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Effectively Realising Synergies in the Supply-Service Chain?

“Diligence feels like speed dating. You have a short timeline to make a critical decision that equates to marriage. The target shows off its colours, and you need to decipher between infatuation and a true match.” – PriceWaterhouseCooper

To put it in clean terms, the above simply means that the deliberations during the short meetings (dating) between the service provider and the client company or the equipment supplier and the service provider enable the parties involved to make the critical decision of collaboration (marriage). While each one puts up the best before the other during such meets, one has to figure out what is right (true match) and what lies beneath (infatuation) for a successful synergy.

In the normal scenario, the sale-purchase deal usually involves the equipment supplier and the service provider but lately, equipment suppliers are closing deals with the end users/client companies in specific industries. While both these kinds of deals are almost similar, the factors involved in creating synergies with the service provider has been found to be much strained.

Comparatively, the synergies between the supplier and the service provider have soured for several reasons, prominently owing to distracted equations and after sales service. Suppliers today find complacency in dealing with the end user, as the above two contributing factors are largely missing.

Factors driving the success synergy are being experienced in the institutional and commercial market too. says Vivek Mata, Managing Director, Charnock Equipments Pvt Ltd, supplies international brands.

Sitting across the table at the office of 247 Facility Services in Bangalore in a discussion on creating synergies, Vivek Mata says, “We have been supplying equipment to 247 FS since its inception and share a very comfortable equation. This has been possible because there is clarity in our transactions and services. Clarity steps up the buyer confidence in the seller; this in turn strengthens the relationship and contributes to successful partnership.”

However, there is misconception in the market that suppliers are more concerned with clearing stocks, resulting in customer dissatisfaction. Ultimately, however efficient the machine and however good its applications, unless it meets customer satisfaction, the deal is unstable. “Customer awareness is equally important, especially in customised machines, as it will help in understanding the need for such a machine and the operations for satisfactory results,” explains Mata.

The dating period with the client could be short or long depending on the educating and convincing factors. And not all courtships end in marriages. But to educate and convince, it is essential to understand the needs of the client. “This is possible only through thorough site audit,” says Mata. “The supplier should essentially accompany the service provider during such audits, to ascertain not just the kind of equipment but also the capacity and usage,” adds Shashi Kamal Garg, Managing Director, 247 Facility Services Pvt Ltd, which is not only into providing soft service but has trained staff for kitchen stewarding. Many of the Taj Hotels have engaged 247 Facility Services kitchen stewards.

Besides education, another most challenging factor is to provide services within the parameters specified by the client company. “Meeting this challenge is a win-win situation for both the client and the service provider. Clients spell out the limitations in the financial allocation for cleaning and to work out a suitable solution with the use of man and machine, it is important that the equipment supplier accompanies in the site study. This will simplify the process of selecting the right equipment and also enable better service,” Garg adds.

In the absence of this supplier-service provider synergy, in many cases, service providers have expressed dissatisfaction over the machine purchase and have complained of non-performance or faulty performance. “But how can a machine perform the task which it is not meant for? A lot of companies go wrong in the selection of the machine and land up buying the wrong machine on the basis of their limited knowledge,” says Mata.

The equipment supplier surveying the client site can ascertain the kind of equipment required, its size and its applications. “We form a team, understand the requirement and supply the right equipment at the best price for specific applications. As far as hospitality industry is concerned, there are certain key factors. Will the machine be used for back office or visible area cleaning? We suggest low decibel machines for the visible or traffic area and high decibel for the back office in order to save money. These are some of the suggestions that play a pivotal role in taking the right decision,” adds Mata.

This again is influenced by the cost factor which has to match the client’s financial allocation. “Nonetheless, whatever clientele we have today, we do not compromise on any point be it manpower or machine. We put forth to the client, the requirement toward meeting cleaning standards,” Sandeep Khosla, CEO, 247 Facility Services.

In the case of 247, having been in the industry for a significant time, it has been able to build on the client confidence on the service provider. “Based on the rapport that we share with the client and based on the confidence the client has on us in delivering the services and the products being used therein, we have been able to acquire a lot of new business in a short span of time,” says Khosla.

While the above is an ideal model, in nine out of 10 cases, the service provider opts for a cheaper machine despite recommendations of better machines by the equipment supplier. This has largely contributed to the ill confidence on the products and services offered by the service provider. “In such cases, as suppliers, we put in black and white that ‘X product has been recommended but since the service provider is opting for an X minus 1 product, the supplier is not responsible’,” explains Mata.

In the bargain, where the service provider goes for a lower priced products other than what is required, the machine gets abused and fatigued very fast and resultantly, the credibility of the machine and supplier gets damaged. “The equipment supplier plays an even bigger role in informing the client about the differences. In many cases, the machines have been called back and replaced with a higher model. Initially, service providers were unhappy and even refrained from buying from us. But, we had to keep our slate clean when it comes to the client. Many of them have come back to us at a later stage,” says Mata.

It’s not always that the service provider decides on what machines to buy. “A lot of clients know what they want and are particular about the machine being used for cleaning. The awareness among the clients is much pronounced to the extent that in some cases they are able to specify the model and the brand of the equipment,” adds Garg.

At times, the client’s demand for a particular brand can be challenging. “We had encountered with one of our clients, a Fortune 500 company. They insisted on us using a particular brand against what we had suggested. As a service provider we do not have a down time of more than four hours. Hence, the machines we use have to match the requirement and in times of breakdown, I should be able to get it fixed or replace parts in four to five hours. This would not be possible, if I had to procure the parts from London or Germany or the US, due to the time factor. Finally, we withdrew from the contract when the client held his ground. But the positive factor in this failed synergy was that the client, inspired by our commitment, called us back,” says Khosla.

A well-defined, disciplined, and transparent approach to synergies increases the probability of achieving them. Such an approach involves:

• Modelling synergies: Conducting synergy and value driver analyses, including probability weighting of financial impact and success

• Executing synergies: Creating a detailed work plan that identifies dedicated and accountable resources

• Tracking synergies: Implementing robust approaches to synergy tracking and reporting

As an equipment supplier, Charnock has 12 offices across India and 35 dealers with a good network. “Reaching the service provider or the client in time when there is a service call is a priority. With a good networking system, the nearest dealer reaches the site, anywhere between four to eight hours without fail. To quote the success of being on time for a call, reaching a multi-national company within one-and-half hours of its call for a demonstration, worked to our advantage to the extent that we have received the second order in a short span of time,” says Mata.

Today, the outlook has changed. You can’t sell just brands you can sell your commitment and service. The worst brand can become the best with proper services and vice versa.

“Thus, the synergy concludes when the right seller brings in the right results, with the right equipment going to the service provider at the best price and in turn the client draws the right benefits out of the transaction with smooth services and immediate action.”

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