Channel Service Partner – New Way of Cost Reduction – But for Whom???

 

Channel Service Partner – New Way of Cost Reduction   

                         – But for Whom???

“Channel Partner” is todays buzz word. If you call / tried to contact a company representative for any means, for any work or information, 99% of times you will be landed in contacting a Channel Partner. This Partner network is increasing and spreading in all areas of a business and across all the businesses. Doubt whether anybody evaluates the pros & cons of this concept before introducing in any new domain and that too particularly evaluating how all concerns / stake holders mainly the so called “KING – Customer” will be affected.

Earlier days, these Channel Partners were not on the horizon. Then why are now??? Due to shear pressure on the companies for offering more & more at the lesser & lesser cost is the root cause for this. This cutthroat competition and cost pressure, companies are compelled to outsource as many activities as possible. It becomes dangerous (mostly for end customers) if no proper / adequate system for customer voice is in place. In the absence of such important information / mechanism, this concept still is being widely used in many areas of a company. Recently, due to couple of shifting from a city to city; have faced this devil – named as “Channel Service Partner”. And trust me, experience with Channel Service Partners of most of the companies / corporates is horrifying and you get the feeling of why we have called the companies for service instead would have been better to get the work done from third party or freelancer service providers.  

First let’s find out the advantages / benefits for a company for outsourcing Service / Repair activity to Service Channel Partners. The foremost advantage or benefit for the company would be the Cost. Particularly in Service arm of any company, the major cost will be the Employee Cost. This will be in addition to other costs such as infrastructures cost, spares inventory cost, administrative cost and so on…. But to me, major cost involved remains to be the employee cost.

Big question for all companies is how to reduce these costs to gain advantage over the competitor, to remain in the business and most importantly to be in green.
Needless to mention that the Agency selected for Channel Service Partner has to be the L1, with the lowest cost. Let us not forget that agencies interested in to be Channel Partner are also do face stiff competition and forced to quote / offer the minimum / lowest cost offer to company and not surprised if they are offering or accepting at even less than their actual cost estimate. So how the Channel Service Partner agencies will survive???  

1.  Reduction in spares inventory cost. No system to ensure availability of all (or at least bare minimum required) spares. Spares will be procured as and when required and obviously making customer to wait for the arrival of spares. Reason given to customer for non-availability of spares could be anything such as shortage, obsolete, design change, no supply from company and so on. In short reason could be anything for which Channel Partner are not responsible.

2. Less availability of service personnel making customer to wait on the pretext of more leaves of employees or retaining manpower concern. Sometimes even depending / using freelancers there by increasing the wait time.

3. Most common is overcharging the customer by 
    a. charging higher rates than market on the pretext of stipulated by company.
    b. Charging for the work which though is not required and hence not done.
    c. Making an excuse of arranging the required (???) spares from market as procuring                 from the company will take a very long time and thus delay in the completion of task.
    d. Exaggerating the work to be done.
    e. Replacing the spare parts even though not required. Customer has no control on this             and of no use even brought to the notice of company. Now reason why company is             not bothered to take note of this and initiate action could be anything – to support             channel partner to justify their own decision of outsourcing or allowing channel                     partners to recover the shortages or ___???. 

4. After completion of service, attending technician will ask to make the service charges payment to his account and he will make the payment to company. Further he and supported by his superiors, will insist that this is the only procedure laid down by the company. One has no option but to make payment (whatever asked by technician) to his personal account or in cash as no possibility of escalating at that given time.

5. Once service is completed and payment made online or in cash, then its customers responsibility to follow for service invoice or bill. Channel partner will not be willing to provide the same for the obvious reason. Further, in all probabilities, manual invoice / bill will be provided by the Channel Partner and in many cases without taxes. Bill will be made for the amount customer has paid and if required, Company will maintain / confirm that the bill provided by the Channel Partner is correct, error free.

This list has to be kept as open and should be considered as developing story. Every now and then, above list is required to be updated as and when new ways and means are discovered.

Functioning of Channel Service Partners and in turn treatment offered to the end customers’ needs to be constantly monitored / reviewed by the company and should ensure that it’s not deviated from the predetermined goals, targets – both in quality & cost and seek frequent feedback from the customer. Merits and demerits of out sourcing of after sales service / repair needs to be argued / brainstormed by company before implementation and even at defined frequency after allocation of contract. Emphasis has to be only and only on end customer – quality, cost, delivery and satisfaction.