Sustainably reduce warranty and goodwill costs. - KBC
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Real-world 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 expected warranty and goodwill costs (actual and 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 the company’s long-term planning, are achieved.

Background

After discrepancies were identified in the warranty and goodwill cost (GWK) planning—which were reflected in deviations between the planned and target GWK values—an automaker recognized the need for action. Analyzing and verifying the plausibility of the planned and target GWK 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 a successful and sustainable reduction in warranty and goodwill costs is consistent transparency regarding all warranty and goodwill costs within the company, as well as valid warranty and goodwill cost plans and target values for each vehicle. To close the gap between actual, planned, and target values, appropriate quality measures had to be identified and prioritized. Consistent initiation and management of these measures ensured their sustainable implementation and the achievement of overall targets.

  • 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 over the long term.
  • Lack of a systematic approach to identifying sustainable quality measures.
  • Need for support in the initialization, design, and sustainable implementation of a quality initiative.

Specific Task Description

  • 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 analysis of the quality measures (“business case”) as the basis for the decision to implement them.
  • Overseeing quality initiatives during the implementation phase.
  • Support with program initialization and management to ensure the measures yield lasting benefits.

KBC 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 life cycle to identify any anomalies. After conducting 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 measures) 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 tailor the proposed measures to the specific needs of the organization. Finally, we developed a proposal for the measures, including a timeline and a financial business case. In addition to initiating the approved measures, we also supported our client in implementing them on time and in a sustainable manner.

Portrait photo of Bene Budde, a partner at Kemény Boehme Consultants (KBC). A man with short, dark brown hair and distinctive black rectangular glasses smiles warmly at the camera. He is wearing a dark blue jacket over a white shirt without a tie, along with dark jeans and a black leather belt; both hands are casually in his pants pockets, and he has a relaxed and approachable demeanor.
Portrait photo of Bene Budde, a partner at Kemény Boehme Consultants (KBC). A man with short, dark brown hair and distinctive black rectangular glasses smiles warmly at the camera. He is wearing a dark blue jacket over a white shirt without a tie, along with dark jeans and a black leather belt; both hands are casually in his pants pockets, and he has a relaxed and approachable demeanor.
Benedikt Budde
Partners

Impact Achieved

For our client, we were able to establish validated plan and target values at the vehicle level and ensure end-to-end transparency regarding areas requiring action with respect to the GWK plan and target values. To achieve a long-term reduction in warranty and goodwill costs, we were able to derive and prioritize well-founded quality measures based on our proven quality assessment and support their implementation throughout the decision-making process. Using our processes and methods for initiating and supporting measures—which have already been tested in numerous initiatives—we were able to successfully support our client in ensuring the project’s long-term success.