“Pit Crew” Repair: Atul for Tablet Logistics

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Tablet repair isn’t exactly a matter of life and death. But if we acted like it were, would we be doing it better? If we studied organizations where failure means a lost racing title, a flaming car wreck, or a patient who didn’t pull through, would companies and consumers see more value from tablet sales?

When Atul Gawande addressed a class of graduating physicians in 2011, he told them to leave their ideal of an independent, omniscient doctor in the past, where it belongs. Medicine has grown too big for a single education, he said. The best results come from doctors and nurses who form “pit crews” – who distribute the inordinate time and expertise needed for complex treatments across a team of specialists. People aren’t cars, but when the professionals who fix both look totally different, something is probably amiss.

On it’s glossy face, a tablet doesn’t much resemble a human body, or the hurtling machine that carries one. But tablet repair has plenty in common with high-stakes maintenance, and should take cues from both medicine and car repair.

No pause button

In a NASCAR race, ten seconds of repair means a quarter-mile lead for the competitors. Market research suggests that this is a pretty good metaphor for the tablet industry. Quality might be king, but firms that lag in resale or refurbishment time tend to pay a hefty price. Getting intact tablets back in stock should be a priority on par with getting back in the race.

Integrate or disintegrate

To get back in the race, you need a pit crew. Tablets and cars may not defy one person’s skill or comprehension, but they defy one person’s ability to perform ten services at once. Unimpeded workflow often calls for small and interdependent teams that perform both testing and repair, ideally in the same workplace, and ideally in easy shipping distance from a large customer pool.

But such a team wouldn’t necessarily be integrated, only differentiated. It wouldn’t be a team at all without regular and responsive communication between testing and screening specialists. A growing body of data seconds our call for optimized front-end testing and screening. It wouldn’t do for pit crews to dismantle a working vehicle, before the driver tells them he was feeling lightheaded. Why should tablet repair be any different?

To date only one vendor has fully heeded our call. CTDI’s NightHawk Test System offers the industry standard for reliable and user-friendly functional testing, with assays of tablet connectivity, multimedia capabilities, battery, display, sensors, and system information. And with its front-loading tray system, NightHawk actually can perform ten tests at once. Responsiveness and integration don’t have to come at the cost of throughput. The most intelligent solutions are often the most inhuman.

Speaking of false dilemmas…

Don’t follow the money

Sometimes return on investment doesn’t just diminish – it takes a U-turn. The best hospitals in America are not just the most cost-effective, but among the cheapest. And some of the most expensive hospitals rank near the bottom in patient outcomes. It’s no coincidence that the CTDI NightHawk Test System offers one of the best values on the testing market. We have every reason to think that, by learning from CTDI’s example and applying our recommendations, countless vendors could follow their lead. Schedule a strategy session today to find out how.

 

A World Without Service


its-a-wonderful-life-sequel

Have the routines of reverse logistics and aftermarket service got you down? Have you started to lose hope? Are you poised at a bridge on Christmas Eve because dastardly Mr. Potter made off with your fortune — or because aftermarket service seems futile? Fear not: your guardian angel is here! Let us be Clarence to your George Bailey, and show you a world without aftermarket service and reverse logistics.

What’s that? You can’t find Zuzu’s petals? That’s because in this world, you and your colleagues in service and logistics never existed. It’s a seedy and backward place – one where products and profits both suffer, and where companies and customers regard each other with intense suspicion. See all those people trying to discreetly take apart brand new phones, tablets, and microwaves, doing their own testing right there in the store? They know there’s no warranty; if it’s broken, the customer has to fix it. Sure, sales are lower that way, but what’s the alternative? See all those stores in competitive and dynamic markets, who can offer warranties and still meet payroll? Neither do I.

Sure, a handful can afford warranties. But they are the last ones standing; they’re the big fish, who shoved their way to the last puddle as the market dried up. And even they’re not sure the warranty is worth it. The customer may like it, but without aftermarket support, even loyal customers may send back mint-condition goods. Or at least they look mint condition; without technical support or product screening you can’t be sure. And without repair, big companies have a painful dilemma: gamble with customer loyalty and resell anything that looks ok, or toss everything that comes back, and accept that ebbing profits may leave the company high and dry.

There is, of course, a way to have the worst of both worlds. With dirt cheap production, you can gamble with customer loyalty while still scrapping all returns. Those customers weren’t shaking and tapping their phones just because they can’t get a refund. In a market without an aftermarket, nearly all companies, big and small, warranty or no, are under heavy pressure to lower production costs, even if quality suffers. Have a warranty? Keep products uniform my shunning resale, and keep losses on return low by charging the same for cheaper products. No warranty? With such cautious consumers, high standards may yield little in the long run. As long as the item holds up before purchase, cheap production probably helps more than it hurts.

Don’t you see? You were the only thing standing between us and this bleak economic order, with its perverse incentives and its hostility to innovation. You alone lifted the dilemma between long-term and short-term profits, and gave businesses an incentive to prioritize quality without having to fear the whims of their customers. Aftermarket service and reverse logistics absorb the shocks and tugs of supply chains, so that manufacturers can stop worrying about survival, and start worrying about how to be the best. Now that the customer expects an ongoing relationship with the vendor, old acquaintance shouldn’t be forgot, and never brought to mind.

Schedule a strategy session today, and we’ll show you why countless service and logistics professionals think Blumberg Advisory Group has earned its wings.

Risks, Clues, and Monopoly: How to Play the Tablet Game

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Monopoly, Risk, checkers, chess, Scrabble, Clue, Battleship, backgammon, Go: many associate these words with long hours pleasantly wasted. But time spent playing games isn’t always wasted – and not just because there’s more to life than profit margins. We tend to think of games as structured procrastination, or at best a social crutch. But nearly all of them give us regular access to a precious yet fleeting insight: that our endeavors are bound by the hard and unforgiving facts of strategy. Anyone who has tried to bounce back from reckless investments in Monopoly, blunders in chess, or wishful thinking in Risk can attest that, in board games as in life, even the most spirited struggle can’t rise above a shoddy plan. Like all “play fighting” in the animal kingdom, playing games trains us to protect our soft spots and check our blind spots, giving us stress-free practice for the struggles that matter.

These lessons have not been lost on the reverse logistics field at large, or on the tablet industry in particular. In earlier posts, we touched on the broader tradeoffs and challenges confronting each. But all abstractions aside, supply chain and reverse logistic professionals place an unwavering premium on customer satisfaction. This year’s Benchmark Trend Report from Consumer Returns found that 48% of its respondents have “very close” collaboration with customer service professionals – the highest rate among seven professional categories. Customer service was the only category for which the “not close” collaboration rate was zero, in contrast to 38% for merchandise, 24% for transportation, and 17% for finance.

In the tablet industry, the commitment to customer satisfaction through fast and flawless replacement meets a high return rate and ample savings from resale. These three parameters define the strategic space of reverse logistics in the tablet industry, and that space is occupied by repair and testing. That’s not just our opinion: a cross-section of OEMs, retailers, and wireless carriers ranked “quality of repairs” and “commitment to quality metrics” as their top considerations in choosing a vendor. A firm’s success is closely coupled to its skill at those two games.

How do you play? Repair is a free-for-all, but here are some of the legal moves in testing:

Manual testing

Just what it sounds like; costly, error-prone, but often necessary as a last resort – like all the jobs that computers have yet to take.

Diagnostics testing

Automated and efficient, but usually specific to each device, operating system, or application programming interface. You don’t have to pick the lock, but you need to have the key.

Board level testing

Exploratory surgery for tablets, done in engineering mode. Often automated, but not always informative. Before your patient goes under the knife, try asking him what hurts.

Open unit testing

Open heart surgery; you need to break the tablet seal and remove the circuit board for “bed of nails” testing. It can get to the heart of the problem, but then the heart needs a new body.

Embedded diagnostics tests

Cheap but limited. Works within the hardware, so can’t find hardware-level defects. There must be a moral in that.

CTDI’s Nighthawk Test System

The best overall solution we’ve yet seen. Tests ten units simultaneously, keeping a steady rate with front-loading tablet trays. Nighthawk simulates the user’s tablet experience with checks on tablet connectivity, multimedia functionality, battery, touchscreen, buttons, LED, sensors, and system information.

If you want to learn more, read the full game manual here, or get in touch to schedule a strategy session. Reverse logistics for the tablet industry is no board game, but that doesn’t mean it can be fun.

 

A Blueprint for Big Data Logistics

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How can big data help reverse logistics?

This is a little like asking “How can duct tape help in an emergency?” According to Blumberg’s Law of Big Data, the answer will be unique to every problem that calls for lots of data. No list of applications can hope to be comprehensive, and no generalization can provide detailed guidance for each case and industry. But that doesn’t mean that a list of generalizations isn’t worth making.

In our last post about big data, we told you that our job is to help you build bridges from the problems you have to the data you need. So let’s draw a map. The challenges found in reverse logistics form an organic whole…not unlike the neighborhoods of Manhattan. And some of those neighborhoods need bridges to the sprawling datasets and powerful analytics that have just recently emerged. Here we imagine a branch of commerce that never sleeps as a City that Never Sleeps, and connect the Big Apple to big data.

Brooklyn

Elegant, austere, mathematical, and once the only game in town, the study of service supply chains could reap huge dividends from big data. The quantitative tools of chaos, fluid dynamics, and traffic theory can be used to model the flow of goods and currency in forward, reverse, and their confluence. Where the conceptual framework of an Enterprise Resource Planning (ERP) or Supply Chain Management (SCM) system meets modern data collection and storage, there is an inviting playground for data scientists. Logistics experts from every specialty can now reach out and touch the crisp contours of service flow as they evolve minute-by-minute. With help from operations research, consultants can design safeguards against bottlenecking, turbulence, state transitions, and other logistical nightmares that can arrest normal service for days on end. Big data can also resolve long-term rate distributions with greater precision, allowing firms to make homeostatic adjustments and keep service delays within tolerance.

Triborough

Quality control in reverse logistics is a different animal. It’s not a true field like its manufacturing namesake, but the busy crossroads of a few nameless subfields. What unites them is the goal of recovering value on resale goods…at a lower cost than making them from scratch. Quality control in forward logistics has its hands full churning out a uniform, working product in the controlled conditions of a factory. If your products come from the messy world outside factory walls, you’re going to need more hands. Who can say exactly what an item may have been through before its warranty was up? Maybe a malicious eight year old took it apart, stole the hard drive, replaced it with its weight in dirt, and then lovingly reassembled the product before polishing the screen. The only way to quell such paranoia is to perform every test that the industry can offer – in other words, to replicate the US healthcare system on returned products. The name of the game is detecting tiny but consequential probabilities, and making testing protocols that reflect them. For that you’ll need lots of data.

GW

The science of long-distance shipping costs should take Manhattan’s longest bridge. When companies pay for shipping, they have created a thorny optimization problem, in which the cost of building and running maintenance centers offsets the cost of longer shipping distances…to a point. Both parameters are bound to evolve with the size and geographic distribution of consumers, and may be abruptly reset by the closure and creation of mailing routes. In the war rooms of service management, big data will provide plenty of actionable intelligence.

Queensboro

Like Manhattan and Long Island, forward and reverse logistics are too rarely integrated. Where auditing and other conventional probes fall short, product flow in forward and reverse supply chains can monitor product screening and satisfaction. Robust baseline measurements for the magnitudes and ratio of forward and reverse product flow can serve as a performance index for front-line screening. With enough data, deviations from baseline can be a real-time window to the effects of reorganization and new service protocols. Similar metrics could pave the way for a revealed preference analysis of product features.

Manhattan

The tension between customer satisfaction and short-term revenue calls for a subtle feat of engineering. If you match the rate of salvageable returns with the rate of resale, you eliminate free replacements, but at a greater risk of issuing faulty products. If your resale standards are uncompromising, resale may not cover replacement, and if a dynamic bottleneck forms at testing and repair, those may become sunk costs – insult to injury! Long-term, conditional rates revealed in big data analyses can control for these risks by setting a time range on testing and repair – lower bound to limit defects on resale, and upper bound(s) to keep repair congestion syndrome at bay.

Eager for details? Get in touch for a consultation, and we’ll see how seizing the data can make you an industry power broker.

 

Thou Shalt Not: Reverse Logistics Sins in the Tablet Industry

moses

 

“Moses then turned around and came down the mountain. He carried the two covenant tablets in his hands….When he got near the camp…he hurled the tablets down and shattered them in pieces at the foot of the mountain….The Lord said to Moses, ‘Cut two stone tablets like the first ones. I’ll write on these tablets the words that were on the first tablets, which you broke into pieces.'”

That’s right: Moses started reverse logistics for tablet repair. We doubt his CV needed it…

We also doubt he would recognize the field today. Tablets are a bit cheaper and have some new capabilities – though turning to sand, summoning angels, and melting faces are not (yet) among them. The market has also grown; archaeologists find it far simpler to locate modern tablets, and most tablets are, in fact, easier to have delivered if you don’t live on a mountaintop.

Above all, manufacturing firms are not almighty, and that’s what makes things interesting. Tablets don’t do well when hurled to the floor in anger, but inconveniently, most returned tablets have not been. Yet any manufacturer who plans to stay in business must swiftly process every tablet returned under the warranty, maintaining efficient product flow for resale, repair, and disposal options – to say nothing of replacement. And any manufacturer who plans to thrive must look under the humming hood of customer service, and check that the engine doesn’t waste fuel. The tablet industry has gone from zero to 60 in the blink of an eye, and shows no sign of slowing, but with that kind of speed comes unpredictability, and tablet repair is already associated with distinctive logistical problems.

Put simply, explosive growth means outgrowth. Take the scarcity of regional maintenance facilities. A behavioral economist might say that the cost associated with building them is more certain, tangible, and discrete than the cost of shipping without them – which is nonetheless higher. This may help account for an industry-wide failure to drive down aggregated shipping and facility costs, by investing in far-flung sites for cleaning, screening, and repair. What’s clear is that the customer base for tablets has outgrown the maintenance infrastructure, with expensive consequences.

Market size has also outgrown screening efficiency. The combination of high model turnover and overwhelming choice belies an immature market, and the result is a high return rate from “buyer’s remorse.” Many support organizations routinely incur avoidable costs from inefficient testing and repair, usually through a third party service provider (3PSP).

Weak front-line screening and diagnostics represent a third revenue sink. Though robust technical support boosts customer satisfaction and limits frivolous transit and testing costs, the tablet industry has been head-scratchingly slow to catch on. Industry standards that were ubiquitous in the “PC era” are still percolating. Until the tablet industry heeds the unwritten commandments of screening and diagnostics, it will be smitten again and again by its reverse logistics supply chain.

These inefficiencies are easier discussed than solved. You may even be tempted to smash your iPad in frustration, or to mail it to California so a 3PSP can check whether it’s been smashed. We recommend taking a few deep breaths, and tuning in to our upcoming posts from Blumberg Advisory Group on the tablet industry. We’ll give you our take on how companies everywhere can optimize forward and reverse logistics velocities, hold down costs, and face the future in top gear.