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issue: June 2005 APPLIANCE Magazine

Service
Servicing the Claims System


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By Erin Biesen, Assistant Editor

ServiceBench helped Sears of Hoffman Estates, IL, U.S. and its appliance vendors move from a tedious PC-based warranty claims system to a quick and user-friendly Web-based application.

The appliance retailer looked to an outside consulting firm to help find a solution to the challenges it was facing with the old warranty claims system. A variety of possibilities were taken into consideration, ranging from someone managing the entire aspect of claims management to having a system written specifically for Sears.

Through this search, Sears chose ServiceBench of Fairfax, VA, U.S., a provider of Web-based service supply chain management applications. The relationship with ServiceBench actually began about 5 years ago when ServiceBench began working with Frigidaire (now Electrolux Home Products) and later with Whirlpool. Since ServiceBench had experience with the appliance industry, it was prepared to address the appliance retailer’s issues. “ServiceBench actually had by far the best return back to Sears and the best solution because of their experience with the industry,” confirms Craig Reilly, director of Operations at Sears Home Services.

ServiceBench has a variety of modules that help or assist manufacturers and their retailers with the warranty claims system. When a company uses ServiceBench, the consumer sends in the registration form, and it is filed in the ServiceBench database. If the consumer then has an issue arise with the product, the manufacturer or retailer can go into the database to confirm that the consumer does in fact own the product and has a warranty on it. After the consumer decides when he or she would like service, the software searches for a qualified service provider that is able to fix that product and dispatches them out.

From this point on, the consumer is done. After the dispatch is received, the service technician goes out to complete the job, visits the ServiceBench Web site to fill in necessary information such as model number, and then submits the form. ServiceBench then sends an e-mail to the technicians informing them of the time for which they will be paid. Although ServiceBench offers this entire system, Sears and other ServiceBench customers have customized their own systems to fit their needs.

Past Processes

The retailer’s previous claims system was a PC-based, DOS application that was written years before in a language that Sears found difficult to support in the current environment. The transactions that passed through the system exceeded the capability of the program. Also, when Sears brought on new appliance manufacturers, it was tedious to develop the data necessary for that particular company’s warranty claims. The combination of the proprietary system having limited functionality and the manual review process resulted in some claims not being recovered due to human error.

When switching to the new system, Sears began by defining its requirements, looking at its current applications to understand the current system’s functionality and what its end goal was. Following this process was the actual writing of the code, which involved close interaction between Sears and ServiceBench. “What we are doing is customizing the system to meet the client’s needs. Part of this involves writing additional software functions to support new functionality,” explains John Estrada, COO and founder of ServiceBench, Inc. “It also can be configuring existing functionality to meet the client’s needs.”

Testing and quality checks were the next step in switching programs, followed by the migration of the old data from the old PC-based application into the new ServiceBench system.

Mike Dering, president and CEO of ServiceBench Inc., says, “The main challenge was the ability to effectively manage a large quantity of service transactions and to allow as many [warranty claims] as possible to be processed through the system without the requirement for manual intervention.”

After looking at the nine modules offered by ServiceBench, Sears decided to use three of the nine, including claims recovery, dispatch, and claims modules. The claims recovery module is used by the Sears National Claim Center (NCC) to manage claims with its vendors and extended warranty providers. The dispatch module is used to send service call requests to its network of independent service providers, and the claims module manages claims sent in by the retailer’s network of service providers.

Making the Switch

A group of individuals from ServiceBench then worked closely with Sears for about 2 months gathering requirements for the system, which included business rules, claims logic, and interface specifications. According to Mr. Estrada of ServiceBench, business rules determine whether or not the product is claimable based on the information in a service order.

Since ServiceBench spent a large amount of time getting to know Sears’ system, it knew how to help solve the retailer’s issues. “ServiceBench almost became a business solution expert, and they could recommend to us what we are trying to articulate to them,” notes Mr. Reilly. ServiceBench looked at where the industry is headed and helped Sears to move in that direction, he says.

Sears notified its more than two-dozen appliance vendors of the transition to the new ServiceBench application. The switch did not require extensive amounts of work from the manufacturers. “Primarily, ServiceBench worked with Sears’s partners on the testing of interfaces for sending claims and receiving status,” notes Mr. Dering. This required companies to only check information coming to it from Sears.

When the OEMs were contacted about the switch, they were eager to get the new system started, according to Mr. Dering. “One of the things they were anxious to see is more timely and stable information coming to them,” he says.

While manufacturers were excited about the switch, it was going to require some adjustments. In the past, Sears would send the paper documents out to manufacturers that were still working in a paper environment. In the new system, everything is electronic, and ServiceBench trained manufacturers on the new application, especially if the company was not previously a customer of ServiceBench.

Overall, the transition between the old system and the new system was not difficult for Sears vendors, according to the retailer. “As we bring new people on and we train them, it is a fairly easy training process to bring somebody up to speed,” Mr. Reilly comments. “We took some of our independent servicers online, and ServiceBench offered training via a Web cast, and all of them picked it up almost immediately. It’s a very user-friendly system.”

ServiceBench’s Web-based system helps to ease the warranty claims process and reduce the cycle time to complete a claim.

Setting the Rules

According to Mr. Dering, ServiceBench added customizations, or rules, that were specific to the Sears system. “Rules include items such as determining what is required on a specific claim form, how to calculate labor rates, and what is required to be submitted for a claim to get paid,” he explains. “Rules tend to be managed in a single location and, thus, are not required across modules.”

Previously, claims were sent back and forth between Sears and the manufacturer to correct information, which took up large amounts of time. After gathering input from manufacturers, ServiceBench set up specific rules to identify specific information needed by the manufacturers before the claim is submitted. “That’s a huge work saver for the manufacturers and that’s something ServiceBench was able to give us that we would not be able to achieve on our own with our old system,” explains Mr. Reilly.

In working with the manufacturers, ServiceBench discovered the criteria they truly needed when filing claims. This included information relating to the model and serial number, which the old system did not allow, and defect codes. ServiceBench included a cross-reference code in the new application, which allows Sears to pass their defect codes based on how they ran the service. Vendors and manufacturers are reportedly receiving and processing data much more efficiently than they were under the past application.

The first phase of implementation was completed in spring of 2004, and the second phase was completed toward the end of January 2005. “The second part to this is that dealing with a different vendor changed all the rules that we wrote the code for last year. So this changed a lot of the code requirements, and it is dealing with a brand new set of service orders and claims,” Mr. Reilly tells APPLIANCE. “The point is that ServiceBench can modify the system to account for different rules even when they’re different from those established during the original design.”

Shortly after Sears made the switch to ServiceBench, it quickly began seeing the benefits. “We saw results almost immediately, but then it took us several months to start to tweak it and fine-tune it to where it became consistent for us,” says Mr. Reilly. “We started seeing claims that previously weren’t being recovered.”

There was also a reduction in the amount of time it took for a claim to be completed. In the old system, it took a week for a claim to be processed; now it only takes a day. According to Mr. Reilly, manufacturers feel they are getting better information and data than before because the information they now receive is much more timely and in a more consistent format.

One of Sears’s vendors, Whirlpool Corporation (Benton Harbor, MI, U.S.) has personally seen the benefits that can come out of an updated claims system. Whirlpool, which switched to a ServiceBench system a few years before Sears, says it experienced decreased cycle times, decreased reject rates for claims, immediate communication channel to service network, and immediate visibility of claim status to the service company, explains Stephanie Patterson, manager of Warranty Administration at Whirlpool. “Electronic claims jumped from 49 percent to 90 percent in the first 3 months,” Ms. Patterson continues. “Today, more than 97 percent of claims are submitted electronically, and the initial rejection rate went from 25 percent to 2 percent.”

Sears says the system has also saved on labor costs. “One of the reasons why we looked at this is our old proprietary system was very labor-intensive and fairly unstable, and when we went over to the ServiceBench application, we were able to reduce our payroll by about 75 percent,” states Mr. Reilly. “That was one of the components we were looking at to determine the success of the program.”

A Dynamic Relationship

Both Mr. Reilly and Mr. Dering feel the process was so successful because the companies took the time to work closely together, which resulted in a dynamic relationship when making updates or tweaking the system.

Mr. Dering comments, “It shows you what two companies can do when they work together because there wasn’t huge teams doing this. There were a handful of people on each side with support disciplines to get this thing up and running in about 6 months time.”

Sears not only saw benefits in its own service system, but was also able to pass on those benefits to its appliance vendors. As time goes on, both Sears and ServiceBench agree they will continue to make improvements to the system. “When we build a rule, every once and a while something will slip through that is contrary to the rule, and we will have to go back and figure out how we will implement that in,” Mr. Reilly says. “I think it is always going to be an ongoing process.”

 

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