ASSOCIATED FOOD SIGNS THIRD-PARTY WARRANTY ADMINISTRATOR

LINDA PURPURA

SALT LAKE CITY -- Associated Food Stores here recently signed a three-year contract with a third-party warranty administrator, hoping to capture savings that are lost when repairs it performs in-house void a product's warranty.

Associated will also use the warranty administrator to more effectively track and use warranties it may not be aware of.

Along with achieving savings, Associated's goal is to increase the amount of warrantied products handled through its own shop by 10% this year, according to Darwin Dewsnup, transportation manager for Associated Food Stores.

While Associated's current shop maintenance system has a component to track warranties, it is not set up to negotiate with manufacturers' representatives for additional warranty repair work at its site, with payment for parts and labor, said Dewsnup.

This is the first time Associated Food Stores is evaluating this area for potential cost savings, and the first time the company is using a third-party warranty administrator.

While unable to quantify exactly how much money is lost when a warranty is voided because Associated has repaired the item itself, Dewsnup said he believes it is potentially a large, untapped area of savings, particularly on small components. Larger components are often repaired on the outside.

"We've lost quite a bit of warranties over the years fixing components to get the trucks on the road," he said. "We don't know what this amount is yet, but we hope to in the future."

Dewsnup said Associated would like the option of repairing some warrantied products on-site, because its goal is to get its trucks back on the road quickly. Sending components out for repair for several days runs counter to a supermarket's transportation needs, he said.

"It's inconvenient for us to bring a windshield wiper motor to the dealer and leave it for two days," explained Dewsnup, noting that the shop's job is to make sure trucks are always ready to be dispatched with loads to stores.

"We can fix a windshield wiper motor in two hours at our shop and have the truck back on the road again," he explained. "But we'll lose that warranty once it's fixed. The warranty administrator will negotiate with the manufacturer for us when this situation arises."

However, obtaining additional repair work on warrantied items will be an uphill battle with manufacturers' representatives, who themselves make money from repairs. Currently, Associated only repairs a very small amount of warrantied products on-site.

Dewsnup said the warranty administrator, J&R Warranty Administrators, Milmay, N.J., has a sizable database -- from Associated's 200 trucks and other fleets in the industry -- of truck components and their history. The warranty administrator said its systems can also provide customers with failure rates on comparative components.

"The database has literally thousands of components," said Dewsnup. "If there is a problem with a non-warrantied part that is happening all over the industry, they can go to the manufacturer and work out the warranty issue."

Dewsnup also said that the warranty administrator works with a number of other companies besides Associated Food Stores, which gives it strength when it goes to a manufacturer on a warranty issue.

"If everyone in the industry is having trouble with a part, they can act as the liaison with the factory to get us a warranty," Dewsnup said. "As a company using 200 trucks, we don't pull as much weight compared to being part of a larger consortium of companies."

Currently the warranty administrator is incorporating information from Associated Food Stores' shop maintenance systems into its database.