You probably don’t think about the warranty on your oven or refrigerator all that often.
That is, until something goes wrong. Then you start frantically paging through the warranty to see whether or not you’re covered.
It should be a simple process to determine if your warranty will save you from paying for repairs. But the warranty industry’s supply chain has a number of issues and inefficiencies that roadblock this process for both companies and consumers.
False claims, fake products, and confusion about coverage are some of the most common issues companies face. And these are passed on to consumers in the form of tedious processes and poor customer experiences.
But there is a better way for warranty companies to verify claims. Blockchain has the potential to help streamline the industry by securing supply chains and providing track-and-trace capabilities for products under warranty.
Here’s how:
The industry is up against many challenges and complexities.
Most people feel as though they’re getting the runaround when they process a claim.
They spend hours on the phone trying fruitlessly to prove their issue is covered. But warranty claims are much trickier than many imagine.
Warranty companies are in a constant battle, trying to avoid paying fraudulent claims on products or issues they don’t cover. And counterfeit products entering the supply chain add an extra layer of complexity to their job.
Much of the trouble comes from information gaps between manufacturers, distributors, warranty companies, and consumers.
A clear reason for these gaps is lack of consumer insight. Most warranties are located somewhere in the back of a thick booklet of product information and directions. They often require the consumer to fill out a form and mail it back to the manufacturer.
But the vast majority of people never do, and that creates a major information gap. The manufacturer doesn’t know for certain where their products are ending up. They only know which distributors they sell to.
And because the manufacturer can’t follow the paths their products take, the warranty company has no way of knowing whether the product they’re covering is the real thing.
Blockchain will be able to track the chain of custody.
Blockchain helps solve this problem by closing information gaps.
Using a serial number or a tamper-proof cryptographic seal, companies can track the progress of a product from the manufacturer to the consumer. They can verify through immutable blockchain-based proofs that the product has moved on to the wholesaler, retailer, and consumer.
So when a product is manufactured, the manufacturer creates a record of it on blockchain. As the product moves through the supply chain, it is verified and recorded at each touchpoint until a consumer buys it.
When a customer calls in about the product, the warranty company is able to check the record to see if there is proven path from the manufacturer all the way to the consumer. If so, they have proof the product they’re paying a claim for is authentic.
Keeping fake products out of the supply chain benefits everyone.
Removing counterfeits protects the manufacturer’s brand and the distributor’s reputation.
The warranty company is protected from fraudulent claims on counterfeit items. The retailer has an additional value proposition in their pitch to upsell customers on a warranty. And the consumer can be sure they’re getting the real thing.
Checking a warranty on blockchain will become a breeze.
Once the supply chain is secure and product identities are registered to blockchain, warranty claim resolutions will happen in seconds.
Let’s say I buy a refrigerator. I flip through the thick instruction packet that comes with it, fill out the warranty, and register my fridge. Or the registration can happen automatically at the point of sale. For the next year, all is well.
Suddenly, my fridge won’t cool. So, I call the warranty company and submit my claim. With a blockchain system, the person who answers my call can immediately check whether or not my product is covered based on its blockchain identity. They simply look up the serial number to check the product’s record and verify the warranty.
And if they’re not sure whether my specific problem is covered under the warranty, they can send a service person to my home. Once the problem is diagnosed, the repair technician can immediately pull out a phone that links to the blockchain system and check whether my issue is covered under the warranty.
Although this is a simple version of the workings behind the process, blockchain will provide some much-needed visibility into the supply chain for warranty companies.
Coupled with the ability to weed out counterfeits, this system will greatly reduce the time and money spent identifying fraudulent claims.