Necessary shift in smartphone service supply chain, by B2X

By Freddie Pierce
Written by Sven Montanus, (pictured below, right) Head of Product Development and Bobby Penn (pictured, at bottom, right), Head of Business Development...

Written by Sven Montanus, (pictured below, right) Head of Product Development and Bobby Penn (pictured, at bottom, right), Head of Business Development North America at B2X, the global, technology-enabled service provider of customer care solutions for electronic devices to manufacturers, insurance providers, mobile network operators and retailers

As the sheer number of devices continues to increase, and as each device grows in complexity, the need for service and support will exponentially expand as well. The current service repair model for smartphones is “swap spoiled,” meaning that almost every single device inquiry is satisfied by exchanging a presumably defect device with a new or refurbished one. It resembles the theme “If your only tool is a hammer, every problem looks like a nail.” This not only creates unnecessary costs for logistics, parts, and refurbishment work, it also doesn’t respond to the need for a more personalized or explanatory support method. People aren’t fond of giving away their beloved device with all of their programmed settings and personal content for a blank new unit. Their phone is their life and they expect the manufacturer or seller to respond in a competent manner, not with an outdated standardized procedure.

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A new, and necessary, paradigm shift in the service supply chain will become clear as industry leaders continue to innovate in frontend customer service techniques like self- and in-store service as well as backend supply chain strategies like component-level replacement.

According to a recent index by Cisco, there will be an estimated 19 billion networked devices in 2017 globally, up from 12 billion in 2012. Additionally, 54 percent of all networked devices will be mobile-connected in 2017. With each release of a new device model and software version, manufacturers introduce more than 200 new features on average. As users struggle to identify how to fully utilize their devices, their dependency grows. Taking into consideration that an average of 10 percent of all devices are returned for repair, the potential for repairs could be as high as 1.9 million each year, and if the average user asks for help five times a year the potential for customer service inquiries rises to 95 billion a year.  

Service goes beyond support to brand identity itself. According to research firm Gartner, by 2015, at least 80 percent of organizations that fail to orchestrate their self-service implementations will incur higher customer service costs and will not achieve the savings and benefits expected. Their conclusion: “When customer self-service/self-care is not associated with differentiation, it cannot be a formidable tool for enhancing services or reaching new audiences via new and emerging channels.”

At the same time, the advancing complexity of user interfaces with new built-in features and downloadable applications requires retail stores to educate customers. People need help to understand what they can do with their devices, and they need this help instantly, on the spot, in the store, delivered from a real person.

One player to successfully adapt to this shift is Apple. Through an easy-to-use online support portal, Apple enables their customers to find answers to simple questions. For more complex issues, customers can contact a call center or book an appointment at the Genius Bar. Initially, Apple Stores only had tools to replace speakers, receivers, home buttons, vibrator motors and batteries, but recently in-store capabilities have expanded to display replacement, cameras, sleep/wake buttons and logic boards. Moreover, employees have access to advanced diagnostics tools for hardware issues and can relay data directly to technicians, allowing for quicker turnaround times.

On the backend, many mobile network operators, consumer electronics retailers and device manufacturers continue to operate with an exchange-driven service supply chain. A modernization of that concept would entail innovation and change with processes, tools, competencies, financial models, supplier strategies and other things. The value of mobile devices has increased and refurbishing phones is getting more expensive. Not to mention, consumers would prefer to keep their own device. Finally, commonly used quality KPIs show devastating trends with “no fault found” rates of up to 50 percent and “bounce rates” of up to 20 percent..

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Unlike in the past where devices were built from hundreds of various parts, today’s smartphones and tablets have a much shorter bill of materials. A Samsung Galaxy has 12 core components, while an iPad mini has only 8. This trend towards modularization is in line with the product engineering strategies of most of the leading manufacturers and therefore the service supply chain needs to respond to this growing trend.

In the next few years, component level repair concepts will disappear while component exchange concepts evolve. This allows mobile network operators, consumer electronics retailers and manufacturers to fix up to 80 percent of hardware issues in their own retail stores. Exchanged components and parts will be shipped to advanced repair factories to be reworked and redistributed to the shops to make use of them again.

This paradigm shift, in both front and backend systems will continue to improve both the customer experience and supply chain efficiency, while providing wide-ranging benefits to consumer markets, industry and the environment at large.

About B2X

Sven Montanus is Head of Product Development and Bobby Penn is Head of Business Development North America at B2X, the leading global, technology-enabled service provider of customer care solutions for electronic devices to manufacturers, insurance providers, mobile network operators and retailers. B2X operates in more than 110 countries and manages over 8,000,000 transactions each year on behalf of most of the top 10 smartphone and tablet brands.


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