According to Warranty Week, global automotive Original Equipment Manufacturers paid a whopping $46 billion in claims in 2021, with $54 billion set aside as accruals. This means that approximately $630 per vehicle sold is reserved for forthcoming warranty issues. The challenge of reducing warranty claims and their costs is significant, as flaws can occur throughout the entire value chain. However, a solution may lie in leveraging digital twins.

The Current Warranty Landscape

While lean production improves efficiency and reduces costs, it also increases the risk of new quality issues and potential warranty concerns. With an increasing amount of software integrated into vehicles, the percentage of software-related warranty claims is on the rise. Therefore, it is crucial to identify and address these failures and problems as early as possible.

Software issues are comparatively easier to resolve via over-the-air updates, eliminating the need for recalls. This results in reducing total warranty costs for software-related topics in a customer-friendly and efficient manner. However, global claim and accrual figures have remained relatively unchanged in the past five years. What does this mean?

Early Data-Driven Warranty Reinvention

Global automotive OEMs have always grappled with warranty issues, which is why their warranty management capabilities are well-established. Some companies have embraced data-driven practices by incorporating social media data to stay informed about trends and utilizing IoT data to reduce failure rates in plants. However, there is still potential for improvement in using data among all companies, including early technology adopters.

Opportunities with Data-Driven Digital Twins

Data analytics has played a significant role in avoiding warranty issues through simulation in engineering, preventing failures through sensor data analysis in manufacturing, and spotting trends through social media analysis in after-sales. However, the challenge remains in identifying the root cause of failures across the value chain, as well as shifting warranty costs to suppliers. Current approaches like manufacturing 4.0, smart factories, and IoT have not entirely resolved these issues.

Enter the digital twin. Unlike one-time projects that connect various systems and sensors, the digital twin is a living process that enables true root-cause analysis and early detection. It allows for cross-referencing alerts throughout the value chain, from design and build to sales and after-sales. By gathering and connecting information, the digital twin facilitates group-wise analysis.

The digital twin eliminates the challenge of recalls affecting all possibly affected vehicles. With a vehicle’s digital twin spanning from design and engineering to manufacturing, it provides comprehensive information for warranty reduction and avoidance.

Warranty management is an ongoing process, and digital twins have the potential to revolutionize it.

FAQ

What is a digital twin?

A digital twin is a virtual representation of a physical product or system that provides real-time data and facilitates analysis for various purposes, including improving performance, identifying issues, and optimizing maintenance.

How can digital twins help with warranty management?

Digital twins enable early detection of failures and root-cause analysis, allowing for more efficient warranty management. They also facilitate cross-referencing alerts along the value chain, helping to pinpoint issues and reduce warranty costs.

What are some challenges in warranty management?

Some challenges in warranty management include identifying the root cause of failures, dealing with siloed information and unclear data ownership, and using outdated analysis tools. Shifting warranty costs to the appropriate supplier can also be a challenge.

How can data analytics improve warranty management?

Data analytics can enhance warranty management by providing insights into failure trends, identifying patterns, and enabling proactive measures to prevent warranty issues. It can also help optimize warranty coverage and reduce costs.

Learn more about digital twins here.