talk about actually processing and tracking those warranties.  Now in nearly every client I’ve worked at, they process warranties differently.  None of the methods are wrong, but I certainly feel that some are better than others.  I’m going to try to cover the best methods I’ve seen to date.

The biggest issue I tend to encounter with warranty is knowing if it is under warranty.  That’s the biggest reason I did Lesson 4.  That master data can set the stage to make that part of your job easier.  But even if you do that right, a lot of times it’s still not obvious if something is under warranty, or if it was damaged in a way that invalidates the warranty you offer.  Because of this, we have several ways of handling warranty processing.  I’m going to do my best to cover the main ways, and give you the pros and cons of each.

Service Material for Warranty

Ok, how about the easiest method first.  This is creating a DIEN that denotes a warranty repair.  Now, I say it’s the easiest, because it requires very little configuration and you can use standard SD reports to monitor the warranty.  The first drawback is that you use it because you know up front that it’s a warranty.  But in the repair procedure, you cannot change this if you decide it really shouldn’t be warranty.  This makes for a huge hassle.  So even though it’s an easy method, it rarely works as the best solution for most organizations.  Also keep in mind, you still need all your pricing and account determination configuration (which I’ll cover shortly).

 Accounting Indicator on the Service Order

Next method is also pretty simple from a configuration standpoint, the accounting indicator.  First thing to recognize is that the accounting indicator does not have any functionality of its own.  It is purely a field you can key off of for other processes.  Now, the biggest challenge with using the accounting indicator is that someone needs to remember to set this field when they recognize it is warranty.  Someone also needs to recognize at the repair sales order that it is warranty so specialized pricing can be carried.

Pricing + Account Determination

This is one of the most powerful methods because it incorporates the financial aspect into the process.  You will typically do several configuration steps.

• Create a new account key – this will allow you to segregate your warranty accounts from standard COGS accounts.
• Add entries into the account determination – this is where you set the actual accounts you want to use.
• Creating a new pricing condition – you will use this to “write off” the warranty amounts.
• Add new conditions to the pricing procedure – be sure to attach the new account key.

Master Data

To get the full pictures, you need to look back to lesson 4.  Using the equipment record to note when something is under warranty is the best method.

Pulling it together to make a solution

Now if you want to make a workable solution, you’re going to need to put several of the pieces together.  My recommendation is to use the accounting indicator + Pricing + Accounting Indicator to pull together your solution.  Your process will probably be some variation of the following:

• Notification with or without a serial number.  If you’ve configured your master data correctly and your notification, the warranty will be flagged in the service notification.  This doesn’t force any of the follow on documents to be warranty, but at least it gives you the heads up.  The same goes for a service contract.
• Generate Repair Sales Order – this begins the process.  Depending on your pricing model, your fixed price may already be set.
• Receive the customer’s unit.
• Generate the Service Order.
• Evaluate the unit and determine if it’s under warranty.  (This is done outside of the system).
• If the unit is applicable for warranty, then set the appropriate accounting indicator.
• Complete the repair & TECO the service order.
• As an option step, if you use RRB, you can include accounting indicator as one of the fields to generate special materials/pricing in the sales order.
• If you don’t use RRB, the sales order will need to be updated manually to include the warranty pricing condition.  This will be used to write off whatever amount is under warranty.
• The unit is shipped back to the customer.
• An invoice is generated.  If the full item is under warranty it is a $0 invoice.  Otherwise, bill for the appropriate amounts not covered by the warranty.

Now for the Gaps…

While, this is the best process I’ve come up with for most clients, there are some obvious issues that need to be addressed through training and manual procedures.

• Service technicians must remember to set the accounting indicator.
• If you do not use RRB, how does the customer service rep know that an item is warranty, in order to perform the correct pricing?

For the first issue, nothing that can be done aside from training.  However, for the 2nd issue, if you’re interested in becoming an early adapter, check out Broadsword by JaveLLin Solutions.  This service order dashboard has a ton of metrics, including the accounting indicator and the links to all of the documents, including the repair sales order.

Tracking warranty dollars

Now, after all this work, the real deal is actually being able to track the warranty information and money that you are spending on it.  For this, you’ll need a couple of things.  The first, I can’t really help you with, but your FICO consultant certainly can.  This is using your accounting and controlling reports based on cost centers, profit centers, etc.  This is where you can get the dollars without too much work.  The second piece is all of the other information associated with the warranty.  For example, what parts are costing you the most?  What parts are coming back the most often?  For what reasons?  This is where you need a dashboard that can pull all the information together.  Broadsword by JaveLLin Solutions can do that for you, or you can write your own reports to pull the information you are looking for.

I hope this helps with your service processing.
This is the last regular lesson in the series, but be on the lookout for bonus lessons.  And as always, if you have questions, we have answers.  Let us know what is troubling you.  We love ideas of things to talk about, or perhaps you need more individual attention.  Just let us know.

mpiehl@goJaveLLin.com