rla webinar peter philippens march 20, 2014. dhl it project lead philips senseo product recall co...
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RLA WebinarPeter PhilippensMarch 20, 2014
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• 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
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“Fortune favors the prepared mind”Louis Pasteur
Recall !! Are You ready?
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2003 2004 2005 2006 2007 2008 2009 2010 2011
All notifications Serious risk notifications
Recalls Can HappenRAPEX notifications 2003–2011
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Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012
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.
The Largest Recalls in history
7,9 Million carsThe ignition
switch had to be replaced.
Multiple reports of it sparking and
starting fire in the steering
colom1996
5.3 Million carsReports of
driver-side floor mats becoming
wedged beneath gas
pedal causing vehicles to accelerate
uncontrollably 2010
4.5 Million carsSame problem
as in 2005 recall Cruise
Control button continued to catch on fire
2009
5.8 Million carsBolts of
suspension were easily loosened
rendering driver unable to steer
the vehicle1981
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
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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
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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 FTE’s repair staff• < 2 months preparation time
Costs : Budget € 47.0 Million
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
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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
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Crisis!
CRISIS!
costs
market share
consumers
liabilities
brand
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The risk of being unprepared and out of control !
Day 1, 09:00: Media reports fault with productDay 1, 10:00: Adverse Public reactionDay 1, 11:00: Website and Call center volumes increase
exponentiallyDay 1, 12:00: Website and Call center collapse under volumesDay 1, 13:00: Corporate executive team start reacting internally to
media message and infrastructure collapseDay 1, 15:00: Crisis response team nominatedDay 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-usersDay 2, 10:00: Website and Call center volumes still uncontrolled,
callers concerned with lack of informationDay 2, 12:00: Reactive holding statement issued to mediaDay 2, 13:00: Website still carries no adequate response to
potential recallDay 2, 14:00: The crisis team assembled to design an adequate
solutionDay 2, 15:00: Regular business starting to become impactedDay 2, 16:00: Internal debate about the solutionDay 2, 18:00: Unmanaged media messages continue to increase
Day 1, 09:00: Media reports fault with productDay 1, 10:00: Adverse Public reactionDay 1, 11:00: Website and Call center volumes increase
exponentiallyDay 1, 12:00: Website and Call center collapse under volumesDay 1, 13:00: Corporate executive team start reacting internally to
media message and infrastructure collapseDay 1, 15:00: Crisis response team nominatedDay 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-usersDay 2, 10:00: Website and Call center volumes still uncontrolled,
callers concerned with lack of informationDay 2, 12:00: Reactive holding statement issued to mediaDay 2, 13:00: Website still carries no adequate response to
potential recallDay 2, 14:00: The crisis team assembled to design an adequate
solutionDay 2, 15:00: Regular business starting to become impactedDay 2, 16:00: Internal debate about the solutionDay 2, 18:00: Unmanaged media messages continue to increase
1) No effective crisis communication2) Lack of media / social media management3) Insufficient short term scalability of website and Call
center infrastructure4) Lack of structured recall management5) Lack of organizational readiness6) No clear ownership in the organization7) Uncontrolled response and process8) Message to media, partners and stakeholders is unclear
driving frustration and dissatisfaction 9) Betrayed the End-users trust in the brand10) Lack of a predefined solution and process
1) No effective crisis communication2) Lack of media / social media management3) Insufficient short term scalability of website and Call
center infrastructure4) Lack of structured recall management5) Lack of organizational readiness6) No clear ownership in the organization7) Uncontrolled response and process8) Message to media, partners and stakeholders is unclear
driving frustration and dissatisfaction 9) Betrayed the End-users trust in the brand10) Lack of a predefined solution and process
Sequence of events Sequence of events Lessons learned Lessons learned
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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
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Low
Importance of customer needs
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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
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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
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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
PerformanceManagement
Service Controllability Performance Visibility Management Decision Support
Functional and geographical business extensions
Growth accomodation Coordination of process changes
ChangeManagement
Service Flexibility Business Agility Consultative Advice
Solution optimization Innovation management Leveraging of best practices Cost and efficiency management
ContinuousImprovement
Business Intelligence Learning from Leaders
Customer relationship management Collaborative service development
AccountManagement
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
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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
Registration1
Repair
• Carriers• Service Points
&Consolidation HUBs
• Repair Vendor• Warehousing
Simulation
End-user
BusinessCustomer
Control Tower
Scrap
Service PointPUDO
Example end-to-end Replacement and Repair Model
Recall Management System
E2E Business Intelligence RMS
Operational Flow Model - Example
ConsolidationHUB
WarehouseCall
Center
Customer
Supply ChainIntegration
A E2E OrderManagement
B ReportingC D
• New Product Delivery• Packaging Delivery• Recalled Product Retrieval• Scrap Services
Replacement3
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D
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• 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
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An Integrated Recall SolutionThe Recall Management System
An end-to-end Recall Management Solution
The solution provides open information flows at any point in the recall process
RECALL MANAGEMENT SYSTEM
RECALL MANAGEMENT SYSTEM
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
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The simulator as part of the Recall Management System
Registration
ManagementSystem
Added Services
Partner System
Integration
Dashboards,Reports & Analysis
Label ManagementSystem
Call CentersIVR
Solution Design Simulation
Packaging & Warehousing Repair & Recycle VAS Carriers
ProcessConfiguration
OrderManagement
Data Consolidation& Conversion Engine Tracking & Tracing
End-user Registration Webpage
Address ValidationModule
RMS is a fully modular solution using expert partners
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TweakingAdjustment / 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.
Questions ?
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