Research Triangle Park, N.C. – Fuel pump makers in the USA say unnecessary returns are costing millions in part returns.
“Council members estimate that returns in 2008 cost them $26.6 million based on the manufacturer sales price alone,” said Tom Thompson, chairman of the Fuel Pump Manufacturers Council (FPMC) of the Automotive Aftermarket Suppliers Association (AASA) and product line manager for fuel management systems at Delphi Product & Service Solutions.
“We are seeing a national warranty rate of 6 percent, and we also know that a large number of returns are unnecessary,” Thompson said.
Chris Gardner, vice president of the Automotive Aftermarket Suppliers Association, said the total size of the U.S. market for aftermarket fuel pump parts sales is $451 million.
Gardner and Thompson both said that the fuel pump manufacturers noticed in 2005 that fuel pump returns had risen in recent years. In response to that, AASA formed the Fuel Pump Manufacturers Council to organize the suppliers to study how to deal with the problem.
“The national warranty rate is 6 percent,” Thompson said. “What is an acceptable rate? Think about it. Talk to any manufacturer making parts for any OEM, and the acceptable warranty rate is less than 1 percent of production. Why does it go to 6 percent with the aftermarket?”
Thompson said there are a number of different reasons for unnecessary and unwarranted returns, including misinterpretations of catalogs, returns of other manufacturers or distributors parts, diagnostics, and other ineffective or wrong diagnostic practices. He said he sees this as everybody’s problem and that everybody has a role in the solution.
“Unnecessary returns cost the entire supply chain,” Gardner said. “Shipping and handling costs by jobber stores, WD’s, and manufacturers are outside credits issued by suppliers.” adding that ultimately, the costs are absorbed in higher prices and higher costs of doing business.
Thompson said the goals of the FPMC are simple. Draw attention to the problem and provide solutions to minimize unnecessary returns.
The council’s goal is to reduce overall returns of fuel pumps to 3 percent. How is it doing? “Not enough has been accomplished to deflect the problem,” Thompson said.
“We brought some more awareness to it over the last 12 months, but we need to do a lot more,” he said, adding that the manufacturers are talking about taking more actions and are very much aware of the size of the losses, but the rest of the supply chain needs to be made aware.
With the fuel pump problem shared throughout the supply chain, it is logical that the solutions need to be defused throughout the entire chain as well, Thompson said. Service professionals to parts supplier to the distributors–-all share in the challenge to control costs and to reduce millions of dollars of waste each year, he said.
There are a number of steps that can be taken to reduce unnecessary returns and to control these costs, Thompson said. One step is the awareness campaign conducted by AASA. Another is the FPMC Web site, www.fuelpumpinfo.org.
Other actions included the development and distribution in 2009 of a counter mat for jobber personnel, Thompson said. AASA has conducted shop owner focus groups to better understand how repair professionals manage fuel system jobs and the council is planning a new education and training curriculum for 2010, he said.
FMC members include Robert Bosch, Airtex (UCI), Delphi, ACDelco, Denso, TI Automotive (Walbro), Continental, and Federal-Mogul (Carter). Council members donate time, information and resources for the initiative that is managed by AASA.
Although strict enforcement of warranty policies can reduce returns, Thompson said most businesses at all levels of the supply chain are resistant because of the fear of losing or antagonizing customers. In tough economic times, keeping customers content is more important than ever, he noted.
Thompson said it is not uncommon for companies to receive competition products back in their own boxes. Many times, the other brand is not identified until it comes all the way back to the manufacturer and at that point a great deal of cost has already been expended, he said.
“We need to overcome this resistance at each part of the chain,” he said, “but there are other things we can do that have a greater potential to reduce more of the problem.”
Improved diagnostics is at the top of Thompson’s and the FPMC’s lists. “No question about it,” he said. “We need better upfront diagnostics and repair procedures if we are going to reduce returns. We need to have more on-car testing to determine whether or not the pump has failed prior to its removal or replacement. Technicians need to make the correct diagnosis, the first time and every time.”
Thompson said that use of equipment such as a fuel rail tester from Lincoln Industrial will help. At some member companies, he said that in addition to a visual inspection, returns are tested for flow, pressure, and electrical connectivity.
He said the FPMC is even looking into processes and equipment that would have returned pumps tested at the jobber or distributor for flow, pressure, and electrical connectivity prior to acceptance as a warranty return.
The minimum check for service technicians would be to safely check for flow, pressure, and electrical connectivity while the pump is still on the vehicle, Thompson said. The FPMC has published recommended diagnostic procedures, as well as safety and repair information at www.fuelpumpinfo.org.
Also at the site is information on alternate fuels and their impact on fuel pumps. Installers are advised to be careful to change like parts with like parts, especially with flex-fuel vehicles because the use of ethanol has prompted material changes in not only the fuel pump but also in other areas of the fuel delivery system, Thompson said.
The FPMC is working with ASA, ASE, ASCCA, and other industry groups to increase awareness of the problem and to implement solutions.
In addition, Gardner said the members of the FPMC have been invited to participate in the ASE test question sessions. “Non-legitimate returns affect the entire supply chain by increasing costs and reducing efficiencies,” he said.
“The warranty issue creates problems beyond just the manufacturers,” said Thompson. “We need better on-car diagnostics, and we are working with installers and jobbers to accomplish this. Our goal is to reduce returns to 3 percent or less, and we will remain involved until we reach that goal.”
