Warranty Management – New rules to apply

Copyright © 2009 James Taylor. Visit the original article at Warranty Management – New rules to apply.

Rob Pritchard of Infosys presented on the power of business rules in warranty. His focus is on agility – most warranty systems are inflexible and hard to change. Organizations cannot make changes to warranty policy to respond to competitors, can’t create what-if scenarios, can’t tighten claims control or pre-valid claims or repairs. These problems come from outdated, disconnected systems. At a strategic level they can’t respond to trends and at an operational level they incur excessive costs and customer dissatisfaction. Some try to fix this by simply re-platforming their old mainframe systems but even replacements, if hard-coded, will still  not handle enough claims or handle them well enough.

Rob’s solution, as mine would be, is to apply business rules management systems to the problem. Rules can be applied at every stage in a claim – for validation, for adjudication, for adjustments, recovery and more. Using a BRMS allows the integration of flexible strategies into the system while allowing business owners to manage the rules, further improving agility. One of the particular advantages for this in warranty was the ability of business users to write rules to handle particular problem areas – focusing on particular VINs or models, for instance.

Rob spent some time discussing how rules can be harvested. A top-down approach looking at processes or use cases, finding decisions and then documenting the rules is one approach. This emphasizes the business language in the rules and maps them nicely to real business decisions but it may not cover all the rules in the legacy system. A bottom-up approach involves code mining either with software or by hand. This can result in overly technical rules but it does ensure coverage of the legacy applications. As you might expect, Rob suggests a hybrid approach using a little of each.

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Rob sees three key areas where rules can help:

• Tighter warranty controls
  Claims processing is improved because financial limits, detailed coverage types, materials return and more can be automated and rapidly changed when necessary. The rules also allow “what-if” testing and impact analysis.
• Better built vehicles
  The decision making is tracked very closely thanks to rules so you can analyze specific repair types, specific VINs and so on. More effective parts return and generally better information also contribute.
• Lower cost repairs
  Rules allow goodwill repairs, labor-only repairs and specific kinds of repairs to be managed very precisely. Rules-driven decisioning can reduce the variation of costs between dealers and help intervene, rejecting or editing claims that seem overly expensive. The ability of rules to deploy data mining and predictive analytics can also really help here.

Clearly Rob and I are on the same wavelength.This was blogged out of sequence.

Don’t forget to check out the white paper I have at decisionmanagementsolutions.com/warranty