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Take The War Out Of Warranty Claims
In my last column (Engine Builder, May, 2009) we discussed the need for responsibility – for you, your family, your business, your employees, your customers, your government and, ultimately, your future.
By Dave Sutton
While it may have been an uncomfortable topic for some, I feel I succeeded with the previous column. Of course there are always those who dispute the need for personal responsibility.
Since we live in a world full of handouts and government programs, why be responsible for yourself? I have a good friend who describes it as the “Big Box Store” mentality. If you don’t like it, return it. It doesn’t matter if you opened it or abused it, they’ll take it back.
But as readers of this magazine certainly understand, this is not a free service. Any business worth a nickel has overhead and that overhead is met through profit.
Unfortunately, I see a fair amount of this return mentality in returns to manufacturers and returns to the W.D. I’m not sure how long any of you have been in the automotive industry, but if you have been around for the 35 years I have, you know that the words “large” and “profits” just aren’t used much anymore, if at all. Since someone will have to take the blame for returns, mis-ships and defective parts, they’re going to cost someone something in the form of a return goods credit or refund.
I’d like to see some of the “blame” taken out of the process, and a little bit more “responsibility” injected. Let’s get it right out on the table. “So you didn’t take a deposit and the customer never came back for that special order part now who is to blame? And since you let it sit on the back shelf for 45 days, and are now just getting around to shipping it back to your supplier, why are you getting uptight about a small return charge? You know, somewhere back in time, you surely read something about getting returns back within 30 days.”
The part puller left his glasses at home Friday, and he pulled a set of .010˝ bearings, when the invoice clearly stated .020˝s. Did you match the part to the invoice when you opened the box on Monday to potentially head off any problems? Did you double-check what you were handing old “Bob Craftsman” over the counter, or did you just assume that the WD, on whom you’ve depended since 1914, got you the correct part again. It never fails, right? There’s never enough time to check it, but there’s always enough time to reorder, ship back and watch for a credit.
Okay, now figure Bob knows nothing but assumes you do. So he tears the bearings out of the package and greases them up and tries unsuccessfully to cram something together. Now he’s upset, and you are the only one he is looking at. Now we have parts that are not resalable and everyone is upset because of a time delay. By God, someone is going to pay!
I sure can’t wait until we fire all those humans and replace them all with machines! Then we’ll never have a wrong part pulled and shipped again, right? Well, at least not if you can key in the part number correctly. Of course THAT would mean you were able to locate the part number from the information the customer supplied you with, information that included two “I thinks” and at least one “What’s that?”
It is 2009, people. Let’s get this VIN number thing down once and for all. No guessing or drawing a playing card or rolling the dice. Someone has to go look at the plate. If you are unsure about which number it is, I have found the gasket manufacturers’ catalogs can be a great source to help you figure it out.
Shipping errors and cancelled parts will happen. Of course we are going to have a few mis-boxed parts. The product manufacturers’ employees will occasionally leave their glasses at home as well. So it’s inevitable we’ll have wrong parts in the pipeline. But let’s try to be responsible here. You know the old saying: “What comes around, goes around?” Here’s another: “Do unto others as you would have them do unto you.”
I can’t tell you how many returned parts I’ve seen that are just junk. Engines bearings just thrown in a box, gasket boxes torn open and parts falling out, or ring sets thrown together and tangled in a bag. If you’re going to treat a return like that, why waste the freight charges to return it? Remember that big stink you made about the return policy and restocking fee when your customer tried to return parts to you? That was when the shoe was on the other foot. Now it is your turn to be compassionate and thoughtful. It takes just a minute to protect those open, mis-boxed parts before you ship them back for credit. It doesn’t feel as good when the table is turned.
Like it or not, there is a “War” in warranty. Nothing can bring out bad feelings faster than returned parts. But these are only small skirmishes. The big guns don’t come out until the dreaded “Labor Claim” is launched.
It seems like labor claims are often just a chance for both sides to gear up for the big fight over who is responsible. However, here is a little lesson I learned from a good doctor: everyone is responsible 100 percent! Now, if you’re thinking this is some kind of new math, and I obviously mean something like 50% each, stay with me. I mean we are each responsible for 100 percent of whatever it is that we are doing. If we get help along the way, great, but we can’t expect it, demand it or change someone else’s opinion on the matter.
If you or your employee improperly machine a casting or part, there is no question about responsibility: it’s obviously yours as the owner of the business. Sure, you could worry about your ego and deny any fault, but you have to live with yourself on these things. It is much better to step up, take the hit and get the job fixed and done right and move on. The worst-case scenario is it will cost you a few hours time and you’ll receive a small lesson on how not to do things. It actually sounds pretty valuable in the long term.
But what if we believe the fault lies with a defective part? This is where it gets very tricky. Unfortunately, the usual attitude that comes with a claim that a part failed is “Someone is going to pay! Everyone get out your shovel because there are trenches to dig. We are drawing the line right here!”
I heard about a customer who called his engine kit warehouse and asked, “What’s your warranty?” The truthful answer should have been, “None! I didn’t make the parts. But let’s take a look at each product manufacturers’ printed warranty inside their catalog.” But many customers are too delicate for such truthful answers. These are the ones I fear. They are usually looking for an out or someone else to blame for his or her own mistakes.
And what’s the poor guy on the other end of the phone supposed to do anyway? You might as well bring up a claim with the overnight delivery driver. He probably handled the part more than the guy at the warehouse.
Kidding aside, why do we start blaming in the first place? Because this can be an expensive business. Labor costs are sky high and if your customer the repair shop has to pull an engine or do a repair on a rebuilt engine, for example, they’ll want to get paid.
But just because someone starts blaming first, does not automatically make them the squeaky wheel that will get the grease, or in this case, cash. Even if you can prove you have a defective part (and in most cases this is pretty tough), you better check that manufacturer’s warranty in its catalog. Many refuse to do anymore than replace the failed parts and possibly some related parts, such as gaskets. Period.
In 35 years, I have seen very few legitimately, unquestionably failed parts due to a manufacturing error. And most of those should have been caught by the installer and never installed in the first place. And, frankly, just because YOU offer a 3-year or 36,000 mile warranty, does not mean that the parts suppliers do.
So you have a defective part and you feel you’ve done your jobs correctly and you can find no problems related to the install, what next? I say, “Build your case.” Let’s face it, manufacturers have many experienced engineers on staff and they are rarely credited with the billions of “perfect” parts they produce. We take these for granted. But find that one bad one and some folks look for a way to get paid twice for this job. That will save the economy!
These engineer types know they are producing good parts and it might take some convincing that although it looked good when it went in, you found their weak link and it didn’t fail until 89 days into the warranty period.
This is how I build a case for labor. First, do a thorough examination of the damaged engine. There are many “Which came first, the chicken or the egg?” scenarios which should be checked. I had a customer who thought a camshaft had broken in half, when he completely missed the broken rod swinging in the block. How many defective camshafts are going flat today? Or, are they really damaged by defective lifters? Or is it the oil? Be smart and eliminate all other possible failures or you don’t have a case.
Next, find out if the manufacturer requires claims to be on a particular claim form. This saves time for everyone. Usually these forms ask for a lot of specific information which you’ll be able to provide if you collect all the related documentation. If I’m handling your claim, I want the original engine rebuild work order, installation work order if separate, all new parts receipts, including the alleged defective part purchase and the receipt for the replacement pieces and any related receipt including tow bills. You are building a paper trail for the manufacturer to see. Start with why the motor was replaced or rebuilt in the first place. Did the same part fail again or was a related part to blame?
Understanding labor costs is an important part of this process. No one pays full profitable labor costs on a comeback or warranty claim. I am sorry, but plan on some comebacks and list them under “costs of doing business.” You’ll be lucky to get $35-40 per hour and book time from any part manufacturer, so in your claim, bill it this way. Never bill the highest possible costs, with the idea of taking what you can get. This is ludicrous. Mark my words, you will definitely get a rejection letter.
Put all this documentation together so the part manufacturer can see that the job was or was not done completely and correctly. What else was replaced or not replaced that may have resulted in this premature failure? They can see the level of professionalism of your business if you present a professional-looking, well-documented claim.
And please, never send a part for inspection, then try to launch a claim. If you are looking for some kind of reimbursement for parts and labor, send it with the part the first time. Don’t try to get someone to imply some kind of fault, than try to collect the national debt from this implication. It will never happen.
Also, just because you believe this part was defective, does not make it so. You may get a very good explanation back about why it was not or could not be as a result of what you claim. You may also get a form letter back that looks just like the claim you did 2 years ago. Either way, be prepared to receive little or nothing for your trouble.
You will be happier in the long run. I say this, because like I said earlier, it is very hard to prove a part is defective, without any blame to the installer, after it has been run and a failure has occurred inside an engine. If you get any compensation, it will probably come as goodwill, not an admission of fault. But take it anyway.
If you don’t like the idea of little or no help from a manufacturer on a labor claim, let’s consider an alternative. You can certainly purchase warranties, as a kind of insurance from many distributors (not the manufacturers) these days. Understand that they do come with a price. Many have limitations of coverage and can be different for professional vs. do-it-yourselfer installations. These can be a good value, if you plan your pricing to include the cost of the warranty and adopt it into your entire program and sales pitch. If you don’t, and if you cherry pick jobs because you see possible problems and you want to make them someone else’s problem, beware. You are going to find you have few partners out there at crunch time, if you are only covering your own butt.
What if you have no warranty to purchase or this was just a repair? Many parts distributors, under the heading of “goodwill,” will offer a compromise. At least one manufacturer used to have an unpublished “Goof Proof warranty.”
Simply stated, if there was no claim for labor reimbursement, they would cover the parts needed at no cost. This means the machine shop covered their own labor costs and they were also left to negotiate any labor with the installer. But this eliminates any blame and everyone takes some responsibility and gets the customers car back on the road.
I hope these ideas help you to see another way of looking at warranty. Now is not the time to draw lines in the sand and dare your supplier to not take care of the problem. It is not time to declare, “War.” It’s time to look at the problem realistically, come up with the most plausible explanation of the event or problem, and try to find a way to take care of the problem with minimal expense to all parties. Let us not forget whom the last person was who saw and handled said part before it was installed.
This takes me back to the first article in this series. Remember the part where we discussed making a profit from your sales? A strong, profitable business can weather a comeback or two over time. But these are expensive problems for those who have no profits to pay for business expenses, yet alone a war.
Dave Sutton has more than 33 years of automotive aftermarket experience, starting with his days as a jobber store stock clerk and driver. He currently operates a manufacturer’s rep agency in Minneapolis, MN, and is a District Sales manager for Sterling Bearing. For information about developing your own sales plan, email him at email@example.com.