Warranty recovery involves the tracking and recovery of all vehicle expenses related to manufacturer recalls and vehicle warranty-type repairs. While managing warranty recovery can be a time-consuming and complex task, it can also be one of the quickest ways to improve your operational bottom line.
In today’s environment of escalating operating costs, fleets are more and more focused on the bottom line, says Mark Elstad, customer systems program manager for Paccar Parts, a company that operates a network of parts distribution centers. “If fleets ignore warranty and its recovery, they are literally giving up thousands of dollars per vehicle per year that goes directly to the bottom line.”
Warranty coverage is important because part of the price paid for a new vehicle goes to cover the cost to warrant specific items on the vehicle, explains Chris Swiser, senior sales executive with Collective Data, a leading provider of fleet maintenance management software solutions. The same holds true with certain parts purchased, whether from the manufacturer or an aftermarket supplier.
“Warranty recovery makes sense simply because you need to recover the money spent to fix an item that broke during the warranty period,” he says. “This includes the cost of the replacement part and the labor to change out that part.
“If you don’t implement a plan for warranty recovery, you are literally throwing money away.”
By carefully defining warranty coverages and monitoring warranty matters, fleets should be able to recover a significant amount of these expenses, adds Dave Walters, regional sales engineer for TMW Systems, a leading supplier of solutions covering the transportation services sector. A powerful tool to help do this is a good information management system.
INFORMATION MANAGEMENT
Many fleets still do warranty recovery by hand and don’t have an effective process for maintenance technicians to identify vehicles requiring repairs while still under a manufacturer’s warranty. As such, they are missing out on the benefits that can be had by using warranty management software programs to streamline warranty claims and supplier recovery processes.
“I think the predominant reason is that many fleet managers and their staff just want to get the problem fixed and get the equipment back in service,” Collective Data’s Swiser says. “No one has taken the time to look into automating warranty recovery. It comes down to a matter of education and training, and it needs to come from the top.”
The single biggest factor in warranty recovery is the buy-in, he notes. Someone in management has to acknowledge that by not tracking warranty recovery the company is literally throwing money away.
“If they could find a way to incentivize the process for the people in the shop, then maybe they would get better participation,” says Swiser. “Granted, all employees should know that warranty recovery is the right thing to do, but that just doesn’t always happen.”
“Fleets processing warranty claims by hand have not invested in the tools and technology available to automate many of the tasks, provide real-time coverage analysis and identify all potential claims,” says TMW Systems’ Walters. “Typically, these fleets rely upon the expertise of the service manager to identify potential claims and, therefore, miss many of the claims opportunities.”
“To be effective, a manual, paper-based, process requires an elaborate filing system to keep all the records, and then painful research every time a part is used or the repair involves an outside supplier to determine if they are covered by warranty,” says Paccar Parts’ Elstad, “and it all has to be accomplished very quickly after the completed repair. All this when most fleets do not have dedicated people, to just track and file warranty.”
WARRANTY ELIGIBILITY
“I doubt seriously that there is a technician out there who hasn’t at one time or another replaced a part and did not know it was covered under a warranty,” says Swiser of Collective Data.
“The biggest challenges customers face regarding warranty claims are identifying if a part is eligible for warranty reimbursement, preparing the claim information and tracking the recovery, Paccar Parts’ Elstad says. “These are the same reasons why many fleets lose thousands of dollars every year that they should have recovered.
“When a part fails, identifying whether it is under warranty can be a huge obstacle. If you don’t have a good shop management system, it could require wading through a lot of paperwork for parts invoices, work orders and claim forms.
“Thousands of dollars in potential warranty claims go un-filed because managers can’t find the right documentation or because of the time required to do the research,” continues Elstad. “A quality shop management system, like the Paccar Connect system, solves these issues and can be used to manage all warranty requirements by utilizing an unlimited amount of user-defined warranty schedules for all types of equipment.”
The right system needs to be able to manage warranty schedules - whether it is a new truck with an extensive warranty or replacement parts with variable warranty periods, for example: 2 years/200,000 miles, he says. The system also needs to remove the guesswork by automatically alerting the user of possible warranty coverage, provide a way to tag the failed part so it isn’t discarded and make it easy to look up prior work orders and parts invoices that will be required when creating a claim.
In addition, the shop system should “be able to capture your warranty recovery so that you can measure your success over time with each supplier.”
TECHNOLOGICAL ADVANTAGES
It makes good business sense for a fleet to employ a Computerized Maintenance Management System (CMMS) to handle warranty management and administration. These systems are tools to help control, optimize and verify maintenance activities.
Most simply, a CMMS “takes the remembering out of the process,” Collective Data’s Swiser says. “The software remembers for you.”
“One of the most daunting tasks of warranty administration is identifying potential claims in the mass of paperwork that flows through a maintenance system,” says Walters of TMW Systems. “Without computerization, this task requires a manual review of each document by a skilled warranty administrator or team of individuals based on the volume of repairs. This manual process occurs after the fact and eliminates the option of optimizing the warranty solution.
“Computerized electronic records lay the foundation for automated warranty identification and warranty alerts in real-time, whereby the fleet can optimize a repair solution.”
“There are many benefits to a Computerized Managed Maintenance System,” adds Paccar Parts’ Elstad. “Warranty is one of them, as it provides an immediate and easily measurable return on the fleet’s investment in the system.”
In general, computerized warranty management systems allow the user to carefully record all available warranty coverages on each vehicle and also aftermarket parts, Walters says. Once this data set is established and applied, the system should identify all potential claims in real-time.
For vehicles, the user simply tells the program what warranty the vehicle has - time, miles, etc., and then instructs the program who to notify as the expiration approaches, explains Swiser.
For parts, when the user sets up a part in the inventory file, they define what the warranty is for that part, he says. Whenever that part is used on a work order, the warranty “attaches” itself to the equipment worked on. If the same equipment comes in for repair and that same part is placed on a work order, most systems will warn the user that the particular part number was used on a previous work order and may still be under warranty.
CLAIMS IDENTIFICATION
Another big issue fleets face is not always submitting work and reconciling payments received for repairs made on warranty vehicles. Software programs can help with this.
“A good information management system should automatically identify all possible claims based upon the warranty set up for the vehicle,” TMW Systems’ Walters says. “Once identified, the claim can be reviewed for accuracy and edited if needed. Some systems will even generate a fileable claim from the data provided.”
The system should also track and apply claims recovery for each individual vehicle, he adds. Reports showing warranty claim history by vehicle and system will assist the fleet in purchasing and specification decisions.
“While software programs cannot ‘program’ an attitude of watchfulness, they keep the warranties more visible to technicians and managers,” says Swiser of Collective Data. “No one has to remember, or look up the paper records, that the transmission they’re working on came with a 50,000-mile warranty. Since it only has 37,000 miles on it, the shop is due some monies in the form of partial labor reimbursement or parts replacement at a pro-rated price.”
“Without a CMMS, the time resources required to maintain an adequate filling system for work orders by unit, parts and outside repairs by date, and then to look all that up when a repair is completed is tremendous,” says Elstad of Paccar Parts. “In the past, a manual check of the records may show that the parts were eligible for warranty but by the time it was completed the failed part had already been scrapped.
“That is why, traditionally, shop personnel have focused only on the big dollar items, as they are more memorable. Because of the lag caused by the research time and the possibility that the part has already been scrapped, many shops have come to believe that trying to recover warranty on lower cost parts doesn’t pay off.”
Computerized Maintenance Management Systems can provide in-system alerts when a part is eligible for warranty, tag the failed parts, save the information for a more convenient time to process the claim and easily look up previous work orders and supplier invoices for a specific part or job, Elstad notes. The systems “can track any part regardless of its value, reduce the processing time to a tiny fraction of the time required by a manual process and record the recovery to document the total realized savings to the fleet.”
RESOURCE INVESTMENT
“Understand that moving to any Computerized Maintenance Management Systems will require time and people resources,” says Paccar Parts’ Elstad. Nor should a CMMS be considered a cure-all for warranty administration problems.
“A computerized system cannot fix bad information,” he says. “Before uploading or entering your initial data make sure it is clean as possible.”
What’s more, not all warranty issues can be fixed by a computerized system.
For example, Elstad says low cost parts providers may have shorter warranty coverage periods and limited labor reimbursement. “If the part has to be replaced numerous times, it can end up costing more than its name brand competitor, especially when taking into consideration unit downtime, claim processing and parts re-ordering times.”
“Using the proper software can help eliminate a lot of human errors - whether by commission or omission, but not all errors,” Collective Data’s Swiser adds. “No matter how good the software, it is still going to be used by human beings and can be prone to errors.”
