Wired for warranty

If you aren’t using information technology to manage your warranty program, you
probably are throwing money down the drain.

When a technician replaces a $50 part, chances are he gives little – if any – thought to possible warranty coverage. Filing a claim means paperwork and hassle, so he probably will simply discard the part.

Doug White of Dunbar Armored wants to change that mindset. Filing a warranty claim at the 1,200-truck carrier requires no extra time or effort for technicians – thanks to the efforts of White, director of fleet maintenance for the Hunt Valley, Md.-based company.

“If I get them over that hurdle, we can accomplish a lot,” White says. “The bulk of warranty is common items that average mechanics throw in the trash, such as turn signals. It’s a $30 to $40 item, but they just throw it in the trash.”

By training technicians to treat each repair as if it were covered by warranty – that is, to save the part – and by making other improvements to its warranty program, Dunbar Armored increased its warranty reimbursements from $80,000 in 2003 to $200,000 in 2004.

Technology has played a central role in this accomplishment, but “it’s not all related to technology,” White says. “We also hired a full-time warranty administrator. We are really just getting started right now with respect to changing the mindset of people.”

Vehicle OEMs typically offer standard bumper-to-bumper warranties for parts and services between one and three years, along with optional extended warranties on select components. But for fleet managers, tracking these warranties – along with warranties on aftermarket parts and services – quickly creates information overload.

Dunbar Armored uses maintenance software to flag warranted items automatically and create claim reports as repair orders are entered. But having such software is just the beginning of a more accurate and efficient way to handle warranty claims processing. Currently, each vehicle manufacturer has a different set of requirements, but most offer Internet-based software for fleets to submit electronic claims. And some are on the verge of adopting a standard claims form, thus paving the way for integration with fleet maintenance systems and a streamlined claims handling process – from repair order to reimbursement.

A systematic approach
Generally, if a fleet has 100 or more trucks from one manufacturer, it can seek approval to perform its own warranty work and file warranty claims electronically.

“A lot of times, the manufacturer does not initiate that process,” says Ron Bredemeyer, a transportation maintenance consultant based in Abilene, Texas. “It depends on how much confidence the OEM has in the mechanics and parts people.”

Because few small fleets can perform their own warranty work, they must weigh the warranty benefits against the cost of vehicle downtime incurred by using an outside party.

Regardless of size, careless or outdated maintenance records can cost your operation thousands of dollars a year in unclaimed warranty reimbursements. Charles Arsenault, president of Arsenault and Associates, estimates that fleets without a computerized maintenance system miss a minimum of 50 percent of the repairs and parts covered under warranty.

As with many fleet maintenance software systems, Arsenault and Associates’ Dossier uses the Vehicle Maintenance Reporting Standard (VMRS) system to track a vehicle’s maintenance and parts usage. The coding system – developed by American Trucking Associations’ Technology and Maintenance Council – enables fleets to identify warranties by vehicle components in a uniform fashion. Fleets can include or exclude parts and services under warranty based on standard assembly and component codes.

But computers and VMRS aren’t magic. Maintenance software is effective only when repair and maintenance information is entered accurately and on a timely basis. Remember: Garbage in, garbage out.

Dunbar Armored performs warranty work at its own facilities. To help ensure that data entry is accurate – or at least consistent – Dunbar Armored’s technicians handwrite repair orders. Data-entry clerks enter those orders at a central location into the company’s Dossier system.

“We want the mechanic taking care of maintenance,” White says. “We don’t want him to be a data-entry person.”

Once information from repair orders is entered, the software automatically triggers reports for the warranty administrator. If, for example, a technician installs an alternator, the administrator knows instantly when the last one was installed. The warranty administrator then sends instructions back to the shop to scrap the part or, if it is covered by warranty, ship it back to the manufacturer.

Managing outside work
Tracking warranties via a computerized maintenance system is relatively simple if all repairs are accomplished at in-house facilities. But tracking warranty on parts and service performed at dealerships, independent garages and other facilities can be more difficult because invoices from outside parties may not be entered into maintenance systems on a timely basis – or even at all.

Southeastern Freight Lines – with more than 2,000 trucks and 65 terminals – does about 80 percent of its repairs at the company’s 20 maintenance facilities. Outsourced repairs are entered into its custom-built maintenance software database by operations clerks. But “the biggest problem is getting information entered accurately,” says David Foster, director of maintenance for the Lexington, S.C.-based carrier. Training and staffing data-entry clerks at all maintenance locations is a continual challenge, he says.

Biagi Bros. uses Peterbilt’s web-based Connect Plus system to manage maintenance and parts inventory on its 300 vehicles. One advantage of this system is that anytime a work order is closed out at a local Peterbilt dealership, the data is exported and uploaded into the Connect Plus system automatically.

“We get our direct costs directly from (the dealership),” says John Boggus, director of maintenance for the Napa, Calif.-based carrier. “We do not have to do any manual key entry. We can get the mechanic’s story, word for word, and what the cost was.”

Information captured for each repair includes part numbers for the repaired or replaced parts, the mechanic, cost, date, time and vehicle mileage. This information is necessary to identify and submit warranty claims to suppliers, Boggus says, adding that the system can flag warranty anytime a part is used. “If we reuse the same part, the system flags it and opens up a popup screen with the work order number, date and unit it was done on.”

To track warranty on parts purchased from aftermarket parts suppliers such as Fleet Pride and Napa, and labor under warranty from outside repair shops, the company enters information manually from invoices. The company realizes between $5,000 and $10,000 a month in warranty reimbursements, he says.

Tracking warranty on outside repair work does not require advanced technology, however. Terry Johnson of Buccaneer Enterprises uses his own Microsoft Access spreadsheet application to track parts sent out for warranty repair, the cost, expected warranty reimbursement and the day he received the reimbursement or credit.

In past years when Buccaneer Enterprises didn’t keep detailed records, “I would get a credit for warranty on the invoice, but they would seem to lose a core of mine,” says Johnson, parts and shop supervisor for the 90-truck carrier based in Buckhannon, W.Va.

Minimizing errors
Internal communication problems over warranties may be as significant a challenge as dealing with third parties.

One of the main reasons U.S. Xpress decided to implement Fleet Assistant – a web-based system from Cetaris – was because the carrier’s warranty administrators “were always running a battle with the shop to document a repair correctly,” says Steve Goodner, the carrier’s manager of maintenance systems. U.S. Xpress generates 2,000 repair orders daily, so management also wanted to improve the accuracy and efficiency of handling warranty claims.

“Everything was so much of a manual process,” says Jerry Elkins, vice president of maintenance for the Chattanooga, Tenn.-based carrier. “We missed things and overlooked things.” Using its previous maintenance software system, warranty recovery began the “next day or so” after a technician completed a repair order and a warranty administrator printed out and reviewed the repair orders the system flagged for possible warranty reimbursement.

“In the new system, (the warranty process) basically starts when the technician starts working on the truck,” Goodner says. Now, U.S. Xpress prints out a barcode for the technician to stick to the part, which is placed in a warranty bin. The warranty administrator then can scan the barcode and pull up the data on the part with the repair order to file warranties for all its shops from a central location.

“With the barcode, it is a simple process,” Goodner says.

It’s not unusual for a barcode system to identify warranty parts at the time of the repair order. TMT Software, for example, tells the technician the part is under warranty and automatically prints a barcode label for him to tag to the part, says TMT President Rick Rosenburg. (For more on how fleets use barcodes to increase data entry accuracy, see “Moving parts,” CCJ, July 2004, page 60.)

Expediting claims
When filing warranty claims, fleets typically work directly with a local dealership to file a claim for any vehicle component.

Kenworth dealers, for example, assist fleets with the added documentation needed for a replacement parts warranty claim even if it’s not removed from a Kenworth truck. With adequate volume, the fleet can be set up with the software and security needed to initiate claims electronically, which are passed along to the Kenworth dealer for review and filing, says Steve Wasson, PACCAR parts claims manager in Renton, Wash.

Similarly, fleets that qualify to file warranty claims electronically with International can use Fleet ISIS, International’s electronic service system, says John Fay, International’s director for heavy truck marketing. Fleet ISIS is a Windows-based program that provides fleet technicians with an array of maintenance and warranty information.

Filing warranty claims through the web is not limited to vehicle manufacturers, however. Early this year, Hendrickson International plans to complete a web-based warranty system that will be accessible to both its internal customer service representatives and customer base to allow for both entry and tracking of claims, says Greg Goluska, the company’s director of information.

Moving toward integration
Despite the ability to file warranty claims electronically, fleet managers still must manually enter data from their maintenance systems into websites or paper forms. Integrating fleet maintenance systems directly with suppliers and eliminating the double entry of data would require the adoption of universal data standards for warranty claims processing.

Although the Technology and Maintenance Council developed a recommended practice (RP-807) for a universal warranty claims form in 1999, implementation by manufacturers and suppliers has been slow, says Mark Williams, VMRS manager for TMC. But fleets with the muscle power, such as Southeastern and U.S. Xpress, are helping to speed its adoption.

“We’re not doing electronic data interchange to manufacturers, but we’re moving in that direction,” says Southeastern’s Foster. The company’s programming group now is handling major work on its warranty system, and Foster eventually wants to communicate electronically without human intervention.

U.S. Xpress has integrated its Cetaris system with two OEMs to date, but the carrier’s ultimate goal is to get its suppliers to adopt TMC’s universal claims form. The carrier has informed its suppliers of that goal, Elkins says.

Taken to its logical conclusion – a fully integrated electronic system – warranty handling technology would ensure that fleets receive full benefit from coverage and improve cash flow. But for now, any computer-based tracking should catch potential warranty claims that otherwise would slip through the cracks.

Going beyond warranty
Fleets use failure rates to negotiate discounts

Even if parts are not covered by warranty, using maintenance software to track failures on parts of any value can be powerful tools to negotiate with suppliers, fleet managers say.

New World Van Lines, a 220-truck fleet based in Chicago, handles part failures not covered by warranty by reviewing maintenance records with the supplier. Fleet manager Gerry Walsh recently met with a representative of a vehicle manufacturer to review and evaluate all warranties filed and all claims paid in 2004.

“We had a particular situation with glass breakage that was not covered under warranty, but they said they would make good on them,” Walsh says. The company’s maintenance software system detects if similar replacement parts are used within a certain timeframe. The replacement can be flagged for possibly warranty reimbursement – even if the part is not covered.

David Foster of Southeastern Freight Lines says the company tracks failures for all parts, not just the ones covered by warranty. Typically these parts cost less than $5.

“We know what the failure rates are on those types of parts,” says Foster, director of maintenance for the 2,000-truck carrier. “We’ve negotiated some other incentives from manufacturers to cover it.”

John Boggus of Biagi Bros. says that negotiating with vendors for nonwarranted items pays off. “We do a tremendous amount of business with them,” says Boggus, director of maintenance of the 300-truck carrier based in Napa, Calif. “We have a friendship. Without each other, neither one of us would be in business.”

Boggus says that as long as he has documentation on installation and failure dates, suppliers generally are receptive. “I can go back to the manufacturer and explain, for example, that 15 of these failed in the last 6 months in a truck 3 years old, and then I can negotiate a repair fix.”

The bottom line: Suppliers are willing to work with their customers to address specific problems that fall outside the expectations usually covered by warranty. But suppliers will want to see the kind of evidence supplied by systematic tracking of failures.