A one-size-fits-all approach can lead clients to your competition.
Recently I had an under-the-slab plumbing leak. I’ve been using a plumber who has deliberately kept his business small for over three decades. He is responsive, but complex jobs often take longer because he doesn’t have all the tools the larger plumbing firms carry in their vans. He also doesn’t have their overhead, so for most jobs he is more cost competitive. I called and he walked me through shutting off the water at the meter because he couldn’t come until the next day. Part of my childhood was spent in Florida, so I applied my post-hurricane water management skills while I was without running water.
Sadly, when he arrived, he was unable to determine the source of the leak. Watching the meter spin, he mentioned it was a big one. He recommended a water leak detection firm. Its voice mailbox was full, however, and said it sometimes took a couple of days for them to return calls. My plumber reassured me he would come back after we found the leak. I got on the computer and found a water leak detection firm that operated 24/7. Fifteen minutes later they were at my house and 30 minutes after that we knew where the leak was. They were able to cut a hole in the wall and cut off the bad pipe so I could have water in the rest of the house. They couldn’t fix the leak until the next day, and it would likely involve more demolition to reroute the pipe, so I had a decision to make.
Did I want to go with my reliable plumber who didn’t have the same time-sensitivity or power tools as the team specializing in plumbing leaks, or did I want to pay the larger firm roughly double what my plumber would likely charge? I opted for the faster, more expensive operation. It was a good choice because they had to remove a tile I couldn’t replace and cut through an exterior brick wall to do the repair. Their tools did the job in a way that was easy to repair, and they installed an access panel in the brick wall, plus closed up all the wall and tub surround holes before they left. My regular plumber would have gotten the pipe reroute done, but the demolition and subsequent repair would not have been nearly as elegant.
I often draw parallels between electronics manufacturing services (EMS) providers and some of my business transactions, and this example has a clear EMS parallel. Many OEMs choose job shops or regional manufacturers for the convenience they represent and their ability to handle projects that don’t fit well in larger EMS companies. Their lower overheads often translate to lower pricing, and the industry has evolved to a point where there isn’t much difference in core capabilities among different tiers. In most cases, choosing a job shop or a regional EMS provider for product volumes that don’t run well in a larger EMS provider is the best business decision. That said, when a smaller EMS company loses a customer, it is often over reasons like this plumbing example. Something was keeping the customer up at night that changed the dynamics of the relationship, and the EMS provider didn’t recognize that the problem required a different approach. Or the way a project challenge was handled convinced the customer that more complex projects should go elsewhere.
Two lessons are to be learned from this. First, smaller EMS providers must be sensitive to customers’ sense of urgency because ignoring an urgent issue can open the door to comparison with competitors with a broader range of services and a dual-sourcing strategy. Defining the response based on the criticality of the problem rather than taking a one-size-fits-all approach can help minimize this risk. Just as you would do an FMEA on product design, consider doing FMEA on key customer relationships. What situations should drive a different approach? How will you resource that? Having this game plan in place is particularly important when the issue involves a new project that could be sourced elsewhere.
The second lesson is for OEMs. Most relationships with smaller EMS providers have a convenience factor. There can be more flexibility, faster fixes on short notice and usually better prices for projects that have a lot of changeovers. If an unusual situation isn’t handled well by a long-term source that has been reliable most of the time, switching suppliers may not be the best decision. A candid conversation about why a specific issue needs to be handled differently may be a better solution. If lack of responsiveness has been a trend driven by lack of resources, however, reevaluation of sourcing options may be the best choice.
I’m not replacing my plumber with a larger firm. I am now recognizing, however, that I am better served by a second source for complex projects, even if it costs more. In the EMS parallel, that customer mindset creates an account vulnerability.
is president of Powell-Mucha Consulting Inc. (powell-muchaconsulting.com), a consulting firm providing strategic planning, training and market positioning support to EMS companies and author of Find It. Book It. Grow It. A Robust Process for Account Acquisition in Electronics Manufacturing Services. She can be reached at email@example.com.