On Target

A Day in the Life of a Warranty Administrator
John Sappo, Daubers, Inc.
Allow me to introduce “Sue” to you. She is an all around
nice person. That is, she is known as someone who
never has a bad word for anyone as well as being known
for getting the job done. She has been with our company
for eight years. The story opens as it does each and
every day. Sue arrives to work happy and refreshed, she
sits at her desk and turns on her computer. While it’s
booting up she stops by the coffee pot and enjoys some
lighthearted conversation with her fellow employees.
From my desk, I then see Sue walk slowly back to her
desk and, with that, the transformation begins. With each
step she takes, she is moving slower and slower, her
shoulders start to sink and she starts to shake her head
slowly back and forth. The happy face is gone and the
look of dread has replaced it. As she sits down you can
hear her sigh from across the room. One may think this
person is in charge of death row or maybe the county
morgue. But you would be wrong; she is our company’s
warranty administrator.
This may seem a little over the top but it is based on reality.
Each day Sue is confronted with a different set of policies
for each manufacturer. It is then her responsibility to
make sure the others in our company know the everchanging
policies. As an example, (we will use the manufacturer’s
name as ABC), whenever a warranty service
call is made for ABC, the technician must first receive an
authorization number from ABC’s third-party administrator,
Warranty Central. These types of policies become
overwhelming not only for the technician but also for the
claims processor. Knowing each manufacturer’s nuances
becomes a terrible burden. These policies change constantly
thus resulting in rejections and drag receivables
out 60, 90 and even 120 days. The return of defective
parts in no different. Some manufacturers want only certain
parts returned while others do not require any parts to
be returned. The research to know exactly what to do for
each manufacturer requires time = money.
Each day, every warranty submission is reviewed and,
based on the specific manufacturer’s requirements is
processed and submitted to the factory either online or by
mail. When filed on-line, you at least know within a few
hours that your claim has been rejected for some reason
or another.
As an example of the complexity when filing a warranty
claim, allow me to provide another example. (We will use
the manufacturer’s name as XYZ) XYZ rejected a claim
because when we provided a replacement disposal and
entered the replacement unit part number. We were told
that you must enter the replacement unit part number in
the “notes” filed and specify an authorization number from
the manufacturer’s warranty administrator. This, in turn,
flags the manufacturer to send a no-charge replacement
unit.
In another situation, the same manufacturer, XYZ, rejected
warranty claim for a replacement housing that had
a hole blown through the side, which had been hooked up
by an installer to the incorrect voltage. The reason for
rejection - the part number for the replaced housing is an
“accessory part number” vs. a “replacement part number.”
Please keep in mind that there is no difference in this
manufacturer’s part numbers for accessory parts and replacement
parts. How would one know the difference?
To clarify this we contacted the manufacturer’s warranty
processor about the rejection. We were told that the IT
person established all electronic procedures with the third
party claims processor. We were then forwarded to their
IT person, who, by the way, has nothing to do with warranty
policies. When we asked if this “filing rule” had
been in any written bulletin form to follow, the response
was, “nope, that would be the warranty department’s job.
We just put in what they request.” When we asked the
same question of the warranty department, their response
was “I don’t have time to do that and besides I’m only a
phone call away.” We now not only have to guess what
parts are valid, we now have to call the factory each time
to confirm this. Again, time = money.
Our warranty administrator maintains six-inch, three ring
binders for all manufacturer’s warranty filing procedures
that change very frequently and are very difficult and
costly to implement. Free start-ups, extended warranties,
one-year, two-year or more warranty (special customer
policies) are all very costly to implement accurately and
timely to get reimbursed at half the rate of our nondiscounted
field labor rate.
These are only some of the reasons why warranty rates
are just not keeping up with our field labor costs.
Recently, we conducted research on exactly how much,
per hour, it costs our company to provide a professional
field service technician. Very conservatively, the figure is
$62.00 per hour to employ a two-year technician and approximately
$70.00 per hour to employ a certified senior
field technician. Armed with this information, we approached
this manufacturer and requested an increase in
our warranty rate. The conversation went as follows:
Service Manager: “Is this call all about your warranty
rate? Why don’t you just ask for a raise? The policies
and rates are controlled by corporate and accounting, not
the service department. I don’t even oversee warranty
here anymore. You were eligible for an increase in September
of ‘07. Rate increase requests must be in a letterform
for us to have on-file for our auditors.”
It’s pretty simple—ask and you shall receive. If you don’t
ask, you won’t “automatically” be given an increase. As a
service company, take the time to ask!
NOTE: Jean Choquette was recently quoted from a
manufacturer that only 35% to 40% of ASAs actually do a
formal annual request. Only those get an increase in
most cases. ■
16