Chief Iceologist, Mark Hangen (CEO), explores accountability and commercial ice machines in this 3 part exclusive series.
Accountability and Commercial Ice Machines
There is a simple, profound truth which separates Easy Ice customers from those who choose to own and operate an ice machine. Easy Ice profits least when our customers’ ice machines are not functioning properly. The ice machine industry profits most when owner’s ice machines malfunction or underperform. We firmly believe that profiting from a customer’s misfortune is not an acceptable premise on which to build a sustainable business.
The ice machine industry is made up of a handful of manufacturers (e.g. Hoshizaki, Scotsman, and Manitowoc) who sell their products to independently owned distributors who, in turn, sell to independent dealers who sell to the end customer. Service for ice machines may be provided by the selling dealer but generally is provided by small heating and air conditioning service companies.
The dark side of this structure is that no single entity has accountability for your ice machine; indeed as many as four different entities may be involved. No accountability means each interaction is viewed as a transaction on which a profit needs to be made by everybody involved. Does your ice machine need a part? The manufacturer gets a margin when it is sold to a distributor, who gets a margin when it is sold to a service dealer who charges you a margin as well.
Because there is no single point of accountability it is up the ice machine owner to manage the various entities involved. The motivation of each entity is to maximize the amount of money earned on each transaction. While the initial sale may be the single largest single outlay made by the customer it provides the least amount of profit margin. Indeed, there is far more profit in parts sales and labor. Hence the more labor involved and the more parts sold the more profit to go around. Conflicts naturally emerge: building an ice machine that is too reliable means fewer parts and less labor cost. Building a machine that is easy to fix means less labor. Building a machine that is too durable means fewer machines sold over the long run.
Why aren’t manufacturers building longer-lasting, more reliable ice machines? We will continue this discussion in the next installment of this accountability series. We invite you to leave comments or questions.