Warranty service. Automation, transparency and return on current assets

October, 2011
proto$ gen V mod 3F47BD (Londinium)
Warranty service tends to be the most neglected business process in any company. Very low control, transparency and manageability are somewhat next to nothing.
Megatons of books have been written about the art of pushing — that is, selling correctly. Dozens of titles (not tons), and they are all good books.
Sales are a thrilling process. Buyers are happy with their acquisitions, and here’s a vivid and pleasant result: money in your cash register, and profit in your statements. We make people laugh and rejoice!


And working with returned items, warranty claims and similar non-profit nuisances from your customers are quite a different pair of shoes.
With the customer’s frustration on top of it; he has honestly paid his money for quality goods, got a faulty item and even has to waste time returning it for warranty repair!
And you are also frustrated, as you got somebody else’s money but have to give away yours (this is about refunds or replacement with a new piece).
And what shall we do with the rejections next?
Marketable appearance is definitely lost. You also have to repair the goods on your own or return them to the supplier who doesn’t need this headache either.
Well, we’ve repaired it, but how to sell it again? Repaired — and unpacked.

A heap of problems, in short. And the nastiest thing is that it doesn’t offer a penny of profit. Quite the opposite: just losses and sadness unrelieved.

In theory everyone knows that customers must be loved, cherished and pleased in every way. But in practice, for the above reasons, most sellers follow the petty logic of minimizing the warranty problems. That is, to use even the smallest opportunity to send the customer on a lake dive with his warranty. In the absence of the opportunity, try to invent one.

This is an improper strategy, of course. And even no strategy at all.
But this is exactly the conduct characteristic of most homo sapiens individuals.
The example is not far to seek: all and everyone know that you need to be well-nourished, go in for sports, refrain from drinking and smoking, etc. to be healthy. Do many people follow this advice?
As was said before us, most people are constantly complaining of poor health, but no one has ever complained of poor wits.

So if you belong to that regrettably small group of homines sapientes who always follow strict logic (and are thus invariably successful), you don’t even face the issue of how to manage your customers" warranty (and other) grievances: the client must leave you (i.e. you must leave him) satisfied. Period.

 The above warranty headaches are there, however much you may try to satisfy your customer. The heap of the warranty problems can vary in size only.

dia$par rushes to your assistance as usual, with its super-powerful warranty block that automates 100% of all the business processes dealing with goods grievances.

We shall skip a dreary description of its functionality and cite the ab-group.ru company as an example. Their core business is supplying a wide range of electronics to corporate customers.

Here is how their warranty unit worked BEFORE — like in 99% of similar companies.

  • The customer would come and bring his unit; this was accepted, and he was given a handwritten receipt — and told to wait for 21 days.
  • The unit taken back would get into a huge heap of broken-down devices.
  • Now and then (unpredictably) a device would be picked out of the heap — one purchased from the supplier to whom a delivery man was going.
  • The goods would be taken to their supplier and exchanged for a receipt similar to that in Para. 1.
  • The supplier’s receipt was carefully placed among lots and lots of similar slips of paper from other suppliers.
  • Twenty-one days would pass, and the customer would come and demand the repaired unit, a replacement or refund, of whatever was due to him. Naturally, the goods item that he’d returned wouldn’t have even reached the supplier yet, to say nothing of any repairs. You had to replace it or give the money back.
  • After quite a random period of time, the supplier’s receipt would be presented to its author. Some of the goods mentioned there would be returned after repairs, others would be applied against the balance of mutual settlements in monetary form, still others were replaced with different goods, and something would "not be ready yet" (for the suppliers" warranty business processes are organized no better than in the above example).

This is about how it all went on until now.
No records were kept.
No one could say how much money was frozen in the warranty, which suppliers owed how much and to whom, and which customers were waiting for their claims to be processed. And, ultimately, how much money was lost on all this.

And now the AFTER situation.
All is absolutely transparent and calculable. All the movements of faulty items are registered in dia$par. You can see any analytical cross-sections at any moment — for any goods, customer, or supplier. Where any claims are outstanding, which goods are lying and where, and how much longer they will lie there according to the contract’s processing terms. History for an individual goods item, customer, or supplier.
All kinds of automatic reminders and notifications — for your personnel, customers, and suppliers.

Client Call-down Journal and Possible Actions with the Document

dia$par processes correctly such complicated cases as having a supplier replace a goods item with another or several ones or applying it revalued against mutual settlements, and correct calculation of their final cost is guaranteed as each goods item arrives at your warehouse.
Warranty goods transportation is routed automatically by the dia$par transport logistics block"s standard functionality.

If warranty goods enter your warehouse, dia$par moves them into the Irregular bin, and depending on how substandard they are (repaired, used, incomplete, or in damaged packing) they are marked down automatically. In the background, dia$par monitors the execution of certain business rules if the original goods change in price, e.g. X% price difference. If problematic goods do not sell within a certain period of time after arriving at the warehouse, they will be regularly marked down automatically in Dutch auction format.
The amount of losses by goods group, item, supplier, and company-wide is now crystal-clear.
The management have received all the analytical tools for minimizing losses in this business line.

For example, objective KPIs for business process stages can now be calculated and included in the personnel motivation system — with the effect it entails.

And the entailment is as follows: on average, goods now take 30 days instead of four or five months (a guesstimate, of course) to pass through the circles of warranty processing. The financial gain cannot be quantified for lack of written sources on the prehistoric period. But that very heap now looks MUCH smaller.

And now a curious thing. The quarro.ru online store of exotic leather articles belongs to the same shareholders and also (quite naturally) is in dia$par. Two totally different businesses work in the same meta-system installation, and (quite naturally) dia$par keeps their data fully apart. The staff can see what they are expected to, and the shareholders see all.
But we’ve already written about it.

So we return to our main topic.
You’ll always have to climb the tree to eat the fruit. But with us, it will be far easier.

Being inside dia$par. Some stories
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