NOKIA

AINOK INDIA:
AIDNI :
Battery
yrettaB Recall
llaceR Logistics
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 Management Development Institute - Gurgaon
Supply Chain Management
Case-08
NOKIA INDIA: Battery
Recall Logistics
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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

Part-Time Post-Graduate Programme in Management

(Pt-PGPM: Oct 2012 Batch) Term: VI (Jan-Mar 2013)
 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 India’s $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
 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 Nokia’s 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 product’s condition
Refurbishing for most suitable option out of: direct reuse, repair,
remanufacture, recycle, or disposal
Remarketing
 Reverse logistics: Illustration

Suppliers Distribution Customers

Production

Collection
Intermediate
Material Processing
Recycling
 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 today’s world
Environmental Customer Satisfaction Gaining Feedback
& Loyality

Drive sales

SCENARIO IN US & EU
United States : for economic reasons
European Union (EU) : because of legislation. Eg. Tyre manufacturers operating in Europe
 Some More Cases!

General Motors Saturn Corporation Intel Pentium Microprocessors

Intuit Tax Software 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

• India’s 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 firm’s value chain?

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Thank You