Thinking About Outsourcing Repairs? Key Advantages to Consider:
Outsourcing repair operations can be a challenging decision for manufacturers (OEMs). Whether you’re dealing with a backlog of products awaiting repair or strategizing your go-to-market plan and considering how to proceed, there are several key benchmarks worth noting.
Clearly Defined Cost Basis
Outsourcing repair operations offers a major advantage with its variable pricing model. This facilitates more efficient budget planning and prevents unforeseen expenses common in in-house operations. A clearly defined cost basis also offers insight and the ability to plan around seasonality, sales forecasts, and economic conditions.
Minimizing Costly Startup Repair Expenses
Setting up a repair center in-house can be extremely costly. Not only do you need to invest in equipment and tools, but there are also other expenses such as salaries, benefits, training, certifications, and maintenance costs. At Renova Technology, we provide the repair data back, so you get the benefit of knowing exactly what products come back for without incurring the research and development costs.
Focusing on Core Business Capabilities
As an OEM, you get to focus on what you do best, which is creating and selling outstanding products. Outsourcing repair activities allows OEMs to focus on their core operations, which can boost their overall productivity and efficiency. By eliminating the distraction of running a repair center, quality and product development teams can focus on areas that need their attention and expertise, not handling a customer service request or RMA (return merchandise authorization).
Pay Based On Volume With Depot Repair
Outsourcing repair operations means that you only pay for the volume of repairs that you need. This can help to regulate costs while giving businesses more control over their expenses. Understanding the distinction between variable costs for seasonality vs. ownership of perhaps fixed costs internally. It basically comes down to whether you want to spend on idle time internally when product is not readily available for a repair team.
Reduce Transportation Costs
Outsourcing repair operations can help businesses reduce their transportation costs, as they do not need to transport their products to and from the repair center. This can also help to reduce the turnaround time for repairs, ensuring quick delivery and satisfied customers. Freight alone can be a significant cost, not even considering the repair time. At Renova Technology, we calculated in just one customer example a 30% decrease in overall reverse logistics costs and 50% decrease in transportation costs by moving to an outsourced model domestically. When it makes sense, it makes sense.
Harness Repair Data
Data is one thing we stress at Renova Technology. Overall, finding a depot repair service provider and outsourcing repair operations provides businesses with access to valuable repair data, which can help them identify patterns, optimize repairs, and improve the overall quality of their products.
OEMs can take the data back to quality and product teams for future iterative design process. Quantifying the value of data is by far one of the most significant line items to consider, which can help influence component quality, service calls, inventory management, yields, and repair testing protocols.
