Managing Warranty Recovery
Even though warranty coverage is automatically included with each new vehicle and replacement part bought for your fleet, nearly every fleet professional fights with suppliers for more. It’s also a lot like accident insurance policies; good warranty coverage is nice to have, but it’s something that no one looks forward to using.
Like it or not, part of every dollar you spend on a new truck or replacement part goes to pay for warranty. Doesn’t it make sense to maximize the return you’re getting on those dollars? To do that, you need to have a warranty recovery system in place to be in a position to recover all the warranty money that’s coming to you.
“Warranty recovery is worth about a penny a mile over the life of a truck, so it is a vital part of controlling costs,” said Darry Stuart, president and CEO of DWS Fleet Management Services (www.darrystuart.com). “Too often, however, fleets lack an organized procedure to store failed parts. There needs to be a specific location for failed parts and a procedure to mark and identify the parts. That way, if a manufacturer calls for one of those parts, shop personnel can go directly to where it can be found.”
Sources of Warranty
Warranty is readily available from several sources. All new vehicles come with standard warranty packages provided by manufacturers, generally through their dealer networks. In addition to these standard packages, some fleet managers are able to obtain supplementary coverage from truck manufacturers based on the size of the order and the fleet professionals’ negotiating skills.
In some instances, manufacturers will approve reimbursement for repairs after the standard warranty expires; these have become known as policy adjustments. If you need to repair a vehicle, and you believe the repair should be covered by the vehicle or component manufacturer, don’t hesitate to ask for reimbursement under a policy adjustment.
Another widely available source of potential warranty reimbursement is the additional coverage available to fleets when a new vehicle is purchased. This can come from two sources: major component suppliers and extended warranties offered for sale by truck builders. The former, which normally comes at no extra charge, commonly covers major drivetrain components. Most knowledgeable fleet managers, however, do not consider the purchase of extended warranties, the latter source of additional coverage, to be a good business decision.
An additional source of warranty reimbursement comes from aftermarket parts suppliers, many of whom offer warranty coverage on their products. This is where most fleets struggle to make the claims necessary to successfully maximize their warranty recovery. When many fleets in the industry were using three years as their trade cycle, new truck warranties dominated in importance. Now, however, with trade cycles extending five and even seven years, more replacement parts are being used that are not covered by new truck warranties. The successful management of an effective warranty recovery program is an important opportunity for a fleet to recover dollars.
While most fleets have some kind of program to track warranty, only those that have a formal program – and properly manage it – are successful. “Many people claim they collect warranty, but I find most don’t have an established procedure to track it. So they really don’t have a handle on it,” Stuart said.
Management’s challenge is to make sure technicians know what opportunities exist for warranty recovery. When analyzing why warranty reimbursement has been lost, too many fleet professionals find it was because they hadn’t done a satisfactory job communicating to the people in the field what was needed from them to properly file for warranty. When a problem is encountered with a warrantable transaction, try to identify who was missing necessary information and what that information was, and then figure out how to eliminate such errors from recurring.
Maintenance management software can help. The most effective software modules are designed specifically to help fleets maximize warranty recovery. “The software should help the fleet know that the repair about to be done is warrantable,” said Dave Walters, technical sales manager for TMW Systems (www.tmwsystems.com), a provider of enterprise software to transportation and logistics companies. “If you can have that information in front of you early in the process, it may influence how you make that repair and where you get that repair done. Our software will identify and bring to the forefront potential warranty claims.”
“It’s always possible to discover warranty information after a repair has been completed or the information makes it into the fleet’s maintenance system, but that’s an after-the-fact, reactive approach,” said Michael Riemer, vice president of products and channel marketing at Decisiv Inc. (www.decisiv.com). “When information about warranties becomes available to fleets and service providers at the beginning of the process, it saves time and lets fleet managers know upfront what will and won’t be covered. Some fleets estimate 30 percent savings from warranty recapture using the Decisiv platform. With the right technology, those are valuable opportunities for warranty recapture that won’t be missed.”
Decisiv’s cloud-based Service Relationship Management (SRM) software enables fleets to manage, monitor, and report on service and repair events independent of asset type or service provider. The SRM platform, which integrates with many maintenance management systems, makes warranty information available in real time as soon as a vehicle identification number is entered.
What’s a good warranty recovery system worth? Consider a fleet with a six- or seven-year trade cycle. In that fleet, there will be a broad range of vehicle ages, and therefore a range of warranty needs. “For vehicle ages of 1 through 3 years, we see a warranty recovery of about 10 percent of the amount spent on maintenance annually,” Walters said. “In years 3 and beyond, we see a 4 to 5 percent return from a combination of extended warranties and aftermarket parts warranty.”
Clearly, there are some significant dollars available for fleets that are willing to correctly set up a warranty recovery system. Remember, you pay for warranty every time you purchase a new truck or replacement part. Make sure you’re getting an acceptable return on that investment.
About the Author: Tom Gelinas is a U.S. Army veteran who spent nearly a decade as a physicist before joining Irving-Cloud Publishing Co. While at Irving-Cloud, he worked in various editorial capacities for several trade publications including Fleet Equipment, Heavy Duty Equipment Maintenance and Transport Technology Today. Gelinas is a founding member of Truck Writers of North America, a professional association, and a contributing writer for Utility Fleet Professional.