The Key to Success – Perhaps Survival - Along the Reverse Logistics Trail

“I rode my bicycle past your window last night
I roller skated to your door at daylight
It almost seems like you're avoiding me
I'm okay alone but you got something I need
 
Well, I got a brand new pair of roller skates
You got a brand new key
I think that we should get together
And try them out, you see “……  (“Brand New Key” by Melanie, a folk singer – 1971)

My company has had the fortunate history to have survived a 15 year paring down of repair service providers from over 500 to now less than 12 by our largest customer – a Fortune 500 OEM. After an equally long crucible of continuous improvement initiatives, we have emerged as their “best in class” repairer of proprietary electronics, as have our competitors equally emerged in their respective specialties.   Our OEM customer wisely maintains this portfolio of specialists each within sight of each other, occasionally competing by virtue of the overlap in capabilities. But our customer has on occasion instigated collaboration amongst players -- and this has resulted in growth and profitability among the providers and ultimately our customer.

Back in 1989, Harvard Business Review defined collaboration as “a strategic alliance typically between two firms with the goal of providing mutual benefit for each firm.”  But that was then, and the slicing and dicing of the Reverse Supply Chain into specialty providers over the last 25 years has been accompanied by changes in business philosophy which embraces our overall industry objective – the triple bottom line: People, Profits, and Planet.  Wise executives such as NCR’s EVP Pete Dorsman recognize that “Everything we do begins and ends with the customer,” and without that approach, brand loyalty will rapidly erode.   It is my contention that collaboration must be an alliance between two (or more) firms with the goal of meeting the needs of our common customer.  But, how to accomplish this successfully?

According to an Auburn University article, successful mutual collaboration stems from these three criteria:

1. The size and market power of both partners are modest compared with industry leaders.

2.  Each partner believes it can learn from the other and at the same time limit access to proprietary skills.

3. The partners’ strategic goals converge while their competitive goals diverge.

The strategic goals that must be strived for by the collaborators are best framed by those defined as the top values of a well run service organization by Aberdeen’s study:  Optimizing the Service Supply Chain (one of my favorite studies).

1. Improved customer satisfaction
2. Improved service profitability
3. Decreased inventory and distribution costs
4. Decreased service operational costs
5. Increased service revenues

The independent service provider industry will survive only by demonstrating our abilities to drive these values for our OEM customers as well as their customers.

  

I have heard of several consortiums that have successfully employed these practices.  We have had several projects that worked well and will continue to approach competitors and OEMs.  I encourage OEMs to foster collaboration among service providers.  I don’t expect them to be without conflict – harmony doesn’t mean success.  Success will be defined by our ability to survive and continue to drive value for our OEM customers and achieve the triple bottom line. Try it.  It works.