CEO's Blog

Encompass Resolutions for 2017

Like the next hole on a golf course, a new year always offers the chance to start fresh with a renewed perspective on your business. It’s a time to evaluate the year gone by and assess what went right and what didn’t go so well. You now have another 365 days to try new ideas, implement new programs and go after new business.

        Robert Coolidge
       President & CEO

While Encompass is set to enter our 64th year of operations, we are challenging ourselves to think like a startup and continue evolving our business. Encompass has long understood that just being a consumer electronics parts distributor has little value to the market. As such, here is a sampling of our business resolutions for the coming year:

  • Training & Development – Realizing that tech training is as vitally important as it is hard to come by, we recently opened a learning center at our headquarters in Lawrenceville, GA, just north of Atlanta. Manufacturers have been invited to use the space at no charge, and have accepted our offer for their authorized networks. To expand training opportunities to independent techs, we have contracted with Level 2 Learning – a leading provider of appliance technology training – to hold classes on Samsung refrigerator and laundry diagnostics 24 & 25. Registration is now open on a first come, first served basis.We anticipate offering courses throughout the year and welcome any input servicers have on topics they’d be interested in (please email customercare@encompass.com with your feedback). Our goal is to help our customers be more successful, and that starts with enhancing their skillsets and knowledge.Beyond offering training to our customers, we are also focused on professional development for our staff. From honing their service skills to accelerating their parts identification capabilities, we aim to help ensure our team has the tools they need to provide world-class customer service.
  • New Verticals – One of Encompass’ greatest advantages is our diversity. We currently serve as a one-stop source of 10 core product categories and are constantly looking for new verticals to add to our catalog. As most independent servicers appreciate the need to diversify their own businesses to stay relevant, Encompass enables techs to come to one streamlined provider for all their parts needs.We are set to debut LED troffers – lighting panels you see mostly in commercial settings – and are in discussions with other manufacturers of some exciting products emerging in the market. If it needs parts, we want to support it after the sale. We also have several new and existing products and brands launching in 2017.  We must all continue to evolve!
  • E-Commerce Enhancements – You will have noticed that our e-commerce site com has undergone a massive overhaul in recent months. Our goal is to help visitors quickly and easily find and order the parts they need. The sooner you can get your parts, the sooner you can complete a repair or get your electronics back to working condition. Look for further upgrades in the coming months, including new functionality, additional parts photos and data and other helpful support tools. We have already added over 50,000 product photos, which brings us to over 250,000 total. This, combined with our innovative suggested part relationship data will help make first time repairs a much easier reality.
  • Business Solutions – To further help our customers be more successful, Encompass recently partnered with Netsirk Technologies to develop Skulocity, a new business management application. We leveraged our decades of aftermarket distribution expertise to design a solution specifically tailored for small to mid-sized manufacturers, retailers, field and depot service organizations and parts distributors. Skulocity is a fully-integrated enterprise resource planning (ERP) system with comprehensive functionality for: order management, inventory control, warehouse management, procurement, discrete manufacturing, accounting, payment processing and customer relationship management. This product will help all part distributors become healthier and more capable as they continue to expand their product offerings and improve their value to the OEMs they represent.

As a dynamic organization, Encompass is continually evaluating ways to enhance our business and yours.  We strive to deliver a superior service experience to all our customers, but acknowledge we don’t always get it right. When this happens, we do whatever it takes to turn the situation around.

On behalf of the entire Encompass Team, we wish you all the best in 2017 and appreciate the opportunity to serve you.

 

 

To Repair or Replace LCD & LED TVs — That is the Question

TV flat panels are bulky, expensive and generally difficult to deal with.  Panels inventoried years ago to serve as repair replacements are often pricey due to freight, core charges and inventory costs.  As such, the industry has elected to provide whole unit replacements or retail gift cards instead of attempting repairs on TVs under warranty.

Although buyout options may seem on the surface to be the most economical and logical path of least resistance, there are several factors to consider that may warrant reconsideration of panel repair.

Cost – The average TV replacement cost is about $750, but a 50”-65” flat panel TV can be repaired for less than $375 including parts – assuming 20% panel replacement, transportation and labor.  We estimate more than 150,000 TVs are replaced every year that could potentially have been repaired and kept out of the waste stream.  If these estimates are correct, the industry is conservatively losing more than $50 million annually paying out the product value.  Boards are the likely source of a failure more than 75% of the time. Regardless of price, when a panel is required and available, the overall cost of ownership for the warranty will be less.

Brand Displacement – Issuing gift cards as compensation for a defective panel opens the door for consumers to buy competitor products. Manufacturers should do whatever it takes to keep their brand in the customer’s home. Even if you just break even on a panel repair, at least you haven’t risked losing your customer to a competing brand.

Unnecessary Replacements – When troubleshooting a TV failure, inexperienced servicers are likely to opt for the easiest route, which is to simply diagnose a bad panel.  Customers get a new TV (potentially of a different manufacturer brand), and servicers get paid trip charges. However, paying quick trip charges for replacement is just pennies on the dollar compared to potential revenue share of repairing.

Plus, when a panel is truly defective, it’s in the industry’s best interest to support the service network and enable a repair. We must support the system to keep the process healthy; otherwise, we risk creating a market full of waste and service mediocrity.

Environment – E-waste and its toll on human health and the environment is like the kitchen of your favorite restaurant: you know it’s probably not good, but you don’t really want to know. However, the reality is recent reports show that the U.S. generates around 9 million tons of e-waste annually, with TVs making up a great portion of it. Toxic chemicals leaking into landfills and potentially contaminating our drinking water is a real concern, and we should collectively be working to minimize the amount of electronics we discard. Extending the life of TVs by repairing their largest component is one way to achieve this.

This trend toward replacement is unnecessarily costing manufacturers and underwriters millions of dollars annually in warranty reimbursements while negatively impacting our environment. It’s potentially affecting brand loyalty among consumers, and it’s weakening the service industry.  Let’s reevaluate what is truly the proper behavior to minimize replacement; boost repairs to grow company profits; improve product brand equity; fuel the service community and keep our environment healthy. If TV replacement accounts for 15% of your repairs or more, it’s time to take a deep dive analysis into your processes.

Encompass Websites Get Makeover

As Encompass nears the end of our 63rd year in business, I still can’t believe how far we have come from the days of television tubes and antennas, printed catalogs and pick sheets.

Robert Coolidge President & CEO

       Robert Coolidge
      President & CEO

Our warehouse function is automated with new equipment added regularly to expedite the pick/pack/ship process. Our Call Center runs on an advanced telephony system, and our Purchasing team now leverages software that improves our ability to forecast demand and stock accordingly to achieve high fill rates. The Sales team is promoting solutions that didn’t exist even five years ago.

Encompass’ latest exciting venture is enhancing our online presence for B2B and B2C customers. Both our e-commerce site, encompassparts.com, and corporate site, encompass.com, have been extensively upgraded as part of an initial major release.

We have gone to great lengths to analyze encompassparts.com and incorporate changes to create an easier, faster checkout experience for business and consumer users, and deliver better overall usability to rival other superior e-commerce sites. Following are just a few of the improvements; these are just the first of additional upgrades that will be made in the coming months.

  • Navigation – We have reorganized the site to help users get to the page they need fast, with as few clicks as possible. For example, Quick Finders for Batteries, Remote Controls, Toner and Water Filters are now accessible right from the home page top navigation bar with many more to come in the future.
  • Model/Part Numbers – Instead of separate fields to search by part or model number, users can now input either number into one combined search field to return both parts and model lists on one streamlined page. For anyone who has keyed in a model number in the part number field or vice versa, this will be a welcome change.  This will be particularly helpful for consumers.
  • Refreshed Design – The site has a whole new look and feel with larger, more appealing typefaces and more engaging graphical elements to help improve the overall shopping experience.

Encompass.com has also been completely overhauled to fully showcase our capabilities and history. Following the same design scheme as encompassparts.com, it provides a significantly more comprehensive view of everything we have to offer to manufacturers, retailers, warranty companies and professional services providers.  Our value proposition and list of unique services are now easy to navigate and can easily be reviewed by new potential partners.

We hope you find both websites to offer an enhanced online experience with more convenience, information and tools to help you succeed in your business or to maintain/repair products in your home. Encompass exists solely to serve our customers, so all upgrades we make to our technology, processes, staff, facilities and more are designed just for you.

Please check out the new websites and let us know what you think!

Supplementing the Reverse Supply Chain One Board at a Time

Distributors that specialize in sourcing and supplying repair parts for consumer electronics, appliances and other goods are continually faced with ensuring adequate inventory, especially once the production cycle ends for a particular model. Meeting the demand can be challenging, and distributors must seek different ways to keep vital parts flowing to the service industry.

Printed circuit boards, a key component of many electronic devices such as televisions, are particularly valuable in the reverse supply chain. New boards are often assigned a “core value” on top of their wholesale price, which works like a deposit to encourage servicers to send back used or defective boards (also known as cores) that they replace during repairs. Once recovered from the field, cores can be rebuilt and placed back into service – a process pioneered in the automotive industry.

The concept of repairing and recycling printed circuit boards grew out of the economic reality of declining product price points and legal requirements imposed on manufacturers to provide aftermarket support for repairs. There is a finite supply of these boards because manufacturers are continuously developing new models with different features using different factories.

Manufacturers provide their distributors an opportunity for a “last time buy” right before they halt production of a model. Distributors must then decide how much parts inventory they need to procure to ensure they can meet customer demand for another five to six years, while minimizing risk of the parts becoming obsolete before they can be sold.

Encompass Supply Chain Solutions, Inc., a provider of forward and reverse logistics headquartered in Lawrenceville, Ga. outside of Atlanta, has implemented an innovative process to limit last time buys of boards and supplement the reverse supply chain. Leveraging the capabilities of both its distribution division (Encompass Parts Distribution) and its high-tech repair unit (Encompass Service Solutions), Encompass remanufactures and quality tests its own boards for select OEM brands and then makes them available for sale to its customers.

“Being able to repair boards ourselves enables us to buy much less than we would normally have to as part of a last time buy,” said Jim Scarff, Encompass Vice President of Customer Service who oversees the board repair program. “This gives our customers access to parts they could otherwise have a hard time finding, and reduces our obsolescence risk.”

Encompass remanufactures television and appliance boards for Philips, Funai and Haier as the company manages the entire parts supply chain for these manufacturers – from procurement to warehousing to fulfillment. Encompass additionally performs contract work for other manufacturers for board repair on specialty products like medical devices.

Scarff estimates the technical team remanufactures 1,500 to 2,000 boards a month just for its parts logistics clients.

“We are doing this to extend the life cycle of the products for the brands for which we own the supply chain,” said Scarff. “Once cores are out of inventory following a last time buy opportunity, that’s it; you can’t buy anymore.”

Every week, Scarff analyzes data on Encompass parts sales so he can identify boards with the highest run rates, as well as those in dwindling supply. He then works closely with the Service Solutions team to ensure they prioritize these specific boards so they can be made available to customers as quickly as possible. This also helps Encompass meet the high fill rate requirements set by its supply chain management clients.

“We strive to have the techs working on a balance between boards with high demand and those we are in danger of going on back order for,” said Scarff. “The key is to make sure we don’t stock out.”

In addition to augmenting the parts supply chain, Encompass is able to assist its manufacturer clients by providing failure data.

“We report common failures back to the manufacturers to feed through their engineering staff so they can make improvements in production of subsequent models,” said Scarff.

Encompass also works with all its customers to recover cores from the field and return them to the manufacturers that it represents for eventual reinsertion to the supply chain.

“It’s an ongoing cycle ultimately meant to keep parts available as long as possible to support products after the sale and strengthen consumer loyalty for manufacturer brands,” said Scarff.

Kristin Hurst joined Encompass in 2009 as director of Marketing and Communications and is esponsible for marketing, sales support, public relations and internal communications efforts for the company. She has more than 20 years of experience in the marketing and communications field. Most recently, she served as Director of Brand & Communications for HD Supply, a $10 billion wholesale distributor and spin-off division of The Home Depot.

Equalizing the Risk of Accident Damage Coverage

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.

Robert Coolidge President & CEO

Robert Coolidge
       President & CEO

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.

 

Parts Supply Chain Outsourcing

Like any business, manufacturers are focused on finding ways to improve profitability throughout their organizations. Faced with heavy global competition and ever-changing technology trends leading to shortened product lifecycles and plummeting prices, consumer electronics OEMs are particularly challenged even as the country emerges from the Great Recession.

Robert Coolidge President & CEO

Robert Coolidge
      President & CEO

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.
By taking ownership of parts, distributors assume responsibility for accounts receivable, which removes the hassle of collections for OEMs. They also take on the risk  for excess and obsolete parts and pay for warehouse infrastructure costs. Unlike manufacturers that manage parts for just their own brand, distributors are able to spread operational costs across multiple brands.

Most importantly, distributors are able to provide a higher level of customer support to service techs and consumers. At Encompass, parts management is our core competency – it’s what we’ve been doing for the past 60 years. At a recent appliance trade show, I heard from several different servicers that they won’t touch certain brands because of the difficulty in getting parts. If consumers can’t get support for their products after the sale, how loyal will they be to that brand in the future?

 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.

Managing Business Reputation

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.
Robert Coolidge President & CEO

      Robert Coolidge
      President & CEO

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.

Diversifying for Business Success

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.
Robert Coolidge President & CEO

Robert Coolidge
President & CEO

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.

 

Saving the Environment, Lowering Costs with Green Choice Parts®

Encompass recently announced the appointment of Jim Scarff to the newly-created position of Vice President and General Manager of our Green Choice Parts reclaimed electronics components program. Jim is being tasked with aggressively expanding the program that reintroduces quality, functional spare parts back into the supply chain.

Robert Coolidge
President & CEO

Green Choice Parts are defined as any part that would have been discarded, scrapped or otherwise eliminated from the supply chain, including overstock and core parts. We supply a range of components under the Green Choice Brand, such as printed circuit boards, power supply, motherboards and lamp assemblies. The parts are offered through a dedicated website: greenchoiceparts.com and are also prominently promoted on encompassparts.com when available as an equivalent to an OEM part.

We are dedicating more resources to the program because we recognize its value to servicers, manufacturers, retailers, TPAs ad a way to control parts costs, reduce product replacements, obtain hard-to-find parts and improving the environment by minimizing electronic waste. According to the EPA, more than 2.5 million tons of e-waste is produced each year in the U.S. As prices for consumer electronics continue to plummet and technology advances, more and more working units are bound to be
thrown away as cutting-edge models come on the market. Tearing down these units and harvesting the good working parts helps combat the growing problem of what to do with the mass of unwanted electronics.
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.

E-Waste Regulation and Potential Opportunity for Electronics Service Industry

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.
Robert Coolidge President & CEO

         Robert Coolidge
         President & CEO

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.