Author - Robert Coolidge

This is the time of year when we celebrate the freedoms and joy of being an American. Of course one of the cornerstones of living in an open society is our free enterprise system. Anyone can operate a business and sell products or services at a competitive price for profit.

In a perfect world, this system would always be a win-win situation. Unfortunately, business is never perfect, and there is always a chance someone will end up on the short end of the stick. This is particularly true for those involved in supporting accidental damage claims for electronics, such as laptops and gaming devices.

As a competitive selling point, some manufacturers, retailers and extended warranty companies offer Accidental Damage Coverage (ADC) for laptops at very attractive
pricing for up to three years.  Laptop repair companies contract to perform warranty repairs, many times at flat rates that barely cover their costs. The pressure is on them to control costs while meeting aggressive turn times and maintaining some measure of profitability.

With ADC comprising everything from drops/falls/collisions to liquid spilled on a unit, the potential for repair volume is immense. The potential for fraud is also great.
As a three-year warranty is close to expiring, it would be awfully tempting to drop a laptop and game the warranty system to upgrade to a newer model.

Under the current scenario, consumers are winning with expansive coverage at low cost. ADC warranty issuers are winning by diverting risk to others. At some point, support organizations may find this work to be cost-prohibitive with all risk and little to no upside.  If warranty issuers opt not to adopt a more cost-effective repair model, they could be forced to replace more units.  In the end, the retailers, warranty providers and support companies must all make sound and responsible offerings and business decisions that enable everyone to be successful.

For the system to work fairly, warranty risk has to be spread evenly. Pricing for repair contracts should be carefully evaluated to ensure service companies are justly compensated and are not assuming the brunt of the risk.  It’s the responsible thing to do and the right thing to do to help all parties end up on the winning side.

One area that OEMs are starting to scrutinize is their service parts cost. In an attempt to increase revenue, some are deciding to manage parts on their own and are even bypassing their parts distribution networks to sell direct to the market in a bid to capture additional margin. But with high operational costs and other demanding factors associated with parts distribution, squeezing out that little bit of extra margin is not likely to be worth it in the long run.

Other manufacturers have opted to outsource parts supply chain management to distributors like Encompass. While we obviously have a vested interest in encouraging the outsourcing route, it actually does make the most economical sense for OEMs. Beyond that, it helps improve aftermarket support for their products – increasing customer satisfaction – and frees them to focus on product development in a highly-competitive space.

Encompass currently manages service parts for several OEMs in the consumer electronics, appliance and HVAC industries. Distributors can offer complete inventory ownership service, which eliminates the need of OEMs to manage forecasting and obsolescence – including last time buys and excessive minimum order quantities. In every case, Encompass has significantly increased parts availability and decreased back orders, turnaround times and product exchanges for our manufacturer clients through highly-effective forecasting and procurement, while reducing parts pricing in the market.

Distributors also can integrate with claims management systems to provide an extra layer of auditing and to control parts costs for in-warranty repairs. This ensures parts ordered match the product model being repaired and do not exceed the product value. Additionally, the process prevents non-warranty accessories like remote controls from being added to a claim.

 Manufacturers may look to parts for revenue generation, but at the end of the day, they are likely to find it’s not the cash cow they envision and their brand loyalty could be at stake.

To hear more about Encompass’ parts supply chain management services or obtain a comprehensive free analysis of the overall cost savings benefit, please contact me directly: rcoolidge@encompass.com or 800.432.8542.

Amid the hectic pace of keeping a business running smoothly, it’s very easy to sometimes overlook the customer experience. But without satisfied customers, a business cannot survive – at least not for very long or very successfully.

In this age of pervasive social media, one negative online posting can cripple a business. Unhappy customers have the entire Worldwide Web at their fingertips to air complaints regardless of their validity. There is a whole cottage industry now devoted to online “reputation management” to help businesses monitor social media mentions. But that’s after the fact.

The most effective way to manage your reputation is to be proactive and head off issues before they become an everlasting mark in cyberspace. And the easiest way to do that is by simply asking your customers how you’re doing and what you could be doing better. Encompass surveys our customers annually, and we pore over the feedback to implement changes in response to what our customers tell us they need. This year we are working on everything from improving part descriptions on the website to offering more appliance model exploded views.

If you aren’t currently surveying your own customers, you’re missing a critical opportunity to enhance your service. Use something as easy as a printed form or a little more advanced like an online survey – there are numerous low cost or even free web-based options. Keep it simple, short and focused on information that would provide the most helpful insight into your customers and their needs from you. Be sure to include plenty of opportunity for customers to provide commentary. Here are some helpful links to developing your own customer survey:

While regularly surveying customers is important, you should also offer other avenues for feedback so you can take more immediate action.  In more cases than not, customers just want to be heard. Beyond our annual survey, we have dedicated email addresses for customers to voice suggestions and concerns: suggestions@encompass.com, customerservice@encompass.com and customercare@encompass.com. We also maintain and monitor a company Facebook page, which provides an open forum for customers to ask for parts information, register a service complaint or post comments about their positive experiences with us – something we strive for every day.

Listen to your customers and be responsive to their needs – or someone else will.

As failure rates and product pricing continue plummeting on today’s most popular gadgets, diversification has become a consistent mantra in the consumer electronics professional service industry. With technology and trends constantly changing, diversifying has become vital to business success and profitability. No company can afford to remain one-dimensional and complacent.

A few years ago, Apple dropped “Computer” from its corporate name to become Apple, Inc. The Weather Channel Companies, parent to the Weather Channel, is now simply The Weather Company.  These name changes reflected the aggressive steps both companies have taken to evolve their product and service offerings from their initial beginnings.

The Weather Company is now much more than a television channel – it offers apps, provides consultation to retailers on weather-related buying trends and even manages a robust consumer website. Consequently, most people today probably associate Apple more with the iPhone and other mobile devices rather than the personal computers that launched the brand.

Similarly, Encompass is moving away from our divisional names “Encompass Parts Distribution” and  “Encompass Service Solutions” to emphasize our corporate name “Encompass Supply Chain Solutions.” We no longer consider ourselves just a parts distributor or a depot board repair company; we offer too wide a variety of value-added services and product mix to be pigeon holed.  One of our fastest growing product segments is parts and accessories for high end coffee makers and espresso machines – quite a departure for a 60-year-old company raised on consumer electronics.

Business leaders must seek out and be open to new opportunities wherever they may lie – opportunities they may once have never considered.  Whether it’s a product adjacency or a completely new service solution, consider how your business’ core competencies can be leveraged to expand into new territory.

Always remember that one trick ponies are eventually put out to pasture.

Our core business is supplying manufacturer original parts, so offering an alternative may seem like a conflict. But we see reclaimed parts as an opportunity for OEMs to recycle their parts and reduce warranty costs, excess and obsolete inventory
and product replacement. Green Choice Parts can additionally offer OEMs a solution to competing parts currently in the market.

Supplementing the supply chain is the key purpose of reclaimed parts. When OEM parts are not available to repair  products, OEMs, retailers and warranty companies are forced to provide refunds or replacement units to end users. Reclaimed parts extend the life of products, while protecting OEM brand value and lowering costs. OEMs are often the primary customers for reclaimed parts for this reason.

Encompass sources reclaimed parts from a number of channels, including major retailers with whom we partner to market parts as part of a revenue sharing arrangement. We also are increasingly working to tear down units ourselves to further increase parts availability. Quality and performance are guaranteed with a 180-day warranty.

We are excited to be doing our part to provide eco-friendly solutions to e-waste, while serving as a much needed source of cost-effective, hard-to-find replacement parts.

For more information on the Green Choice Parts program or partnering with Encompass, please contact Jim Scarff at 800.432.8542, ext. 1228 or jscarff@encompass.com.

As manufacturers continue meeting consumer demand for newer, more awe-inspiring electronics featuring the latest technology, the question remains what to do with the last generation of products that have lost their wow factor.  With electronics at price points attainable by more consumers than ever – combined with our throw-away society – millions of tons of toxic electronics are discarded in landfills annually.

While the federal government has yet to enact any e-recycling mandates, it has designated as “hazardous” various materials that make up electronic devices, such as CRTs. A hazardous designation makes these materials subject to special, more expensive and rigorous handling procedures under the federal Resource Conservation and Recovery Act (RCRA). To avoid or mitigate these regulations, electronics must be reused or recycled.

However, 25 states have implemented some type of regulation that governs the disposal of e-waste. According to the Environmental Protection Agency, state e-waste regulations can be stricter than the federal requirements. Some states enforce outright bans on certain electronics from being disposed in landfills, while others impose annual impact fees on manufacturers and/or require manufacturers and even retailers to assist in recycling efforts.

E-waste is inevitably going to become a larger and larger concern and focal point for legislation. Environmental activists will only get louder as the problem continues to grow. Although declaring a product “beyond economical repair” is all too common in electronics servicing today, that bar is likely to drop a lot lower in the future.  Repairing a product even when the cost is more than replacing it may one day become a necessity due to high disposal fees and cumbersome regulations. Recycling electronic components to use in repairs will also naturally become more standard.

While many within the electronics supply chain have already taken aggressive steps to effectively limit e-waste impact and become green corporate citizens, we will never be able to let up on the gas. Extending the life of electronics through repair service or parts harvesting will most certainly be a more crucial mainstay of the industry in years to come.

But with Consumer Electronics repair shops closing because they can’t turn a profit or their owners are retiring, what does the future hold? The Consumer Electronics service industry outlook may not actually be as bleak as it appears, but it also may not be able to hang on long enough to see the tide turn.

If manufacturers don’t begin to better support their service networks today, they may be in for a tougher time dealing with end-of-life electronics later as e-waste regulations presumably tighten. As long as the next generation of electronics keeps flooding our markets, we’re going to need eco-friendly disposition of unwanted devices. Repairing, reusing or recycling for parts remain the most viable options to keep old electronics from becoming trash – and ample Consumer Electronics aftermarket support businesses will be needed to handle the continual influx.

While parts distribution may be perceived as somewhat of a “low-tech” business, the reality is that many suppliers do employ valuable functionality in their operations. However, not all the available tools are being used by customers.

One such tool is SOAP integration. SOAP – or Simple Object Access Protocol – is a way for a program running in one kind of operating system to communicate with a program in the same or another kind of operating system by using the web’s Hypertext Transfer Protocol (HTTP) and its Extensible Markup Language (XML) as the mechanisms for information exchange. Think of it as sort of a translator that is able to exchange data between disparate systems.  Encompass offers web services description language (WSDL) files for all of our services.  This provides a machine-readable description of how the service can be called, what parameters it expects, and what data structures it returns.  Most modern programming languages can use this to automatically build a basic call to the web service.

In parts distribution, suppliers that can offer their customers SOAP connectivity are able to provide instant access to real-time information on inventory and pricing, order placement, returns services and more. This dynamic interface is especially helpful in ensuring up-to-the-minute pricing, which can fluctuate throughout the day.  Another key benefit is having immediate visibility to available parts and the ability to place an order right then and there – locking in pricing before it changes and claiming a part before it is sold to someone else.

The alternative is to receive inventory and price files from a distributor a few times a day like many customers do.  However, after the file is sent, pricing can change and parts previously displayed as available could be sold. File uploads just can’t provide the same reliable information as real-time SOAP interfacing.

Encompass offers SOAP service to our customers, which enables customers to:

• Search by model
• View a model parts list
• Obtain parts information
• Create orders
• Check order status
• Get invoice information
• Cancel an order
• Generate a return request

This allows Encompass’ data and services to be embedded in your business applications as you choose.  There are some development time and costs involved, but the instantaneous benefits could be immense depending on your organization’s parts volume.

If you’re interested in exploring SOAP connectivity with Encompass, please contact Brent Blair, Vice President of IT, at 800.432.8542, ext. 1331 or visit encompassparts.com/soap for a complete list of tags and available code.

This year’s Consumer Electronics Show continued showcasing products around the theme of “connected convenience” with everything from refrigerators to door locks featuring smart capabilities. The major manufacturers are ramping up efforts to capture more wallet share by owning the home. Ideally, they want their brands in the living room, kitchen and laundry room, and even in the hands (or wrists) of consumers on the go.

Wearable technology was on prominent display at CES with an entire space devoted to devices that track sleep patterns, fitness levels and just about anything else emanating from the human body. LG and Samsung unveiled an array of innovative home appliance products, with Haier fast on their heels. Far from being on the decline, the television industry proved it is evolving to create new and exciting technology. Curved, translucent, and 4K were the trend from both established and emerging television manufacturers.

It won’t be long before we see drastic changes in aftermarket support. With so much new technology being built into the household, today’s professional service providers are
going to need much more specialized training to take advantage of future opportunities among multiple product categories. This comes at a time when technical training is not nearly as common as it once was – when was the last time your local high school offered a “shop” class?

As many trade associations already are preaching, technicians can no longer rely on a finite skill set. They must be able to tackle repairs for a wide variety of products and then also consider offering other valued-added services to remain viable.  With technical schools such as DeVry and the U.S. military serving as the primary sources of training, the
industry should look for new ways to make this career path more desirable.

With a dearth of skilled labor and training opportunities, aftermarket service providers like parts distributors are going to need to step up efforts to assist repair techs in the field with everything from triage for trip avoidance to in-home troubleshooting to identifying lower cost compatible parts for post-warranty repairs.  Although this may not be a primary source of revenue or profitability, it will be necessary to
provide these services to remain relevant. While manufacturers do offer great training opportunities for in-warranty service networks, that support should also be available after the warranty period expires. The risk of losing a customer to a competitor is never greater than when that customer experiences product service issues.

Encompass has been working hard to contribute to the success of our tech customers. We’ve got a full-time photographer on staff who takes hundreds of part pictures a day in our warehouse to get loaded to our e-commerce website. We know that pictures help eliminate errors of misidentifying parts and assists with first-time repairs. We are working with companies such as Sony, Panasonic, Samsung, and Haier to capture more repair data and technical notes for field support.  We also post service manuals and provide monthly consumer electronics tech tips to deliver as much valuable information as we can. Encompass will continue looking for new and better ways to support our tech customers.

As product technology continues evolving, the aftermarket support chain must adapt and stay ahead of the curve with information sharing and improved skill sets.

In business, we all strive to be highly efficient and productive, but how do we know if we are actually achieving these goals? We really can’t know – unless we employ comprehensive performance tracking processes.

In distribution, we are measured on how quickly we can accurately deliver goods to the client. This can be tracked through the number of lines picked and packages shipped within a given timeframe. Data for warehouse performance tracking is typically gathered through computer monitoring and RF (radio frequency) guns, which are used to store electronic barcode information from packaging, labels and bin ID tags. With electronic tools, each core task in the warehouse – such as picking, labeling, packing and shipping – can be monitored in real time for speed and accuracy at both the department and individual employee level.

With this type of visibility, warehouse managers can easily identify specific areas and processes that need improvement as opposed to an educated guess, which could ultimately lead to ineffective changes. Managers can also use performance data to adjust scheduling and ensure staffing levels are sufficient at peak times.   All of this information can be used to maximize efficiency and control costs, while pinpointing top achievers and possible weak links.

Employee incentive programs and evaluations can also be driven off this analysis.  At Encompass, we use television monitors to post performance data for each task so employees know how they’re doing compared to co-workers.   This creates a competitive environment in which we reward those who exceed hourly goals in stocking, picking and packing each month.  Baseline goals are set based on historical data. It’s a great way to keep our team from getting complacent and provides a little friendly competition, while also helping to improve our operations.

No matter what role your business plays in the supply chain, it is essential to have clear visibility into the performance of all aspects of your operation.  Establish specific expectations and metrics to analyze execution and then plan enhancements. And you don’t need to pay an expensive consultant or earn an MBA to measure and improve your operation.  Local schools often provide process improvement training like lean Six Sigma, which can also be taken online. It’s well worth the investment, time and effort to educate your team on best practices to enhance your operations and track the outcome.

In last month’s blog, I talked a lot about the importance of superior customer service. Recently, I re-read the always insightful book, How to Win Friends and Influence People by Dale Carnegie. The section “Win People to Your Way of Thinking” really resonated with me from a service communications perspective. Here are some particularly significant points:

· The only way to get the best of an argument is to avoid it.

· Show respect for the other person’s opinion. Never say, “you’re wrong.”

· If you are wrong, admit it quickly and emphatically.

· Begin in a friendly way.

· Get the other person saying, “yes, yes” immediately.

· Let the other person do a great deal of the talking.

· Let the other person feel that the idea is his or hers.

· Try honestly to see things from the other person’s point of view.

· Be sympathetic with the other person’s ideas and desires.

Think about these ideas the next time you’re in a difficult situation and trying to please a customer. It could mean the difference between that customer doing business with you again…or your competitor.

Encompass wishes everyone a very happy, healthy and prosperous 2013!