Warranty management has always been a crucial function for businesses. With the changing dynamics and market volatility, it has become essential for companies to cater to the increasing demands for efficiency, customer satisfaction, and security of customer data. Traditionally, warranty management was a siloed function involving multiple stakeholders and limited transparency. OEMs struggle to meet modern-day customers’ requirements and measures need to be taken to implement ways to increase transparency in their digital warranty management functions.
Blockchain has been a constant name in the digital landscape for quite a few years now. When it was introduced into the business landscape, initial reactions revolved around security and use cases. With a transformative power to revolutionize the process of digital warranty management, the applications of blockchain are limitless. Companies today have implemented this technology in various functions of their businesses.
Blockchain in digital warranty management can lead to an increase in transparency, traceability of warranty, and security of customer data.
We will further delve into the depths of the application of this technology in blockchain and understand how it can be a game changer for companies.
What are the Challenges of Traditional Warranty Management?
While this has been a major focus area that has led to various improvements in the technology offered and eradicating siloed communications, it is an important factor to consider before we go deeper into blockchain technology for warranty management.
Limited Transparency
When compared to other business processes, warranty is one of the most complex processes of them all. With various stakeholders like customers, OEMs, repair and replacement centers, and dealers, it has its own set of challenges.
When communications are limited or siloed, it impacts the efficiency of the process and often creates more disputes than it solves - making a negative impact on the brand and a dent in its revenues.
Fraudulent Claims
In the traditional context, OEMs suffered major revenue losses and additional costs in managing their warranty management processes. In cases of duplicate claims, there needs to be a centralized mechanism that works as a central point of all communication for everything related to warranty. These kinds of fraudulent claims cost OEMs billions of dollars annually which further affects their profitability and future growth.
Inefficient Processes
When a business process of hampered or is siloed, it takes a toll on the operational efficiency as well. These lead to slow claim resolutions and impact customer satisfaction. In cases of slow resolution of claims, the operational costs also rise giving a major blow to the overall operational efficiency of a business.
Data Integrity is Poor
With traditional systems, the data is not synchronized in real-time. This makes the validation of any claim difficult. The insights that should be gained with a digital warranty management system are missing.
What is Blockchain Technology?
Blockchain is a technology that works as a distributed ledger system and records every transaction in multiple nodes. This technology offers the ultimate data security and elevated transparency which makes it an ideal solution for warranty management.
Let us see the key features offered by this technology:
Transparency: With data recorded and stored in multiple nodes, this technology acts as a single source of truth for all claim-related data.
Immutability: Any data or transaction once recorded cannot be changed or altered in any way. The deletion of data is also impossible which makes it a trustable and accountable solution to existing market challenges.
Decentralized Platform: Blockchain in warranty management offers a decentralized platform that eliminates the need for any intermediate platforms. Through this reduction, companies can enjoy significant cost and time savings while processing claims.
Automation: There are smart contracts with preset rules and conditions that come into play and automate the validation of warranty and settlement of claims.
What is Blockchain in Warranty Management?
As we discussed the applications and benefits of blockchain technology, one cannot overlook the transformative power. It enhances digital warranty management offerings for companies and increases overall transparency and operational efficiency.
Let us see the key features of blockchain in warranty management:
Transparency
Blockchain helps create proof of immutable ownership and warranty terms. How? As soon as a purchase is made, the warranty details are recorded. This automated process is replicated for every purchase across product lines, making digital warranty management a transparent process with seamless performance.
Prevention of Fraud
The records maintained by this technology are final and cannot be changed or deleted. As the data is immutable, this becomes an ideal use-case scenario for the warranty process. It can also implement smart contracts that are activated as soon as the purchase is made. As soon as a claim is made, the warranty status is checked against the purchase terms and warranty conditions, making it automated, secure, and customer-centric.
Real-Time Processing of Claims
Smart contracts are automatically activated when a purchase is made. In case of a warranty claim, this smart contract works in the background to validate the claims against the purchase terms and warranty conditions. In such cases, if any criterion is not fulfilled, it results in claim rejection. When these criteria are fulfilled, the claim is processed.
Improved Collaboration
As a centralized platform, blockchain is a single source of truth for all stakeholders involved in warranty management including OEMs, dealers, repair, and replacement centers. They have access to the same data in real time, preventing any miscommunication among these stakeholders.
Better Insights
Insights are an important aspect of any process. In digital warranty management, these insights play a crucial role in determining warranty trends and improvements in product quality. Blockchain can store the warranty history comprehensively. It means all details pertaining to the warranty information would be visible with this technology. Warranty claims status, repair and replacement history, and much more. These insights enable OEMs to maintain better product quality.
What are The Benefits of Blockchain in Warranty Management?
The introduction of blockchain in the technological landscape was with a focus on the improvement of business processes and enabling companies to perform better. It also aimed to increase the efficiency of complex processes. Let’s look at the benefits of blockchain in warranty management:
Transparent Processes
Warranty is a major contributing factor to a company’s growth and customer satisfaction. In these cases, there are various stakeholders involved which also have a direct impact on the customers. For such processes, it is crucial for companies to invest in strategies and technology that make these complex processes streamlined. Stakeholder communication is also prioritized and customer communication and engagement are made better with this technology.
Cost Reduction
As a major business function, warranty management also has costs associated with it. Digital warranty management becomes worrisome where the costs to manage warranties for products outweigh the value addition in terms of customer satisfaction and retention. Blockchain in warranty management automates claim processing and validation resulting in faster resolution and strict timelines.
Fraud Reduction
Warranty frauds make a dent in a company’s profitability and claim resolution, impacting customer satisfaction. With immutable records in blockchain, these challenges are overcome with ease. The records cannot be changed or modified in any way, making this centralized platform the single source of truth.
Faster Claim Resolution
As an automated process, smart contracts come into play as soon as the product purchase is completed. These smart contracts enable the warranty activation, claim validation, and resolution automated which results in faster resolution. Delays in claim resolution add up the overhead costs for the company and make warranty management a challenge for companies.
Improved Customer Satisfaction
Blockchain makes the resolution of claims faster which impacts customer satisfaction directly. When a warranty claim is raised, it is automatically verified based on purchase terms and warranty conditions laid down by the company. There are no delays in this process and customers do not need to wait for the resolution and communication from the OEMs.
Future of Warranty Management with Blockchain Technology
Blockchain technology has wide applications across business functions and enables companies to strategize their future growth initiatives. The integration of blockchain with warranty management will become seamless in time as the technology matures.
This technology can help standardize warranty policies across different industries and geographies. With such applicability, even cross-border claims can be mitigated with ease and zero delays. Integration with technologies like IoT can enable better tracking of products. Companies can track the products across their lifecycle have a better insight into the challenges and identify the scope of improvement across diverse functions. AI integration can bring about deeper insights into product performance and customer behavior. With this, companies can work out predictive maintenance, downtimes, and proactive support and reduce costs as these are cost-intensive processes and functions.
Blockchain in warranty management has a bright future that can revolutionize the entire process. OEMs can strategically position themselves with a competitive edge through innovation, transparency, and predictive maintenance. These can be a game changer for OEMs and customer satisfaction will be improved. Blockchain can help set new standards for warranty management which will be replicated across multiple industries and geographies.
Conclusion
Eventually, blockchain technology will change everything about the digital management of warranties to answer age-old problems of fraud, inefficiency, and lack of visibility. For OEMs, it is an opportunity to reduce costs, enhance trust with the customers, and allow warranties from them.
Customers demand transparency and efficiency, so the OEMs who will invest in blockchain technology for digital warranty management will lead their customers to stronger relationships and continue to stay ahead of the competition. Such transparency would require enhanced strategic elements, as blockchain has become a necessity now and not just another technological evolution.
