Page 94 - MA - May 2017

AUDIT

 Support administration encompasses onsite and conditions. These non-standard terms are difficult
offsite field study, customized repair programs, for organizations to capture and report on across
workshop management, customer and partner the enterprise. Complicated contracts always
help-desks, parts help desk to support dealers, etc. increase the likelihood of errors.
An example of revenue leakage is a field engineer  Information administration covers the complete
who is out in the field fixing a product. While on-site, capture, storage, retrieval and use of aftermarket
a problem with another product is uncovered. To documentation right from service agreements,
maintain a high level of customer satisfaction, the technical publications, service bulletins, etc. The
field engineer fixes the product, but they cannot root cause of warranty leakages is a lack of visibility
access the customer’s contract and cannot know into warranty coverage and costs. Complexity
if the work is covered under the warranty. If it’s also adds to the management of warranty. Many
not and the customer refuses to pay for the service, companies lack comprehensive, easily accessible
revenue is lost, customer satisfaction is impacted, data about contracts, warranties, and entitlements.
and everyone loses. Many times the data is there; it’s just difficult to
 Dealer administration involves the complete sales, access. If, for example, the contact center is not
service and support process at dealer, pricing, dealer connected to all the contract and entitlement
SOPs, dealer discounts, etc. Dealer’s adoption of SOP data, center staff may send out field technicians
on test drives, pick &drop , showroom experience or for support that is not actually covered under the
merchandize may not be consistent. Often dealers contract. With the proper contract information
may not use factory fluids (engine oil, transmissions readily available, service staff can recognize out-
or coolants) or carry out extensions that may of-contract circumstances and sell the client the
invalidate repair or void warranty. Leakages can needed services. There is also a need for warranty
happen when chargebacks are not raised. Scrap and contract automation. Every service transaction
administration is another pain area if they do can be delivered properly. This will ensure that the
not stay in the parts department until parts claim business doesn’t under deliver or over deliver for
payments are made. Sometime, small oversight what the customer wants and has paid for.
opens a potential avenue for leakages and cause of  Performance administration covers measurement
major heartburn between OEMs and dealers. Lack of the dynamism of aftermarket services, the
of stamping on the repair order or lack of details of agility, speed of response, reliability of process,
parts numbers or lack of initials of the receiver on standardization, etc. The good old adage “What
repair order can all become potential irritants. gets measured gets done”, aptly sums up the role
 Customer administration covers customer of performance measures. From a management
relationship process, pre-purchase and post perspective performance measurement systems are
purchase, campaigns, community programs, required for control and reporting. Traditionally,
customer discounts, etc. Many organizations most performance measures are financial measures.
still develop sales contracts manually using ‘cut However, accounting professionals have recognized
and paste’ processes. Pertinent clauses can be the value of integrating financial and non-financial
inadvertently left out, pricing can be wrong or measures using Balanced Score Card (BSC) or
outdated, terms and conditions can’t be tracked, Results Based Management (RBM) to provide a
and clauses can’t be well maintained for reuse in robust integrative view of the company. Companies
future contracts. The sales contract itself is often without service or utilization measures may not be
built from a series of other sales documents such cost competitive. It is imperative to have measures
as the customer proposal or statement of work, like % of appointments completed on time, repeat
previous contracts, pricing catalogs, etc., all of calls to measure field service performance. Service
which can impact potential revenue and create contract uptime (% of uptime for an installed
opportunities for error. Moreover, negotiations product covered by a contract), First time fix rate,
with customers can often lead to non-standard Utilization, Mean time to repair, Mean time to
outcomes. Customers often produce custom pricing, complete, and Repeat visit are some key measures
unique payment terms, and one-off performance to evaluate the status of aftermarket in a company.
obligations resulting in non-standard terms and It is importantly not only to capture measurement

94 The Management Accountant l May 2017 www.icmai.in