If you work in the industry, you know that manufacturers are buying each other up as rapidly as ever. Depending on who you ask this can be a good thing or simply one more thing that drives them nuts about commercial kitchen equipment.
A technician would argue that there are way too many manufacturers out there in the first place. Imagine having to be the expert on over 150 different lines of equipment. it's not like an automobile technician that has to be knowledgeable on maybe 10-15 lines of vehicles. That would be easy. The problem with consolidation lies not with the fact that there is consolidation, but that, more often than not, the purchasing manufacturer or entity does not dissolve the line into their current business model.
The outcome of this is that the buyer of the line attempts to incorporate customer service and support of the old line with their current line, or with another line that they own. Yes, it's confusing, but what it boils down to is losing years of support knowledge for some lines of equipment. Now, imagine trying to fix a convection oven from a manufacturer whose technical support staff has been dissolved. The new support staff is then tasked with the responsibility of rifling through the manuals of the recently acquired manufacturer to try to find the right information. All the while, a servicer has to bill the end user or owner of the piece of equipment trying to be fixed.
Nightmare!
Now there are some that do it better than others and allow the manufacturer that was purchased to operate as they were, keeping the staff structure in place and simply incorporating the manufacturer into a larger consortium of manufacturers. Although this is better, this does not result in the reduction of manufacturers in the industry.
Besides that, it seems that new manufacturers enter the marketplace as quickly as others close their doors. This adds increased pressure in the industry as the support groups, such as dealers, servicers, manufacurer rep firms, food service consultants and others scramble to educate themselves on the new lines. So what's a foodservice equipment industry employee to do?
I would think most would be happier with fewer lines. This would result in better stocking inventories of parts from the service agents as they could reduce the amount of lines that require support. Dealers would be able to better educate themselves on the specifications of the equipment they sell and foodservice consultants would be under less pressure to add every line under the sun into their portfolio of accepted alternatives. Perhaps there would be fewer rep firms, but many times they consolidate and maintain staffing levels. In all, the industry would be less stressed.
Will this ever happen? History tells us no. Many times a line is sold and then, a few years later, the previous owner of that line gets back in with a new competitive unit. For as many ITWs and Middlebys and Manitowocs as there are, there are also the Equipexs and Electroluxs and Meikos and Imperials and Tri Stars and Turbo Airs ready to fill the void.
Not sure what the answer is, but if there was a way to begin reducing the amount of commercial equipment lines out there, I'd be all for it. The short-term pain would be worth the long-term benefits. Gotta love capitalism!
Please leave your comments. I'd love to hear your say.
Friday, December 18, 2009
Selling the Local Service Agent
I guess the best (and easiest) way to start out my first blog is to revisit an article I wrote recently for our service association: CFESA (Commercial Food Equipment Service Association). The topic focuses on OEM Parts and parts distribution, something that many service companies out there take to heart and consider a vital part of their business model.
This article was published in the July/August 2009 edition of "On Target", the bi-monthly newsletter for CFESA.
http://www.cfesa.com/OnTarget/2009/july_aug_09_web.pdf
Selling the Local Service Agent
“The only thing that is constant in life is change”. This quote, from French author François de la Rochefoucauld, is something that many business owners and managers have learned to life by and embrace. If you can’t adapt with the times and change your business model when required to keep up with the pace of industry, you’ll be left behind. The commercial foodservice equipment industry is no exception to this rule and I’d like to talk about a recent change and how it affects you.
The “Wal-Mart” effect is beginning to creep into the venue of commercial equipment parts. Slowly but surely, national parts distributors are coming on the scene promising lower prices and better availability. These national distributors have only one purpose in life, to demand the absolute lowest prices from equipment manufacturers so that they can compete for the “lowest bid” customer on line and in your backyard. They view parts as a simple commodity that can be price-controlled just as easily as a can of tennis balls or a set of tires.
How is your company dealing with this? You know it’s happening and it’s not going to go away anytime soon. What you need to do is explain over-and-over again the value of what you bring to the table. Here’s a few ways where I see the local service agents are a much better value:
1. We are the experts…, period. National parts distributors are not the Authorized Service Agents, we are. We need to remind facilities managers, chain store operators and anyone else that purchases parts on a regular basis that, by outsourcing their parts needs, they are reducing their availability to local expertise. What incentive will local service agents have to send their technicians to manufacturer schools or carry OEM parts if they can’t make a profit? Who will perform the warranty work on their largest investment in their operation…, their kitchen? Outsourcing their parts needs will have the same effects locally that it has had on the national and global scale, it will eventually destroy the local economy and depreciate the value of their product. Long-term, it will reduce the availability of qualified service and threaten their product due to the failure of the kitchen equipment they count on to produce their product.
2. Who is going to care more about their commercial kitchen equipment: a customer service rep that lives hundreds of miles away that may never have even seen a piece of commercial kitchen equipment, or a local team of experts that patronizes your establishment, has been in your kitchen performing the warranty work on your equipment and sends their kids to the same schools that they do? The local service agent has a vested interest in their success, because our success is dependent on it. National parts distributors don’t care if they fail because they’re just a number to them. There’s no long-term need for their success to their business model, only that they’re paid in full before they close their doors.
3. How many national parts distributors have great relationships with the manufacturer reps of the equipment in your kitchens? Few to none and that’s because national parts distributors add no value to the equipment. Local service agents work with the reps to ensure you get the maximum value for your equipment investment. Manufacturer reps care very much about the reputation of their equipment, and they work with the local service agents to ensure you get the value for your investment. See if a national parts distributor will work with the local manufacturer rep to make sure their equipment is giving them the best return.
Local service agents are personally vested in their territories and the equipment they work on. Many of these service agents were started by technicians that worked on equipment all their lives, not started by a business graduate that saw a way to exploit the margins of commercial foodservice equipment parts and then hired another group of purchasing managers to focus on nothing but price.
I’m sure you can think of many other ways that local service agents add value to the equation. Continue to remind your staff of these so that your value and importance can become a battle cry, because it is a battle. If we simply forget about the value we add and do nothing to explain this value, then we certainly will cease to exist. The more your team is reminded about the differences, the better off they’ll be able to handle the discussion with the customer about getting the part cheaper from some place two time zones away.
Continue to remind your customer base by advertising these differences. Take every opportunity to explain your value to the customer, because if you don’t, who will? Whether you point out a few items on your invoices or an advertising flyer or through your website, always let the customer know that you are the better value and offer the best choice for their commercial kitchen equipment needs.
CFESA will always have resources to help you with your battle for your market-share. In the next few weeks a new weapon will be made available that can help level the playing field for parts sales, and that is the OEM Parts Manual. Be sure to take a close look and strongly consider adding this to your organization. There are other resources available online, but the one that will know best how to market your service area is YOU.
If life is constant change, the worst thing you can do is to continue doing nothing to address the changes in our industry. Be sure to join us in Nashville and bring your ideas to help the rest of our association rise to the occasion and ensure our viability for years to come. CFESA won’t work well for you if you don’t participate and work with it. We look forward to seeing you there.
This article was published in the July/August 2009 edition of "On Target", the bi-monthly newsletter for CFESA.
http://www.cfesa.com/OnTarget/2009/july_aug_09_web.pdf
Selling the Local Service Agent
“The only thing that is constant in life is change”. This quote, from French author François de la Rochefoucauld, is something that many business owners and managers have learned to life by and embrace. If you can’t adapt with the times and change your business model when required to keep up with the pace of industry, you’ll be left behind. The commercial foodservice equipment industry is no exception to this rule and I’d like to talk about a recent change and how it affects you.
The “Wal-Mart” effect is beginning to creep into the venue of commercial equipment parts. Slowly but surely, national parts distributors are coming on the scene promising lower prices and better availability. These national distributors have only one purpose in life, to demand the absolute lowest prices from equipment manufacturers so that they can compete for the “lowest bid” customer on line and in your backyard. They view parts as a simple commodity that can be price-controlled just as easily as a can of tennis balls or a set of tires.
How is your company dealing with this? You know it’s happening and it’s not going to go away anytime soon. What you need to do is explain over-and-over again the value of what you bring to the table. Here’s a few ways where I see the local service agents are a much better value:
1. We are the experts…, period. National parts distributors are not the Authorized Service Agents, we are. We need to remind facilities managers, chain store operators and anyone else that purchases parts on a regular basis that, by outsourcing their parts needs, they are reducing their availability to local expertise. What incentive will local service agents have to send their technicians to manufacturer schools or carry OEM parts if they can’t make a profit? Who will perform the warranty work on their largest investment in their operation…, their kitchen? Outsourcing their parts needs will have the same effects locally that it has had on the national and global scale, it will eventually destroy the local economy and depreciate the value of their product. Long-term, it will reduce the availability of qualified service and threaten their product due to the failure of the kitchen equipment they count on to produce their product.
2. Who is going to care more about their commercial kitchen equipment: a customer service rep that lives hundreds of miles away that may never have even seen a piece of commercial kitchen equipment, or a local team of experts that patronizes your establishment, has been in your kitchen performing the warranty work on your equipment and sends their kids to the same schools that they do? The local service agent has a vested interest in their success, because our success is dependent on it. National parts distributors don’t care if they fail because they’re just a number to them. There’s no long-term need for their success to their business model, only that they’re paid in full before they close their doors.
3. How many national parts distributors have great relationships with the manufacturer reps of the equipment in your kitchens? Few to none and that’s because national parts distributors add no value to the equipment. Local service agents work with the reps to ensure you get the maximum value for your equipment investment. Manufacturer reps care very much about the reputation of their equipment, and they work with the local service agents to ensure you get the value for your investment. See if a national parts distributor will work with the local manufacturer rep to make sure their equipment is giving them the best return.
Local service agents are personally vested in their territories and the equipment they work on. Many of these service agents were started by technicians that worked on equipment all their lives, not started by a business graduate that saw a way to exploit the margins of commercial foodservice equipment parts and then hired another group of purchasing managers to focus on nothing but price.
I’m sure you can think of many other ways that local service agents add value to the equation. Continue to remind your staff of these so that your value and importance can become a battle cry, because it is a battle. If we simply forget about the value we add and do nothing to explain this value, then we certainly will cease to exist. The more your team is reminded about the differences, the better off they’ll be able to handle the discussion with the customer about getting the part cheaper from some place two time zones away.
Continue to remind your customer base by advertising these differences. Take every opportunity to explain your value to the customer, because if you don’t, who will? Whether you point out a few items on your invoices or an advertising flyer or through your website, always let the customer know that you are the better value and offer the best choice for their commercial kitchen equipment needs.
CFESA will always have resources to help you with your battle for your market-share. In the next few weeks a new weapon will be made available that can help level the playing field for parts sales, and that is the OEM Parts Manual. Be sure to take a close look and strongly consider adding this to your organization. There are other resources available online, but the one that will know best how to market your service area is YOU.
If life is constant change, the worst thing you can do is to continue doing nothing to address the changes in our industry. Be sure to join us in Nashville and bring your ideas to help the rest of our association rise to the occasion and ensure our viability for years to come. CFESA won’t work well for you if you don’t participate and work with it. We look forward to seeing you there.
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