Depot Repair & the Reverse Logistics Road Trip

by Joseph Costa, Depot America, Inc.

Reverse Logistics Magazine, Fall 2006

You can't move forward on a journey unless you map the course. These days you'd be hard-pressed to find a road that hasn't already been paved. However, when moving through new ground, utilizing a few necessary tools, thorough research and the drive for success you just might be able to make that trip faster and more efficiently while making some unexpected discoveries along the way.

Know Where You've Been
Traditionally, depot repair companies provided little beyond a basic menu of products, services, and prices—nothing more. There was no urgency to extend value outside this standard. With all efforts internalized the best organizations focused on building outstanding reputations for quality, responsiveness and efficiency. Many of these companies were incredibly successful for a time, but where are they today? While market forces were changing rapidly, they continued with emphasis on base line services but did little to enhance their value to customers. The price they paid was a costly one… consolidation or extinction.

The needs and priorities of their customers evolved quickly and dramatically. Repair, while still important, became proportionately less significant to customers as they identified additional opportunities to gain efficiencies not directly related to repair. For service based companies, survival and success in the burgeoning world of Reverse Logistics and after-sales support meant realigning resources to achieve these advantages for their customers.

Building Relationships with the Locals
Building relationships is key in all walks of life. Maximizing yield from any venture demands a solid working relationship between customers and vendors. Both parties must strive to develop a true partnership. At the outset, companies identify the objectives, assign responsibilities, define mutual expectations, and schedule time lines. Encouraging a "team" mentality from the start energizes both sides positively while minimizing bureaucratic obstacles. Each customer project is unique; therefore the program for effective service must also be unique and flawless for ultimate success.

Crush Canned Solutions: Take the Road Less Traveled
Service companies must have an internal organization in place to meet the special challenges that will present themselves and all personnel must compulsively provide and manage solutions swiftly. Listening and understanding specific needs and goals will lay the groundwork for developing personalized programs that will complement customers' own internal measurement systems. Canned solutions simply can't meet all of the specific demands of every customer; so service organizations need to step out of the box and be creative in designing solutions that meet their customers' specific needs while never assuming that customers can or should modify their internal functions to fit into that canned solution! Excellent results are almost always possible when the foundation of a service company is a flexible workforce that is driven by continuous analysis of the facts and a consistent drive to improve quality and productivity.

Be Flexible: A Small Detour Can Save Big $
A flexible workforce provides management with powerful tools for developing innovative services. Personnel with exposure and working experience in multiple areas of the business have a higher confidence level when designing programs with customers. Employees who are effectively cross trained have more range and readily adapt to the constant change in the Reverse Logistics and after-sales environment.

Although it is important to have flexibility within the workforce, it is critical on the systems side as well. Customers with highly complex ERP, DMS, WMS and other systems are reluctant to customize any aspect of them for management of short-term special projects. And they shouldn't have to; the cost of modifying one of these complex systems is usually too large to justify the effort. Extended time and the risk of corrupting or diminishing performance of the overall system are other factors causing reluctance. Depot repair vendors must be able to bridge this gap because effective use of systems can yield great results in managing customers' Reverse Logistics projects, so a means must exist to overcome customers' internal limitations.

Adapt & Thrive with Each Bend in the Road
Critical to filling a customer need is the adaptability of a vendor's software. If the expense and time involved in customizing software is minor compared to the overall project scope, then the team can realize significant benefits. Together the customer and vendor can outline the initial needs necessary to implement the project and the customer can have access to all phases of the operation as if the project were in house. This seamless integration generates a rapid response from customers who readily see the value in obtaining real time data from "their" service operations.

Tracking Each Journey to Ensure Future Success
Well defined reporting will lead to greater productivity on both sides, and guide improvements within the customized repair/inspection processes. Screening, testing, shipment tracking, parts replacement criteria, labeling and packaging are reevaluated and upgraded as needed. Once the reporting fields are identified, they can be further modified to yield more positive results in the future. An example would be the use of failure data to enhance outside call center operations. With accurate updated information and regular training, a call center's effectiveness increases as end user satisfaction improves and the customer realizes significant reductions in valid warranty claims--and an increase in their bottom line.

The Open Road to Success
The economic realities of this age demonstrate the huge shift in business thinking over the last 25 years. We have moved from independence to interdependence. The advantages of this change have been reduced waste and inefficiency, higher productivity, better quality in products and services—in brief a series of benefits unimaginable a short time ago. With focused attention and cooperation between customers and depot repair vendors, this trend will continue. The continuous review and analysis of processes and data by team members insure that projects yield projected results, some pleasant surprises along the way, and a road map for additional successes in the future.

About the Author: Joseph Costa is President of Depot America, Inc. one of the largest independently owned service companies in the US. He holds a BS in accounting and an MBA, both degrees from the University of Southern California. In his career he has been controller of a food manufacturing business, VP Finance & Administration for NYSE member firm, William O'Neil & Co., Inc. and for the last 25 years partner or co-owner of service companies including Depot America during the last 18 years.

Today, Mr. Costa and Depot America have successfully expanded into the Original Equipment Maintenance market, as well as the Self Maintainers market. They plan on continuing to enrich their services by adding complementary products to their already impressive line.

Reverse Logistics Magazine, Fall 2006