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RLA Webinar Peter Philippens March 20, 2014. DHL IT Project Lead Philips Senseo Product Recall Co designer DHL Recall Management System Designer Solution.

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Presentation on theme: "RLA Webinar Peter Philippens March 20, 2014. DHL IT Project Lead Philips Senseo Product Recall Co designer DHL Recall Management System Designer Solution."— Presentation transcript:

1 RLA Webinar Peter Philippens March 20, 2014

2 DHL IT Project Lead Philips Senseo Product Recall Co designer DHL Recall Management System Designer Solution Design Simulator Solution Design of several Product Return solutions Peter Philippens 2

3 Fortune favors the prepared mind Louis Pasteur Recall !! Are You ready? 3

4 Recalls Can Happen RAPEX notifications 2003–2011 Over the last 10 years there has been a substantial broadening in Regulatory Power and Oversight for End-user Safety Q1 2013 the FDA reports: For the third straight quarter, nearly forty percent of medical device companies named in FDA Enforcement Reports were involved in two or more recalls. Those within the industry should take this time to make sure that they have procedures in place to properly assess the scope of any recall event. By ensuring that all potentially affected products are accounted for and collected in an efficient manner, customers and patients will be much more likely to remain loyal to a brand. Especially for the automotive industry the NHTSA (National Highway Traffic Safety Administration) was established in 1970 to increase the safety on the US highways.

5 The Largest Recalls in history 7,9 Million cars The ignition switch had to be replaced. Multiple reports of it sparking and starting fire in the steering colom 1996 5.3 Million cars Reports of driver-side floor mats becoming wedged beneath gas pedal causing vehicles to accelerate uncontrollably 2010 4.5 Million cars Same problem as in 2005 recall Cruise Control button continued to catch on fire 2009 5.8 Million cars Bolts of suspension were easily loosened rendering driver unable to steer the vehicle 1981 3.7 Million cars Passengers become trapped in their vehicles due to cracked and disintegrating safety belt release buttons 1995 Source : msnbc.msn.com 150,000 medical devices US$ 3 BILLION cost Launched in 2010 200,000 medical devices US$ 500 MILLION cost Launched in 2010 25,000 medical devices US$ 100 MILLION cost Launched in 2011 30,000 medical devices US$ 9 MILLION cost Company placed into liquidation following the recall Launched in 2010 113,000 medical devices US$ 7 MILLION cost Launched in 2012 803,000 medical devices US$ 82 MILLION cost Launched in 2012 Source : fda.com

6 Implications For You A poorly reactively Managed Product Recall may have Disastrous Consequences Brand Image Share Value Product Liability Claims Loss of Market Share Loss of End-user /Trade Confidence Administrative Penalties 6

7 Example case: Senseo Recall : 7.5M affected medical devices in Europe, US/Canada and Asia # registrations first week: ~700K, In the first hours: 300 registrations per minute Total registrations well above 1.3 Mln Registrations: 80% via Web, 20% via Call Centers > 1000 call center agents (at the peak) > 750K outgoing calls Scope : Repair and replacement At the peak 35k boxes shipped per day > 2800 truck loads of boxes > 6400 drop-off points Up to 22k repairs/day on multiple locations ~ 900 FTEs repair staff < 2 months preparation time Costs : Budget 47.0 Million 7

8 Recall - Lessons Learned We tend to react too late Debate too long about appropriate actions Under estimation of the challenges and costs Tendency to engage key partners too late No solid recall contingency plans in place Power of Consumer Safety and Legislation institutes Bad news travels faster than ever ! Realize that current supplier contracts are insufficient How solid are our quality control programs ? Crucial dependency on IT Key role of company communications Importance of managing the Trade partners Poor product traceability 8

9 Recall ! Are You Ready ? What is your Product Recall plan? How quickly could you execute that plan? What is your Personal Experience of Recalls? How would your Organization respond to a Recall? How would you be Notified of a Recall? What Resources could you depend on in case of a Recall? Do you have a Recall Insurance? Have you involved your key partners in your Recall planning? …... Are you prepared for a B2B, or even more challenging, for a B2C Recall? Response 9

10 Crisis! CRISIS! costs market share consumers liabilities brand 10

11 The risk of being unprepared and out of control ! Day 1, 09:00: Media reports fault with product Day 1, 10:00: Adverse Public reaction Day 1, 11:00: Website and Call center volumes increase exponentially Day 1, 12:00: Website and Call center collapse under volumes Day 1, 13:00: Corporate executive team start reacting internally to media message and infrastructure collapse Day 1, 15:00: Crisis response team nominated Day 1, 18:00: Virtual team assembled Day 1, 19:00: Unmanaged media messages increase Day 2, 09:00: Internal debate about response to media/End-users Day 2, 10:00: Website and Call center volumes still uncontrolled, callers concerned with lack of information Day 2, 12:00: Reactive holding statement issued to media Day 2, 13:00: Website still carries no adequate response to potential recall Day 2, 14:00: The crisis team assembled to design an adequate solution Day 2, 15:00: Regular business starting to become impacted Day 2, 16:00: Internal debate about the solution Day 2, 18:00: Unmanaged media messages continue to increase Day 1, 09:00: Media reports fault with product Day 1, 10:00: Adverse Public reaction Day 1, 11:00: Website and Call center volumes increase exponentially Day 1, 12:00: Website and Call center collapse under volumes Day 1, 13:00: Corporate executive team start reacting internally to media message and infrastructure collapse Day 1, 15:00: Crisis response team nominated Day 1, 18:00: Virtual team assembled Day 1, 19:00: Unmanaged media messages increase Day 2, 09:00: Internal debate about response to media/End-users Day 2, 10:00: Website and Call center volumes still uncontrolled, callers concerned with lack of information Day 2, 12:00: Reactive holding statement issued to media Day 2, 13:00: Website still carries no adequate response to potential recall Day 2, 14:00: The crisis team assembled to design an adequate solution Day 2, 15:00: Regular business starting to become impacted Day 2, 16:00: Internal debate about the solution Day 2, 18:00: Unmanaged media messages continue to increase 1)No effective crisis communication 2)Lack of media / social media management 3)Insufficient short term scalability of website and Call center infrastructure 4)Lack of structured recall management 5)Lack of organizational readiness 6)No clear ownership in the organization 7)Uncontrolled response and process 8)Message to media, partners and stakeholders is unclear driving frustration and dissatisfaction 9)Betrayed the End-users trust in the brand 10)Lack of a predefined solution and process 1)No effective crisis communication 2)Lack of media / social media management 3)Insufficient short term scalability of website and Call center infrastructure 4)Lack of structured recall management 5)Lack of organizational readiness 6)No clear ownership in the organization 7)Uncontrolled response and process 8)Message to media, partners and stakeholders is unclear driving frustration and dissatisfaction 9)Betrayed the End-users trust in the brand 10)Lack of a predefined solution and process Sequence of events Lessons learned 11

12 Fast Set-up & Execution Brand Protection Single Dedicated Empowered Team Clear, Effective Communication Ownership of End-Customer Relationship Agile and Modular Solution (menu) Regulatory Compliance Visibility and Measurability Registration Process Efficiency Scalability and Flexibility Global Solution & Local Implementation Traceability and Visibility Financial Transparency High Low Importance of customer needs 1 23 56 79 11121013 8 4 1 2 3 4 5 6 7 8 9 10 11 12 13 Voice of the Customer Source: MEASURE Workshop May5/6, 2011; customer interviews Workshop: Set the Customer Priorities by plotting the yellow number boxes into the appropriate part of the Pyramid 12

13 13 Recall - how to get prepared ? Install a Recall Plan – Ownership – Mandate – Define processes and procedures – Checklists – Internal deployment and training – Engage partner(s) – Maintenance of plan

14 Supply chain coordination Service execution monitoring Exception Management Control Tower Improved Manageability Management Decision Support Business reviews (MBR, QBR, …) Performance reporting Root cause analysis (RCA) Corrective actions implementation Performance Management Service Controllability Performance Visibility Management Decision Support Functional and geographical business extensions Growth accomodation Coordination of process changes Change Management Service Flexibility Business Agility Consultative Advice Solution optimization Innovation management Leveraging of best practices Cost and efficiency management Continuous Improvement Business Intelligence Learning from Leaders Customer relationship management Collaborative service development Account Management Single point of contact for all questions Ease of Business Project Management Recall Solution Design Recall Solution (IT-) Implementation Readiness Assessment Project Design & Implementation Optimal Solution Fast Readiness 14

15 RMS Packaging Delivery Recall Product Retrieval Repair Services Return Delivery Dashboards Track & Trace Performance Reporting Scenario Planning Solution Optimization Order Management Partner Management Exception Management End-user Web portal Batch Registration Validations Registration 1 Repair Carriers Service Points &Consolidation HUBs Repair Vendor Warehousing Simulation End-user Business Customer Control Tower Scrap Service Point PUDO Example end-to-end Replacement and Repair Model Recall Management System E2E Business Intelligence RMS Operational Flow Model - Example Consolidation HUB Warehouse Call Center Customer Supply Chain Integration A E2E Order Management B Reporting CD New Product Delivery Packaging Delivery Recalled Product Retrieval Scrap Services Replacement 3 1 1 A A A C C D C 2 2 3 B 1 15

16 What is the optimal number and location of material and service suppliers? - e.g. for packaging, spare parts,repair vendors, recyclers Where to locate the warehouses and distribution centers? -geographical spread of end-users / customer locations -expected response rates -location of the production site(s) What are the optimal transportation modes and routings to meet delivery requirements? What capacities do I need where and when? What lead times are allowed, what are the expected costs? Other challenges like customs, authorities, environment etc. Solution Design Challenges 16

17 An Integrated Recall Solution The Recall Management System An end-to-end Recall Management Solution The solution provides open information flows at any point in the recall process End-user Track & Trace End-user Registration Platform Multi-language coverage Control Tower Planning & Optimization Multi-level Reporting Exception Management Customer Performance Dashboards Customized Solution Design Supply Chain Integration Service Partners Pre-Integrated Partner Network Open connectivity architecture Execution Management 17

18 18 The simulator as part of the Recall Management System Registration Management System Added Services Partner System Integration Dashboards, Reports & Analysis Label Management System Call Centers IVR Solution Design Simulation Packaging & Warehousing Repair & Recycle VAS Carriers Process Configuration Order Management Data Consolidation & Conversion Engine Tracking & Tracing End-user Registration Webpage Address Validation Module RMS is a fully modular solution using expert partners

19 Tweaking Adjustment / Fine-tune the model, re-input the model and run to optimize The following variables can show improvement (or not): Total number of days of the simulated project (did it become shorter?) Bottlenecks in all the nodes (bottlenecks gone?) Time frame in which a node is active (active time frame shorter?) Example of a scenario that shows an increasing stay time (waiting + processing of an order within a node, i.e. repair): This example clearly shows that the stay times are increasing towards the end of the project. This does not necessarily mean that processing within the packaging process takes longer and longer. In this case the orders had to wait longer and longer before they could leave the packaging vendor, due to constraints in the following process, in this case the delivery line from packaging to central hub. 19

20 Questions ? 20


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