According to Ford CEO Jim Farley, “Fixing quality is my No. 1 priority. It is the most important initiative in the whole company. And it’s going to take several years until we fix quality, nothing else matters.” A big, clear, and bold message, but the action didn’t stop there. After many years of high warranty costs and recalls, Ford named a new Chief Transformation and Quality Officer, Jim Baumbick.
This is a strategic move from Farley and not surprising — especially after the company spent $3.92 billion on warranty costs in 2020 with $127 billion in revenue. This is well over the 2.5% industry average cost as a percentage of sales and is clearly an area of focus for many auto manufacturers.
Warranty operations can be complex with numerous players, and many organizations still rely on manual processes and outdated systems to process claims. Considering the main warranty touchpoints for an industrial equipment manufacturer with a dealer network, it is easy to see how the process can be broken, leading to significantly increased costs and missed revenue opportunities.
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