03 Jun Customer Claims Cost Reduction
A large manufacturer of office products wished to reduce the dollar value of warranty claims being paid due to damage found during end use installation of their product. Existing information systems did not capture how, when or why the damage occurred and therefore the manufacturer was paying 100% of all claims. Damage claims costs were approximated at $1 million annually.
Identify the root causes of the damaged product and to reduce the amount being paid out by 50%.
Working with eMRI consultants, significant improvements in data collection and tracking were quickly established and a single, unified database was formed. Damage was tracked by product code, type, installer and other key variables. The team determined that 20% of all claims dollars being paid were for incorrectly logged root causes (customer order changes, etc.). The team was also able to identify several key products and installers (both good and bad). Best practices were identified and implemented across the company resulting in a 55% reduction in claims.