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AINOK AIDNI :

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NOKIA INDIA:

Battery Recall Logistics

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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

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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

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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

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NOKIA Mobile Phone Manufacturing

and Supply Chain

RawMaterials

AutomatedAssembly

Software &Configuration

ManualAssembly

CustomizingPacking

Shipping

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Battery Recall Case

Batch of BL5C batteries manufactured by Matsushita defective August 14 , 2007January 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

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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

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Steps taken by NOKIA INDIA

A SMS solution was activated so that Customers could text thebattery 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

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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.

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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

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Reverse logistics: Illustration

Suppliers Production Distribution Customers

Material

Recycling

CollectionIntermediateProcessing

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Reverse Supply Chain : Challenges

Silo approachLooked at as a series of fairly independent activities considering theintegrated nature of reverse supply chains

Lack of strategic intent

Assumption that the larger strategic question of profitability has alreadybeen resolvedMany 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 returnsvelocity result in loss of value

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Reverse logistics : Relevance in todays world

Environmental Customer Satisfaction

& Loyality

Drive sales

SCENARIO IN US & EU

United States : for economic reasonsEuropean Union (EU) : because of legislat ion. Eg. Tyre manufacturers operating in Europe

Gaining Feedback

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Some More Cases!

General Motors Saturn Corporation

Intuit Tax Software

Intel Pentium Microprocessors

Ranbaxy

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Recent Case from India

General Motors India in July 2013, declared to recall 1.14 lakhunits of its MUV- Chevrolet Tavera, manufactured between

2005-13

It was done to address emissions and specification issues Indias biggest vehicle recall by far

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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?

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uoY knahTThank You