You probably think of warranty claims as a cost of doing business. It's a leak in the boat that you just have to live with. You pay a claim, you absorb the cost, and you move on.
But what if that leak is actually a massive hole? What if your warranty claim process is draining more cash from your business than you can even imagine? For over two decades, I've been inside some of the world's biggest companies, and I see it everywhere.
The manual tracking, the confusing emails, and the black hole where supplier reimbursements should be are not normal. They are signs of a broken system. You'll learn about the most common and costly mistakes I see companies make in their warranty claim process and how to fix them.
Most leaders I talk to are completely in the dark about their warranty finances. They know they spend money, but they can't tell you how much they lose to inefficiency. The problem is almost always hidden in plain sight.
It's hidden in spreadsheets that are a nightmare to manage. It's buried in long email chains that are impossible to track. It's lost in the gap between what you pay for a faulty part and what you get back from your supplier for the product warranty.
These small issues create a huge drag on your business. They lead to financial losses, angry partners, and a poor customer experience. A flawed system also frustrates employees who feel like they're fighting a losing battle with an inefficient claims process.
Does your claims process start with an email or a phone call? Do your people then have to key that information into a spreadsheet or a basic form? If so, you're already behind.
Manual data entry is a recipe for disaster. It guarantees errors will happen. Someone will type a wrong part number, forget a date, or misread a technician's note, and the entire claim submission can get rejected.
This manual work also creates bottlenecks. A claim can sit in someone's inbox for days, waiting for approval, which harms resolution times. That delay might cause you to miss a supplier's deadline for reimbursement, costing you real money.
The problems don't stop with a single error. One wrong entry can cascade through your system. It leads to incorrect financial reports and makes accurate tracking of your warranty work impossible.
Your team spends its time fixing mistakes instead of analyzing trends that could help optimize warranty operations. They become data janitors, not analysts. This is how talented people get burned out trying to manage a fundamentally flawed system for managing warranty claims.
Think about the customer support experience for your partners or OEM dealers. A slow, error-prone process makes you look disorganized. It damages the trust you've worked so hard to build and negatively impacts your relationships with other warranty companies or providers.
When a claim comes in, is it just a standalone event? Or can you immediately see the entire service history of that exact piece of equipment? For many companies using standard SAP, it's the former.
This is a massive blind spot. Without a clear link to a serialized part or machine, you can't spot patterns. You won't know if this is the third time the same component has failed on a particular machine in six months, especially if it's covered by an OEM warranty.
This lack of traceability opens you up to paying for fraudulent or out-of-warranty claims. You have no solid ground to stand on when you push back because there's no repair history to reference. You are left without the data you need to validate claims effectively.
This is especially true for items with a long service life, such as an auto warranty or a vehicle service contract. Without a detailed history, you cannot determine if the damage was caused by a defect or improper use. This makes managing warranty and extended coverage a guessing game.
This is the big one. I call this the million-dollar mistake because I've seen it cost companies that much. You pay a dealer for a repair, but you fail to get that money back from the original supplier who made the faulty part.
Why does this happen? Usually, the warranty claims process is too hard. It requires gathering specific documentation, submitting the claim within a tight window, and tracking it relentlessly. A study by McKinsey points out that cutting warranty costs is a direct path to better quality and profits.
Without an automated system, your team gives up because they don't have the time to handle warranty claims with such detail. They cannot chase every single reimbursement for every claim submitted. So, millions of dollars in legitimate reimbursements are just written off as a loss.
Every dollar you fail to recover from a warranty provider is a direct hit to your profit margin. It's money you are owed that you simply let vanish. Think about what your business could do with that recovered cash.
It also sends the wrong signal to your suppliers. When you don't hold them accountable for poor quality, you're telling them it's acceptable. A strong recovery process and reliable warranty program force your suppliers to improve their own quality control.
This is about more than just accounting; it's about supply chain management and product quality improvement. You are missing out on critical data from the repair process that could help you build better products. This data is essential for managing your overall product warranty strategy.
Can you answer these simple questions right now? What's your average turnaround time for a claim? What is your supplier recovery success rate? Which part is failing the most often across your entire product line?
If you can't pull up a dashboard with these answers in seconds, you're flying blind. Most standard SAP setups don't give you this kind of deep insight without a ton of custom work. You're left guessing about the health of your entire warranty operation.
You can't fix what you can't see. Without clear reporting and real-time tracking, you have no way to identify bottlenecks, measure team performance, or build a business case for making improvements. You just know that warranty "feels" expensive.
Here's what most companies track versus what they should be tracking.
| What Most Companies Track | What You Should Track |
| Total Warranty Spend | Claim Cycle Time (Submission to Closure) |
| Number of Claims | Supplier Recovery Rate (Submitted vs. Paid) |
| General Costs | Claims cost by Failure Code and Part Number |
| Claim Volume by Dealer | First-Time Approval Rate |
| Basic Claim Status | Claim status showing part return requirement, holds, policy rules messages, credits created |
| Open vs. Closed Claims | Detailed Warranty Adjudication Metrics |
The difference is moving from simple accounting to true operational intelligence. This data gives you the power to make smart decisions that reduce costs and improve products. Without it, you are just managing chaos instead of truly managing warranty operations.
Where are the photos of the failed part? Where is the technician's inspection report? Is the customer's proof of purchase attached to the claim details? Too often, the answer is "somewhere in my email."
This is a huge risk for your business. When auditors come knocking, you can't spend days piecing together a claim's history from scattered files. A disorganized documentation process can lead to serious compliance failures and a warranty claim denied.
A complete claim file is a critical step for a successful warranty repair. You must have the repair order, all parts required for the job, and detailed notes. Having organized and complete documentation speeds up the entire approval process significantly.
It also makes fighting for a supplier claim nearly impossible. If you can't produce the required proof in the correct format, your claim will be instantly denied by your warranty providers. All of that critical evidence needs to be attached directly to the claim record in one place.
These mistakes aren't new. I've been seeing them for my entire 20-year career. The question is, why do they persist even in smart, successful companies?
Often, it's a simple lack of awareness. Business leaders don't know that a better way exists. They assume the limitations of their out-of-the-box SAP system and current warranty management software are just the way things are.
Other times, it's a matter of resources. IT teams are stretched thin, and "fixing warranty" never seems to be as urgent as other projects. It doesn't become a priority until the losses become too big to ignore, but by then, a lot of damage has been done.
After seeing company after company struggle, I can tell you there is a clear solution. These problems are not permanent. They are all fixed with the right tool built specifically for this job: SAP ACS Warranty Claims Management.
This is more than a small upgrade from the standard SAP module. It is a purpose-built platform designed by SAP to handle the complete, end-to-end warranty lifecycle. This warranty management software automates the painful parts and gives you the visibility you've been missing.
Imagine a world where an automated claim is created from service notifications. Picture workflows that route claims to the right person for approval instantly. Think about integrated systems that automatically prepare and send recovery claims to your suppliers, improving your turnaround time dramatically.
Let's look back at the mistakes we talked about. SAP ACS Warranty was built to solve each one of them directly, offering comprehensive coverage for all aspects of the claims process.
The overall process improves significantly. It even goes further, with AI-powered tools like ChatACS that can help process claims even faster. An analysis on business technology points out how specialized software can transform "cost centers into strategic assets," and that's exactly what these warranty services do for you.
This might sound like a massive, multi-year project, requiring additional time and resources you don't have. It's not. My team recently worked with two very different organizations: a major metropolitan transport authority and a global aerospace manufacturer.
Both were suffering from the exact problems I've described here. The transit authority was bleeding money on repairs and had no visibility. The aerospace OEM was struggling with complex supplier recovery rules across thousands of parts and different warranties cover a wide range of issues.
We implemented SAP ACS Warranty for both, and the results were fast. Because the solution is built on best practices, we were able to get them up and running in a fraction of the time a custom project would take. They moved from a state of chaos to one of complete control over their warranty claim process.
Your warranty operation doesn't have to be a source of stress and financial loss. The frustration you feel with your current system is valid, but you don't have to accept it as the status quo. By recognizing the common mistakes, from manual data entry to missed supplier recovery, you've already taken the first step.
Fixing your warranty claim process transforms it from a messy cost center into a source of savings, product intelligence, and stronger partner relationships. The tools exist today to make that change quickly and effectively. Stop leaving money on the table and take control of your warranty destiny.
Avoid these costly warranty mistakes. See how SAP ACS Warranty Claims Management can fix your broken process and start saving you money.