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Battery Recall Logistics

Part-Time Post-Graduate Programme in Management
(Pt-PGPM: Oct 2012 Batch) Term: VI (Jan-Mar 2013)
Management Development Institute - Gurgaon
Supply Chain Management

Recall Logistics

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
Software &
Customizing Packing
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

Reverse logistics: Illustration
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 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
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
Recent Case from India
General Motors India in July 2013, declared to recall 1.14 lakh
units of its MUV- Chevrolet Tavera, manufactured between
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?

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Thank You