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Collaborating with the Enemy

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The high level of warranty returns in the industry is certainly one of our enemies. It appears to me, somewhat ironically, that an opportunity for true collaboration may exist within this industry-wide problem.

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This marketing "tool" (some might call it "sham") just might offer enough similar circumstances and ill-fated characteristics to entice parts manufacturers and their re-selling customers to implement policies and procedures in a real, fully functional collaborative effort.

Most are aware of our inefficient inventory management challenge. This challenge is fed by the painstaking process of supporting warranties and product claims. Recently, Counterman managing editor Mike Freeze penned an R.L. Polk Ask the Industry column for our sister e-publication aftermarketNews, in which a Michigan store owner said, with regard to lifetime warranties, "I think the manufacturers have got themselves in a dilemma…they don’t know how to save face. I think it’s the manufacturers’ problem."

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Therein lies the challenge, but also the opportunity. Parts manufacturing category leaders must be just that: leaders. They must initiate the collaboration process by which various aspects of the warranty process become standard. Recently, the Center for Automotive Research (CAR) teamed up with Microsoft to conduct a detailed study of the warranty processing system for car manufacturers and their authorized dealers. As you might guess, the study "pinpointed a lack of standardization in the way warranties are handled…which leads to unnecessary costs and inaccurate information." Sound familiar?

Parts manufacturers have a difficult time collaborating among themselves. R&D costs aren’t shared (enough), information technologies aren’t shared (enough), manufacturing costs aren’t shared (enough) and even part numbering systems are contested. However, warranty processing may be an area where manufacturers can come together for the common good of the industry as well as their own balance sheets. Heck, I’ll even host the party!

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The CAR study uncovered a high degree of variation in the way warranty data is collected and reported. This leads to inefficiencies throughout the system, along with higher costs for warranty repairs and a failure to capitalize on information obtained from these repairs to prevent future component failures. Another finding pointed to the challenge of not having enough "good" mechanics, which hampers accurate diagnosis and failure monitoring, both critical elements as the first line of defense in identifying possible warranty problems.

The independent aftermarket has a similar set of circumstances regarding "good" mechanics – all the more reason for parts manufacturers to collaborate on warranty claim processing. Now that information technology and efficient, web-based solutions are being utilized by repair shops, parts manufacturers must act now to streamline warranty processing. Across all industries, warranties have been used as a marketing tool to enhance consumer confidence and increase sales. But today, because of certain, unique circumstances within our market, this marketing tool needs a serious makeover.

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All marketing, including warranties, must be efficiently implemented. Then, all marketing must work to build sales and profits. When marketing campaigns have run their course and are no longer delivering these results, they are either discontinued or entirely re-vamped. Warranties are not immune to this process.

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