Part-Time Post-Graduate Programme in Management (Pt-PGPM: Oct 2012 Batch) Term: VI (Jan-Mar 2013) Management Development Institute - Gurgaon Supply Chain Management
Case-08 NOKIA INDIA: Battery Recall Logistics scitsigoL
ID Name 1 12PT2-19 Deepak Verma 2 12PT2-35 Nitin Mehta 3 12PT2-39 Pooja Ratra 4 12PT2-47 Sakshi Virmani 5 12PT2-58 Udit Mangal March 4, 2014 NOKIA Background Nokia started as a wood pulp mill in 1865, Finland. Diversified into consumer electronics, ~ 40% revenues, 1980 First cellular mobile phone- 1986 Entered Indian Market in 1995- Nokia India Market leader in Indias $2.5 billion handset market Largest distribution network in India, presence in 130,000+ outlets, 500+ Customer Care Centres (CCCs), 600+ Nokia Priority Dealers (NDPs), Concept Stores
NOKIA Mobile Phone Manufacturing and Supply Chain 10 factories worldwide and 900,000 mobile devices/ day 100 bn+ components sourced from 60+ strategic suppliers Sourcing activities: direct & indirect Demand driven supply chain : link supply management, demand management, product management
NOKIA Mobile Phone Manufacturing and Supply Chain Raw Materials Automated Assembly Software & Configuration Manual Assembly Customizing Packing Shipping Battery Recall Case Batch of BL5C batteries manufactured by Matsushita defective August 14 , 2007 January 1,2008 (Product Advisory ) Replacement through online registration and direct shipment Media Assault & Nationwide Panic 46 Million Defective BL-5C Batteries were recalled Estimated to be $172 million Challenges faced by NOKIA INDIA Had no recall protocol Tax/ legislation issues in pan India for FOC item Problems with SAP, all invoices done manually Media furore raised, public fear and panic Online registration was not effective, especially in rural India No replacement batteries were available immediately Blue Dart Courier not able to handle large volumes of shipment Customers did not receive couriered batteries Steps taken by NOKIA INDIA A SMS solution was activated so that Customers could text the battery Number Also Batteries were sent to CCCs & RDs through HCL in case of directly coming customers Started Advertisement campaign and a toll free helpline Contracted DHL, set flat rates , DHL arranged a makeshift packing and shipping facility Customers sent back old batteries in an insulated envelope 4 months recall operations- ended in Dec, 2007
What it meant for NOKIA? Affected Nokias stock price, could have costed it upto Euro 500m Identified need for having a recall protocol, development of a reverse logistics operation Product recalls, if handled properly, can keep damage to minimum, can further strengthen brand Problems are excellent guides to improvement, but only if the real problem is identified. Reverse logistics : Concept Handling of the return flows of product or equipment back from consumer for reuse, recovery, or recycling Reverse flow of goods back from customer May involve extra operation activities than forward Supply chain- Closed Loop Supply Chain These additional activities include : Product acquisition from end-users Reverse logistics to a point(s) of disposition Testing & sorting to determine the products condition Refurbishing for most suitable option out of: direct reuse, repair, remanufacture, recycle, or disposal Remarketing
Reverse logistics: Illustration Suppliers Production Distribution Customers Material Recycling Collection Intermediate Processing Reverse Supply Chain : Challenges Silo approach Looked at as a series of fairly independent activities considering the integrated nature of reverse supply chains
Lack of strategic intent Assumption that the larger strategic question of profitability has already been resolved Many firms look at remanufacturing as a technical operational problem
Fear Fear of losing the market share Fear of losing on brand image
Lack of encouragement
Ignorance of speed Slow returns velocity result in loss of value Reverse logistics : Relevance in todays world Environmental Customer Satisfaction & Loyality Drive sales SCENARIO IN US & EU United States : for economic reasons European Union (EU) : because of legislation. Eg. Tyre manufacturers operating in Europe Gaining Feedback Some More Cases! General Motors Saturn Corporation Intuit Tax Software Intel Pentium Microprocessors Ranbaxy Recent Case from India General Motors India in July 2013, declared to recall 1.14 lakh units of its MUV- Chevrolet Tavera, manufactured between 2005-13 It was done to address emissions and specification issues Indias biggest vehicle recall by far
Things to Ponder? Is reverse supply chain just an afterthought? Can reverse logistics strategy be a competitive advantage? Should companies now look from 3PL to 4PL? Should green supply chain be a part of firms value chain?