The manual handling of warranty claims is about the toughest task fleets face, according to Fleet Management Software (FMS) vendors. Not only is there significant overhead in poring through repair ord...
The manual handling of warranty claims is about the toughest task fleets face, according to Fleet Management Software (FMS) vendors. Not only is there significant overhead in poring through repair orders for warrantable items, up to 70% of warrantable claims simply go unfiled.
“Seventy percent wouldn’t surprise us at all. In addition to the Original Equipment Manufacturer [OEM] warranty, you should be claiming back a minimum of 5% of your replacement parts purchases. There are not enough claims being made,” says Tim Bowes, vice president sales with Richer Systems Group Inc., which sells the enrich Solution FMS.
“We’ve sat in meetings with major fleets that struggle with warranty claims – if it is for less than $50, it is not worth doing manually,” says Ric Bedard, the president of Cetaris, which has a warranty function in its Fleet Assistant FMS.
In the manual scenario, to even know if a unit, say a new truck’s engine, or failed parts are eligible for warranty claims, someone has to study the repair orders for candidate units, parts or labour, cross check them with warranty period information, install dates, vendor and OEM information, and so on. And once claims have been put together and sent off, hopefully they will be complete enough that they will be accepted and refunds issued. Refunds should then be subtracted from the vehicles’ costs to preserve an accurate picture of their life cycle costs.
Multiply this exercise by the hundreds, or hundreds of thousands of repair orders a fleet generates in a year and it quickly becomes evident why warranty claim management is resource-intensive and somewhat hit-and-miss.
With warranty tracking software, almost the whole process is automated once relevant unit and parts information are keyed in; most importantly, the software correlates the hardware that is being repaired, and the labour, with the associated warranty and information that indicates that warranty claims are possible.
This is how the software works: When a fleet receives new trucks or parts, the equipment department keys them into the FMS, defines the warranty codes and the intervals; e.g., three months, six months or a year, and the metric, such as mileage or months. Other information, such as the vendors, dates vehicles go into service, or installation dates and truck mileage for newly-installed parts are also added here.
The parts or units are given Vehicle Maintenance Reporting Standards (VMRS) codes which, when technicians open repair orders and key in VMRS codes for whatever they are working on; e.g., brakes, create the all-important connections between repairs and stored warranty information.
There are many additional shortcuts and tasks warranty software can do. “You can set up a 12-month, 50,000-kilometre warranty, and you can attach that warranty to any parts that have that kind of warranty,” Bowes explains. “This particular warranty needs to be keyed into the program just once, saving time.”
The software also tracks the elapsed time from when parts are installed – an important distinction for parts that have spent time in the stockroom. When Purolator Courier replaced its 10-year old FMS with Fleet Assistant last year, it found this feature useful, says Purolator Courier’s Serge Viola, director of National Fleet. “With the new system we initiate the warranty the day we put it in the vehicle.
“Before, it was very difficult to track. Now the system notes when you buy something and when you start using it. This is all about true warranty time versus “perceived” warranty time, which is the purchase date.”
Policy warranties – the warranties manufacturers offer after official warranty periods have expired – are more easily managed with warranty software that tracks repair history and all of the associated data, such as details of service checks and mileage. “(FMS solution) enrich can identify policy warranties and repair histories, so that it can be demonstrated that the part has a good repair history. It can show fleet-wide patterns of parts failures, which can bolster one’s claim,” Bowes explains.
Fleets are expected to keep removed parts for a certain period of time, but untagged parts are sometimes accidentally tossed out. Warranty programs can print warranty tags, which identify the part number, model, manufacturer, date it was last installed and cost. The same information is always accessible on the computer, and can be printed.
In practice then, when a technician opens a repair order and selects a VMRS code, say 13 for brakes, the warranty software will create a work notice that indicates there is a potential warranty claim.
As Charles Arsenault, president of Arsenault Associates, which sells Dossier, explains, “Whether the technician sees the warranty notice or not, it automatically gets captured inside the warranty reports area. The supervisor or foreman will get a report – daily, weekly, or whatever – of all the potential warranty claims.” These reports can be customized; e.g., restricting which warranty notices – say by unit, shop, truck type, dates or internal or external repairs – are put in a given report.
Is the software worth the cost? “A lot of our customers will be filing significant warranty claims for the first time when they use our software,” says Arsenault.
“Our warranty team is seeing at least twice as many claims as it saw before,” says Viola. Bedard adds, “What our customers tell us is that the bulk of the return on investment provided through the implementation of FMS comes from revenues from warranty claims. The leaders of tomorrow will be driving the revenue side up through warranty claims.”
Pollock National Lease and Rental Inc., installed enrich in 2001. Operations support manager Christine Willett says, “With the mandatory flag the technician cannot close the work order until the claim is sent to the warranty department. With the mandatory claim, our volume of claims has increased by 50%. Our warranty coordinator has been successful in recapturing over 70% of the claims he has remitted since 2001, while adding well over US$1 million to our bottom line.”