A fundamental indicator necessary for the efficient management of a trading or manufacturing company is product profitability. This indicator is a comparison of sales revenue with the costs of acquisition or production, transport, warehousing, loading, promotion, and sales costs, i.e., the sum of costs incurred by the company until the moment the goods are collected by the customer. However, the costs of warranty service – repair or replacement of goods – are rarely taken into account. These costs are most often underestimated. It should also be noted that they are difficult to measure due to the lack of IT support for the service process or, if such a system exists, the lack of its integration with the sales and distribution system.
The structure of the enterprise can also tell us a lot about the importance of service support. Service is handled by people who have nothing to do with sales. In the company’s structure, the service department is more often subordinate to the warehouse manager than to the sales director. The tasks of the service department include handling service requests and reporting. Reporting to the sales department on the failure rate and consumption of goods and spare parts. This information should influence the shaping of the Sales Department’s policy regarding the product – perhaps withdrawing it from sale or lowering the price.
The service process begins at the moment the sales invoice is issued to the end customer, because the warranty period is counted from that moment. During this period, we must be prepared to repair or replace faulty goods. The period for considering a warranty claim is usually 14 days. If the company cooperates with an intermediary, a store, or a wholesaler supplying the end customer, the repair period is counted from the moment the failure is reported at the store or wholesaler.
The article comes from the magazine “Logistyka” 5/2004.