North American Mobile Network Operator (MNO) Reverse Logistics
With the market becoming saturated and competition more aggressive, MNOs worldwide are under pressure to deliver more streamlined and efficient ways of doing business. No longer can they focus on pure growth. MNOs are increasingly concerned with after-sales services and cost competitiveness.
A major North American MNO, with a national footprint acquired through organic growth and acquisitions, recognized the need to revamp and reengineer its reverse logistics processes. The objective was to significantly reduce costs as well as improve service.
Challenge
The MNO faced several challenges and issues in improving its original handset return and reverse logistics processes:
- Several different processes inherited from the acquired companies
- Inconsistent customer experience across regions and channels
- Inefficient process with too many handoffs
- Too many customer touch points (700+) for returns
- Overall poor service level – no tracking or visibility, plus long cycle-times
- Many opportunities for fraud and leakage
- Process ownership split between retail and supply chain
Approach
A.T. Kearney was engaged to work with a cross-functional team, led by company’s supply chain organization, to identify and implement the best model for handset reverse logistics. The team examined several key issues as part of this project:
- Should service level be driven by the relative value of the customer segments?
- What impact will product proliferation and technology convergence have on reverse logistics?
- What is the optimal number of options and channels for returns, and how do they align with current and future sales channels?
- What are the operational tradeoffs between a centralized versus decentralized reverse logistics model?
- Will an in-source or out-source model provide the desired level of effectiveness and efficiency?
- What are the information systems enablers necessary to drive value out of reverse logistics?
- What is the most effective governance model?
- Which best practices from other industries can be leveraged for competitive advantage?
An end-to-end assessment of the process revealed that two line items contributed over 50 percent of total costs (field expenses and kit breakdown costs). Further interviews and site visits identified other high level issues in different key activities of returns and repairs.
Several reverse logistics models were evaluated for the different combinations of customer experience choices: internal versus outsourced, and national versus regional solutions.
Results
The end result was a Like-For-Like (L4L) exchange model, which leveraged a centralized repair model. Services consistently improved as the solution was standardized for the entire company, with a consistent set of options available to all customers (exchange could be handled at the company stores, via a 1-800 number, or with a web-based tool).
The implementation resulted in savings over $50 million, driven mostly by outsourcing of activities to third-party repair providers, stricter controls over inventory, and cost reductions in handsets/seed stock.
Contact
|
Augusto Morais is a principal in A.T. Kearney's Atlanta office.
