Supplier Recovery by Public Transportation Operators

With nearly 60 million bus trips and 20 million by train every year, the METRO vehicles in Harris County, known collectively as Houston METRO, are frequently on the roads and rails. Maintenance and repairs are everyday activities for the company, which expects to generate revenues of $759 million this year.

For example, if a bus transmission must be replaced, the mechanic has to know whether this component is still covered by warranty or guarantee and therefore has to be replaced by the supplier. “In this case, the component usually has to be sent to the supplier for inspection,” explains Clemens Paulus from SAP Consulting. If this is not done, the replacement claim is rejected by the supplier.

Another example: A vehicle’s engine had to be replaced a while ago. A new engine was used in the vehicle since then. “That means the warranty and guarantee clock has been reset,” says Paulus. “Until now, these two scenarios needed significant manual effort to manage, using Excel or proprietary software developments.”

Guarantees and Warranties: Add-On Solution for Supplier Recovery

This February, Houston METRO began using a new solution. It replaces the customer’s former custom-built solution and enhances the SAP Warranty Management application with necessary functions. Before a mechanic starts working on a vehicle, they can now instantly see whether a bus or one of its components are still covered by guarantee or warranty or if they have already been replaced. The solution makes it possible to check objects and components in the overall context, such as the vehicle together with a specific component.

While the standard solution supports master warranties for individual components and objects, it cannot handle the validation of their interrelationships. “To do this, we created hierarchies and a new structure,” says Paulus. The hierarchy of functional locations is shown in a virtual model with fixed components like wind turbines and power plants, and shown like that of mobile equipment, such as buses or an engine. If a part is replaced, it is enough to enter the new serial number in the bill of material. The system is then up-to-date for the next maintenance or damage case.

Benefits of the solution include:

  • Quick overview of the components and objects for which supplier recovery is possible and compensation or replacement parts can be demanded.
  • Simplified procedure for starting recovery processes; requests and claims to suppliers can be created automatically.
  • Mechanics assigned to maintenance or repair work can quickly find out whether individual parts are still under warranty or guarantee.

Houston METRO: Solution Developed In-House Already Replaced

“Before the project, our Bus Operations department relied on a heavily customized, fragmented solution,” says Gretchen LeGalley from Houston METRO. Because of its inflexibility and complexity, the custom solution could not be leveraged for other newer maintenance and repair lines of business.

Last April, Houston METRO decided to replace its custom solution for warranty handling with a standard solution from SAP. By late 2018, the solution was implemented, and since February 2019 it is inuse by the Bus Operations department. “The METRO IT Applications support team has plans to extend the solution to Rail Operations for light rail vehicles (LRV) next,” says Sunil Pendse, IT manager at Houston METRO.

METRO anticipates the solution will help to improve cost recovery, reduce repair costs, and provide transparency to the warranty claim process. “In the past, claims processing and recovery were difficult because parts of the process were manual and cumbersome,” explains LeGalley. Today, the company can create requests for cost reimbursement and automatically send them to suppliers from repairs. It is also possible to check processing statuses at any time.

Further Potential for Mechanical Engineering

Transportation operators like Houston METRO are not the only ones who can benefit from supplier recovery. “All companies that use complex machinery and systems can use it,” says Paulus.

Power plants, oil refineries, and external service providers that maintain wind turbines are just a few examples of potential users. Due to his contact with customers, Paulus understands that potential recovery claims often are not even considered. “That’s just throwing money away.”