NOKIA BATTERY RECALL

LOGISTICS CASE
Kayahan KAYA
Gke Arzu YCEL
Fatmagl ARANBALI

Introduction

Nokia Corporation

Nokia India Manufacturing Process

Logistics in India

46 million defective BL-5C batteries recalled

August 14, 2007 January 1, 2008 (Product Advisory)
Media assault & Nationwide panic
Phenomenal amount of effort at different levels
95% of batteries replacements completed, not 100%

Nokia Corporation

Nokia India

Manufacturing ProcessLogistics in India Battery Problem

Paper pulp industry in 1865,

Nokianvirta River in Finland
The company named NOKIA AB.
In 1967, Nokia Corporation = Nokia AB
+ Finnish Rubber Works + Finnish
Cable Works
Diversification strategy in 1980s.

Nokia Corporation

Nokia India

Manufacturing ProcessLogistics in India Battery Problem

Concentrating on consumer electronics

(40% of Nokias sales revenue)
In 1984, the first car telephone
In 1986, the cellular mobile phone
In 1991, the worlds first Global System
for Mobile Communications(GSM) was
created

Nokia Corporation

Nokia India

Manufacturing ProcessLogistics in India Battery Problem

As of 2007,doing business around

120 countries
Mobile Devices
Telecom Equipments
Mobile Content Services

The company organized around 2

segments
Devices

Services

Nokia Corporation

Nokia India

Manufacturing ProcessLogistics in India Battery Problem

The Corporate Development Office,

Espoo, Helsinki

Asia-Pacific Regional Headquarters,

Singapore, Korea, China, India

R&D Centers,
Japan, China

Nokia India Manufacturing ProcessLogistics in India

Battery Problem

Recall Strategy

One of the fastest-growing mobile phone

markets with 170 million subscribers
Liberalization of the market
Allowing private operators to give licences
Nokia entered Indian market in 1995
In 2004, 70% market share & In 2006, 76%

Nokia India Manufacturing ProcessLogistics in India

Battery Problem

Recall Strategy

Strong network of sales and marketing

centers in India,
More than 500 customer care centers (CCCs)
More than 600 Nokia Priority Dealers (NPDs)
Concept Stores for more technologically
sophisticated customers

Some of the CCCs and NPDs were owned

and operated by Nokias alliance partner,
HLC Infosystems

Nokia India Manufacturing ProcessLogistics in India

Battery Problem

Recall Strategy

In 2006, Nokia and HCL decided to

coverage needs of both the urban
and widely-dispersed areas
Nokia India,
North
West
South
East

Manufacturing Process
Nokias Supply Chain Logistics in India

Battery Problem

Recall Strategy

Nokias Supply Chain

Logistics in India

Battery Problem

Recall Strategy Logistics Controller

In 2006, very complex supply chain

handled 900,000 mobile devices per day
100 billion components
Since 1995, trying to create a demanddriven supply chain linking with the
consumers and host of suppliers
In 2007, in a research Nokia ranked
number one for the excellence in SCM.

Logistics in India Battery Problem

Recall Strategy

Logistics Controller Evaluations

Significant challenges for Logistics

Management (LM),
Topography of India (25 states)
Varying customer habits
Diversity of languages
Diversity of customs
Highly congested airports, ports and
roadways
Inadequate warehousing and distribution
facilities beyond major cities

Logistics in India Battery Problem

Recall Strategy

Logistics Controller Evaluations

Thats why Nokia had established its

own storage and distribution facilities
The complex and different tax regimes
in each state and high bureaucratic
control were another hurdles.
This requires third party logistics(3PL)
service providers in providing logistics
solutions.

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

Up to comsumer complaints, Nokia

discovered that BL-5C batteries were
likely to swell during charging.
After some analysis, some batches of
batteries produced by Matsushita
were found defective because of
overheating.
Then, Nokia management decided to
issue a product advisory.

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

Online check-in by keying the battery

number from the web site of NOKIA
If the battery is affected it could
be sent to customers adress
within 15 days
Thought a small-scale operation

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

SAP Problems,
The batteries were free.
25 different states & different set of tax
rules
Lots of details required
SAP system did not have a provision for a
zero priced item
All documents and invoices were done
manually
All this software obstacles were overcome by
the management within the same day

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

Media Furor,
Sensational panic occured
Online-checking from the web was
not very effective especially in rural
India
To avoid this panic,
2 different teams created
Crisis Management team
Logistics Team

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

A local solution was required to

prevent that time consuming,
A Short Message Service(SMS) was
activated that customers could text
the battery numbers
If the battery is affected, then
customers sends another text which
includes him/her adress.

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

Also batteries were sent to the CCCs and

RDs in case of directly coming customers.
Reached local customers easily
Then, more than 150 000 phone calls and
messages within a couple of days
More than 3 million requests within a
week

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

These options were not enough

Independent mobile service and
buyers
So, Nokia could not reach all the
customers
A toll-free telephone helpline at each
CCC and NPD.

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

The batteries started coming from

several factories,
Chennai, Singapore, Dsseldorf

Blue Dart couriers, not able to handle

large volumes
Contacted with DHL (Blue Darts
parent company)

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

DHL set up a makeshift packing and

shipping facility
40 employees from DHL crew
At least twice as many more workers
needed
Nokia warehouse Delhi did not let
them
A consultancy was taken,
80 temporary workers were hired

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

Another empty warehouse was rented and

began three shift operation
Unpack cartoons each containing batteries
Each battery wrapped in a bubble sheet four
times
Batteries were put in a DHL courier bag with
Not For Sale sticker
The bar codes and courier bags were
scanned
To avoid double delivery, each CCC also
captured the number of batteries it replaced

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

Nokia paid a flat

rate to DHL.
DHL negotiated the
rates with remaning
courier companies
Peak Business &
Nokia offered DHL
special incentives
and DHL offeren
cuurier companies
too.

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

Reasons for non-delivery,

Incomplete adresses
Missing Postal Identification Numbers
Nobody at home
The courier left a call
If no answer they went once more to
deliver
If nobody again, the battery was sent
back to Nokia

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

Reverse Shipment,
Enviromental concerns were
prevented
Customers were asked to give back
old batteries via DHL & Blue Dart
The same courier bags
Old batteries collected at CCCs
4 months recall operation
Overed in December 2007

Battery Problem

Recall Strategy

Logistics Controller

Evaluations

Recommendations

Coordinating and controling the cycle

of transportation (shipmentpartnership with DHL, Blue Darth)
Organising the storage and
distribution of bateries by using
complex IT and telecommunications
systems.
Checking the quantity and quality of
batteries which were sent to
customers

Battery Problem

Recall Strategy Logistics Controller

Evaluations

Recommendations

Allocating duties for temporary staff

Developing business by gaining new
contracts, analysing logistical
problems and producing new
solutions (tariff restrictions of
exports)
Organizing reverse shipment

Battery Problem

Recall Strategy Logistics Controller

Evaluations

Recommendations

Routine data analysis of consumer complaints

Awereness of defective batches
Standart protocol for crisis
Not appropriate for local areas (online check
system form web)
SMS solutions for media furor (local solution)

Business management software database

Manuel documents and invoices
Completition of FOC and VAT processes within
the same day

Battery Problem

Recall Strategy Logistics Controller

Evaluations

Recommendations

Tool-free helephone helpline

Communication with each CCC and NPD

Successful third party logistics

management
Temporary workers
Trying to reach each customer
Prevention of duplicate records

Battery Problem

Recall Strategy Logistics Controller

Evaluations

Recommendations

A Recall Protocol that is known by

all the stakeholders
Special protocols for special regions
Stable and contracted third party
logistics support

Battery Problem

Recall Strategy Logistics Controller

Key factors for Nokia;

To create,
Agile
Adaptable
Alinged supply chains.

Evaluations

Recommendations

Battery Problem

Recall Strategy Logistics Controller

Evaluations

Recommendations

Perfect product customization in

terms of agility
Also Nokias supply chain should be
agile in case of big breakthroughs
Smart phone technology

Nokia should try to sell devices with

operators to catch the consumer
information trends and choices

Recall Strategy Logistics Controller

Source: Gartner
Group

Evaluations

Recommendations Todays Nokia

Recall StrategyLogistics Controller

Evaluations

Source: Internet Data Center

(IDC)

Recommendations

Todays Nokia

Recall Strategy Logistics Controller

Evaluations

Source: Internet Data Center

(IDC)

Recommendations Todays Nokia

Recall StrategyLogistics Controller

Evaluations

Recommendations Todays Nokia

Slow adaptation to smart phone

technology
Weak comsumer orientation
Lack of operating system
Corporation with Microsoft