Replace or Repair? Five Tips for Lowering Costs and Beating OEM Warranty Scams

Despite these bumpy economic times, some manufacturers are operating at full speed. So when a control board or motor in an assembly line robot malfunctions, plant managers must take action. But not until they have answered one all-important question: Replace or repair?

The answer to this question may seem like a no-brainer, especially when budgets and revenues are tight. Yet industry experts say many corporations that rely on electronic, hydraulic and precision mechanical components often needlessly replace expensive parts because they are in the dark about OEM warranty details.

Or they simply have not taken the time to consider the advantages of repair: lower annual costs, reduced inventory, and even a Green, or environmental, dividend: The carbon footprint for a repair is tiny compared to making a new part.

What follows are Five Tips designed to help manufacturers save money, shrink carbon footprints and improve production efficiency.

1) Reduce Costs

Plant managers in the auto industry know that when a pilot valve breaks down they will pay about $6,165 to replace it. Yet a survey reveals that by outsourcing repairs to a qualified firm, the valve can be repaired – and possibly made better than new – at a cost of about $760. That’s a mere 12 percent of the price for a new unit.

The cost to replace a broken spindle motor in that same automotive plant will cost about $18,000. The price to repair it? A little under $5,000 – or 73 percent less than the expenditure for a new piece.

Some manufacturers are enjoying enormous savings simply by contracting with expert repair firms, such as PSI Repair Services, Inc. of Livonia, Michigan. Maybe leaders in various manufacturing arenas don’t toot that horn because they don’t want their competitors to enjoy the same savings. That’s one way to beat the competition – spend less. Yet in good times or bad, who can afford to ignore thrifty solutions to ongoing maintenance needs?

Savings aren’t merely a result of paying less for repairs. Plant managers say their assembly lines run more efficiently now that the Livonia-based firm has assigned an in-house account representative to the site. The rep is not there to sell services. Due to the enormous volume and range of the contractor’s repair experience – electronics, process instrumentation, hydraulics, motors, ballscrews and more – the rep is on site to monitor repair needs and identify flaws in production lines. When problems arise, the firm alerts the clients to the specific weakness and then offers a permanent cost-saving solution. Operation costs drop when equipment performance improves.

2) Go Green or Go Broke

Bob Phillips, Vice President of the 40-year-old Michigan firm, says the overall efficiency of a manufacturing plant is an outcome that should not be taken lightly. It not only saves money but helps reduce global pollution. “When you look at what it takes to manufacture a new robot, you’ve got to realize companies from all over the world are contributing elements to the project and each is putting out some kind of pollutant. Yet if we’re repairing a robot, the carbon footprint is virtually nil. We don’t want to just fix things. We’d like to help fix the planet.”

Solving engineering problems and manufacturing issues is also a Green endeavor. For example, an assembly line at a local company was continually going down and operating at only 65 percent capacity. By seeing the big picture and going to the heart of the matter – not just repairing one malfunctioning part – PSI was able to bring productivity up to 90 percent. Efficient plants use less energy. Go Green and your company will earn a reputation for being a good neighbor.

The company even offers a website where customers can buy repairs online, ask questions, get real-time answers, and generally reduce paper flow at http://www.psirepair.com/.

3) Outsource to Avoid Warranty Chaos

Plant managers know that the cost of doing business – big business – means timely purchases of new equipment and parts. On the other hand, to keep the factory running full time, managers must respond to endless equipment requests from assembly-line workers. Replace or repair? Under these circumstances, tracking and enforcing warranties from a wide variety of OEMs is virtually impossible.

To make matters worse, some OEMs ignore warranties and convince clients that it is easier to simply buy new components. After all, their business model champions manufacturing and selling, not repairs. Another dark secret is that some OEMs may replace a broken part with a new unit and tell the client it was repaired – and then invoice for the new and more expensive part.

Get help coordinating all warranty data with an on-site repair account representative rep. When a breakdown occurs, the manager notifies the account representative, who then weighs the replace versus repair issue by tracking the part’s warranty information, all of which should be available in your company’s data base. This process is a bit like playing detective. But the rep not only gleans details of the warranty agreement, this process also makes it possible to identify “repeat offenders.” That is, parts that have a history of malfunction and may be the root cause of a larger problem. Such insights help fulfill the ultimate goal: keep factories running efficiently.

4) Improve Warranty with Repair

If the answer to the R & R question is repair, and your repair service provider is PSI, all parts are transported to a 120,000- square-foot facility in Livonia. This state-of-the-art environment operates entirely under lean manufacturing principles and is ISO 9001 and 9002 certified. Each piece is bar-coded and tracked through the entire process so that a customer can be updated on the status of a job at any time.

Phillips, who touts his firm as the largest industrial repair company in the world, takes pride in reducing processes to an absolute minimum of movement, with no wasted energy or time. But there is another benefit: Depending on the part it is repairing, the company offers a 12 month warranty, a far cry from the standard 90-day warranty offered by most OEMs. This is possible because often a repaired part is made stronger than the original.

5) When to Buy New

If a valve, motor or other electronic, hydraulic or precision mechanical component cannot be fixed, who can you trust to provide a frank assessment? An innovative one-stop industrial repair company that does not stand to gain by making the sale. Most OEMs do not match this description. Instead, seek a firm that strives to earn your trust, not just your business, and has saved other manufacturers money by making their assembly lines more efficient, Green and profitable.