Magazine Article | July 18, 2007

Consider A Self-Repair Hardware Approach

Source: Innovative Retail Technologies

Self-repair protects shareholder assets and reduces overhead costs.

Integrated Solutions For Retailers, August 2007

As a retailer, there are few returns that are as effective as better use of labor costs in the store. Too often, we limit our thinking to those associates who are on our payroll and do not consider services for which we are paying as labor overhead contributions. As a stakeholder, the result is the same — an overhead cost that impacts profit.

An interesting and often overlooked area impacting profit is the outside service costs of repairing/replacing nonworking technology components in our stores. A large and ever-increasing number of retailers have looked at their service agreements for outside labor to manage repair/replacement programs and have moved to inside service or self-repair options. Some are complete self-repair, and some have chosen hybrid scenarios, but common among all who have taken this route are three important outcomes:

  • Reduced cost of service up to 40%
  • Reduced response time measured in hours
  • Increased product up time measured in hours

Twenty years ago, traditional retailers looked at the effort to keep their POS and other technical gear working and saw repair folks with manuals spread over checkouts and service counters. Many retailers still have that same image frozen in their minds today. Even though many retailers' staffs perform their own plug and play computer assembly at home, many other retailers refuse to see the enormous value of self-repair.

It is important to note that the first companies to move toward easier repair were the computer hardware manufacturers themselves. They could no longer afford the complex repair training process and still remain competitive. In addition, what consumer would purchase a computer if a repairperson had to come to the home to install it?

Access To Replacement Units Enables Self-Repair
Changes were made to allow friendlier system set-ups and installations, which have spilled over into the retail marketplace, as well. The vast majority of repairs are performed off-site, and a working unit is sent to the location and swapped with the failed unit, which is shipped back. This 'depot repair' process works in millions of homes and retail stores around the world today, and it works at a significantly reduced cost to the end user.

The retailers who migrate to a self-repair approach have realized several important savings that are embedded in the service company agreements:

  • Spare units are now owned by the retailer and not repurchased with each new service agreement (giving the retailer a fixed, depreciable asset rather than a perpetual operating expense).
  • Freight charges are simply freight charges and not uplifted by the service provider.
  • Out-of-scope costs, which can be staggering and a budget surprise, are reduced to reasonable costs or nothing at all.
  • The retailer's own team provides the repairs, so work pride and dedication to their company is a benefit, compared with a service provider.

Returning stakeholder value and remaining highly competitive is difficult enough without giving away money for services that are more easily and effectively provided by your own team. Furthermore, it potentially saves up to 40% annually.