Practical example
Sustainably reduce warranty and goodwill costs
Warranty and goodwill costs should be reliably and fully factored into business planning. To this end, manufacturers use methodologies that allow them to map current and projected warranty and goodwill costs (actual vs. planned) in relation to future target values. Through appropriate quality measures, warranty and goodwill costs are reduced, ultimately minimizing the gap between actual or planned figures and the target value. The goal is to gradually lower warranty and goodwill costs so that the target values for these costs, as outlined in long-term business planning, are achieved.
Background
After discrepancies were identified in warranty and goodwill cost planning—discrepancies that were reflected in deviations between planned and target figures—an automotive manufacturer recognized the need for action. Analyzing and validating the GWK plan and target values was therefore a major challenge, alongside the systematic identification and implementation of sustainable measures to reduce warranty and goodwill costs in the medium and long term.
The foundation for successful and sustainable reduction of warranty and goodwill costs lies in maintaining end-to-end transparency across all warranty and goodwill costs within the company, as well as having valid warranty and goodwill cost plans and targets for each vehicle. To bridge the gap between actual and planned figures and the target values, appropriate quality measures had to be identified and prioritized. Consistent initiation and management of these measures ensured sustainable implementation and the achievement of overall goals.
- High customer expectations and quality standards.
- Significant and, in some cases, opaque warranty and goodwill costs.
- Unrealistic GWK plan and target values – targets were not met.
- The primary focus was on resolving chronic quality issues in the long term.
- Lack of a systematic approach to identifying sustainable quality measures.
- Need for support in the initial planning, design, and long-term implementation of a quality initiative.
Specific task
- Validation of the planned provisions for warranty and goodwill costs per vehicle over the vehicle's lifecycle (planned and target values for warranty and goodwill costs).
- Analysis of existing GWK data to provide transparency regarding current warranty and goodwill costs.
- Identification of areas requiring action and opportunities for improvement as part of a quality assessment (“Q-Scan”).
- Systematic development of quality measures aimed at reducing GWK in the short, medium, and long term.
- A detailed description and business case analysis of the quality measures to serve as the basis for the implementation decision.
- Supporting quality initiatives during the implementation phase.
- Support with program initialization and management to ensure the long-term effectiveness of the measures.
KBC's Approach
Using a proven analytical framework for validating the planned and target values for warranty and goodwill costs, we conducted a detailed analysis of the planned provisions for warranty and goodwill costs per vehicle over the vehicle’s lifecycle to identify any anomalies. Following a series of plausibility reviews, we performed a monetary assessment of the difference between the planned and target values.
This was followed by the implementation of our proven quality assessment (“Q-Scan”) and the development of systematic quality measures (process and training initiatives) aimed at reducing warranty and goodwill costs in the medium and long term. To this end, we conducted interviews with the relevant stakeholders and performed selected data analyses to refine the proposed measures in a needs-based manner. Finally, we developed a proposal for action, including a timeline and a financial business case. In addition to initiating the approved measures, we also supported our client in their timely and sustainable implementation.
