Introduction
In the course of an in-house telephone survey we conducted into the need and feasibility of offering extended five-year warranty, we uncovered gaps in both the retail and outbound logistics processes management that need to be closed.
Main Text
Specifically, we have found convincing indications that:
- Some factory distributors are circumventing the retail process by switching sales away from retailer dealers. On the pretext that the model or colour ordered is out of stock, they persuade buyers to cancel the order and place one with them.
- Retailer-dealers are not aware this is happening. All they see is that an order has been cancelled.
- This is a customer service concern because those who do not switch their order merely take delivery of the compactor unit. The distributor staff neither install the unit nor inform the buyer they are entitled to free installation. Consequently, buyers who wish to have the compactor embedded flush with kitchen countertops or other cabinetry must pay third parties for installation.
- In addition, those who purchase the unit from factory distributors receive faster delivery, proper orientation on compactor operation, and the required follow-up calls 5 and 10 days after sale.
This finding is geographically dispersed. So far, we have learned about this being perpetrated by our factory distributors in Jacksonville, Baltimore, Cleveland, Louisville, Denver, San Diego, Dallas and New Orleans. While by no means our largest and most important markets, these locations are numerous enough to convince us these are not isolated lapses but systematic circumvention of our retail channel management strategy. We need to protect our smaller dealers because they afford the company presence in locations convenient to the household market and competitive parity vis-à-vis rival firms. Hence, it is untenable for the system to have such loopholes that factory distributors can, in effect, steal the margin that the retailer who closed the sale deserves.
I recommend, as the primary means of closing loopholes in the marketing channel, that the warranty card be updated to include feedback on delivery and installation. A checklist can be inserted below the blanks for buyer location and above the reminder to mail it in, consisting of these items:
- Date when delivered
- Whether the deliverymen installed the compactor free of charge
- Whether the installation was satisfactorily done
- Whether the end-user received a clear and complete briefing on compactor operation.
- Overall satisfaction rating in respect of delivery and installation
- A toll-free consumer helpline at St. Louis to use for any problems or questions whatsoever.
This has the supplementary benefit of alerting factory distributors to the fact that we will be monitoring the quality of installation service for each and every unit sold from now on.
Conclusion
Ultimately, the situation calls for process improvement in the outbound logistics system. We must make it clear, essentially to the factory distributors in each city, that their role calls for partnership with us and the smaller dealers. Marketing can do its part by including factory-absorbed warranty service in all advertising for compactors from now on. All corporate theme and image advertising should also include copy to convince homeowners that Handy Andy unconditionally stands behind all its products during the warranty period.
Works Cited
Murphy, Paul R. and Donald F. Wood. Contemporary Logistics, 9th edit. New York: Prentice Hall, 2008.