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1、 海量免费资料尽在此how philips reduced returns from the november/december 2003 issue of supply chain management reviewtony sciarrotta supply chain management review november 1, 2003 the answer to reducing
2、 the cost of returns does not always lie in improving your reverse logistics operations. at philips consumer electronics, the returns management department has focused on
3、;how it can stop returns before they even enter the reverse supply chain. by taking preventative steps such as improving a products ease of use, enforcing company po
4、licies, and revitalizing the service network, philips has cut its returns by more than $100 million per year.in 1998, i was presented with an opportunity: head up a&
5、#160;returns management department within philips consumer electronics and help lead efforts to control a major cost driverproduct returns. at that time, philips consumer electronics
6、60;had no returns management department, and reverse logistics was not yet part of the language of most manufacturers. but management and ken goins, the vice president/general
7、 manager of philips service company who approached me with the opportunity, recognized that the company was facing relatively high return rates. the impact of those retur
8、ns on the bottom line was significant, amounting to tens of millions of dollars in losses. philips management was under pressure to reduce the cost of returns. they&
9、#160;realized that the company needed to develop a core competency in returns management, whether the actual processes were handled in house or via outside partners. managemen
10、t believed that it needed a department with a dedicated director and focused staff to accomplish these goals, hoping that such a department would end up paying for
11、160;itself in the process. when ken approached me, i was working in the product marketing group after a decade in sales with regional and national accounts. my backg
12、round was new for the returns management role. normally, the credit, finance, or service groups within most companies handle returns. but ken understood that returns really
13、60;are "reverse sales," and they are often caused by product-marketing decisions.as we began to study the situation, we discovered a returns environment that was out
14、;of control. in general, returns in the united states have been increasing due to a "take it back" culture, propagated by retailers with liberal and almost unli
15、mited return policies. retailers were found to be giving refunds to consumers over two-thirds of the time. in many of those situations, consumers did not have a copy
16、 of the sales receipt for their purchases. store policies that were in place were not easy to enforce, making it difficult to reduce improper product returns. the
17、60;rise of returns was further fueled by the increase in products that could not be serviced in the home coupled with the demise of the independent service providers
18、 who performed in-home repairs. most consumer electronics companies viewed returns as the cost for the steady sales growth in new retail channels. but along with the
19、;increase in overall returns was another disconcerting statisticthe rate of products returned with "no defect found" (ndf) was very high, averaging more than 70 percent
20、160;for consumer electronics, more than 85 percent for pc products, and even over 90 percent for some small appliances. retailers and manufacturers were paying significant rev
21、erse logistics costs to move products that were not defective. the situation at philips reflected this external environment. because we had no one focused on returns and&
22、#160;no clear returns policy or procedures, philips had developed a culture of "take anything back from anybody anytime." the total cost of returns had never been
23、60;exposed to the product business owners or even identified collectively for the company. philips had never attempted to implement returns solutions across department lines or
24、0;by working with retailers. this lack of attention to returns was hurting us: until 2000, the returns rates at philips were even higher than the industry average. a
25、dding to our problems, many major retailers had begun the practice of deducting for returns upon shipment back to vendors. the claims, counter claims, and reconciliation
26、processes became time-consuming, manual-intensive nightmares for manufacturers like us. finally, the secondary market for these goods in the united states was costly for philips. m
27、any of the liquidators that philips dealt with had questionable finances. additionally, in the secondary market we were experiencing poor recovery on the factory costs of
28、;our products. as an example, for dvds sold at liquidators, philips was only recovering 20 to 30 cents on the dollar.clearly, changes needed to be made. philips firs
29、t needed to analyze its returns numbers to understand their size and total cost to the company. we also had to understand the consumer and retailer environment in
30、60;order to make improvements. this involved researching consumers' reasons for returning productsparticularly those without defects. finally a paradigm shift was needed in many are
31、as. that is, we needed to take proactive steps, both internally and in cooperation with our retail partners and service providers, to address the root causes of retu
32、rns.understanding the problem: measuring returns everyone recognizes the axiom that what gets measured, gets done. for those of us in returns management, this meant realizing
33、that a key to solving the returns problem lay in having a common set of measurements with the right level of detail. at philips, the main problem was a lac
34、k of consistent measurements. returns were measured and defined differently in the united states than in the rest of the world, and different parts of the philips or
35、ganization used different it systems to measure them. furthermore, we could not agree on what time period to use (year to date, monthly, rolling 12 month, delayed me
36、asure for retail lag, etc.) or how to classify the returns (carrier damage, stock balance, defectives, warehouse errors, service, etc.). these differences in measurement led t
37、o misleading results.finally, in 2001, a philips cross-departmental team established some measurement standards. the team decided to separate returns identified as defective from return
38、s for all other reasons (for example, carrier damage, stock balancing, and order errors). they also agreed to use a rolling 12-month comparison over two periods. this
39、0;meant, for example, that returns from one dealer for september 2002 to august 2003 would be compared to returns for that same dealer from september 2001 to august&
40、#160;2002. the team believed that this would provide the most realistic view of dealer returns, which are less affected by seasonality trends.return reports are now issued
41、0;by dealer, by product category, and by model. (an example of a template for such a report is shown in exhibit 1.) to keep the return numbers in perspective,
42、160;we chart them against gross sales and trends in return and sales rates for the entire company, which would show any specific increases or decreases. the reports
43、also include a target percentage reduction and a return percent rate column to keep all eyes on our goals.my role in returns management for philips requires that i
44、160;disseminate this returns information to the key sales, service, finance, and product groups, including senior management. but i understand that information alone is not knowled
45、ge. for this reason, each summary review has to include key returns issues by model, group, or dealer, along with my recommendations or updates of activities for imp
46、rovement.the consistency of the reports played a key role in getting the key players to accept both the reports themselves and the responsibility for returns-reduction goals.&
47、#160;product managers had to see the same results for their categories as the sales groups saw for their totals. our newly installed information system (sap) enabled us
48、160;to provide this level of consistency. anyone in philips, anywhere in the world, who is trained to access the reports will see the same data. sap also enabled
49、0;our return reports to drill down to model- and dealer-level detail. this is a massive report for a company like philips, where we ship over 10 million boxes p
50、er year. in addition, the built-in flexibility of sap still allows us to generate some reports that track returns at the monthly and year-to-date level. these reports
51、0;are given to groups such as finance and logistics that need the information presented this way for forecasting and warehouse planning.getting inside the consumer's head
52、understanding the returns situation depended on knowing not only how many returns we were handling but also why products were being returned. in 2001, philips was able
53、60;to work with a national retailer to survey its customers who had bought and returned selected philips products with higher than budgeted return rates. the retailer's
54、60;market research group contacted some 400-plus consumers with an agreed-upon list of 25 questions about their shopping and return experience. to get participation and hopefully
55、160;to gain more accurate feedback, we offered gift certificates for these extended phone interviews. surprisingly, more than 75 percent of the consumers admitted knowing their
56、0;returned products were not defective. the survey identified the primary reason for the returns as "misinformation at point of sale." the secondary reasons related to
57、60;difficulties in hook up, use, or operation.another disconcerting statistic was that the retailer gave cash or credit refunds for two-thirds of the returns. this statistic w
58、as particularly troubling to philips because in the majority of these cases the retailer did not use a repair service provider. instead most of the returns were sent
59、 back to the manufacturers as defective. as returns increased, carrier volume grew. in response to that increase, we had begun to develop reverse-logistics processes that
60、;made moving these goods back through the supply chain more efficient. yet, while efficient reverse logistics helped minimize our losses, they did nothing to address the
61、profits that were still being lost at every point of the returns process.based on the survey results, philips and the retailer recognized that returns were not tied
62、to the actual quality of the product. instead, many of these issues were related to product packaging not clearly representing the product or the product's operating
63、requirements, such as subscription services. an additional factor was inadequate training of retail salespeople for communicating product features and benefits to the consumer.at philip
64、s, the research also helped us to understand better the reasons forthe increase in call center time spent on many of our new, digital products, such as home the
65、aters, satellite systems, digital video recorders, and even dvd players without standard antenna jacks. the complexity and technical problems with these products was further increa
66、sed by products from one hardware manufacturer having to work with software or services from a different provider, such as tivo, aol, or webtv. one digital internet
67、device with this dual ownership had return rates of more than 25 percent and a no-defect-found rate of more than 90 percent. such results point to usability problems
68、 and lack of product-packaging clarity.the survey substantiated many intuitive beliefs for the retailer and for philips. it was obvious that steps needed to be taken to
69、160;improve product clarity, usability, and interoperability. but the real challenge was how to correct the perceived entitlement among american consumers for returning purchases back
70、160;to retailers. this phenomenon is much more prevalent in the united states than in other countries. in most other countries, consumers are encouraged to repair damaged
71、;products or accept alternative solutions, such as contacting the manufacturer directly, instead of receiving cash refunds for returns. but in the united states, philips (and
72、other global companies) have to find ways to start working differently with retailers so that they can reduce the flow of goods in the reverse supply chainespecially
73、;those products that are not truly defective. if we don't, the estimated costs for both sides are enormous.manufacturer's steps: improving the out-of-the-box experience based
74、60;on this research, we identified factors at the manufacturing, retail, and service supply chain that were contributing to the high rate of returns and looked for potent
75、ial actions to take to alleviate them. one of the main messages of the survey was that it wasn't poor product quality that was driving returns, but the comp
76、lexity of the product. internally, at philips, we recognized "ease of use" as the next barrier for consumers and began working to improve the out-of-box experience
77、160;for the consumer. we have increased service support with web and call center enhancements, such as faqs, hook-up downloads, and free product upgrades for dvd and othe
78、r digital products. additionally, philips is now including "stop sheets" in the box with the product. these sheets are emblazoned with a stop sign and direct th
79、e consumer to contact the manufacturer first before taking the product back to the retail store. all of these actions have helped reduce returns by encouraging the c
80、onsumer to contact the manufacturer to try to solve the problem.philips is also examining ways to increase local or central depot repair and offer easy exchange programs.
81、 under such a program, philips would pay retailers or servicers a handling fee to send returned products directly back to us. these programs might possibly include p
82、roviding drop-off centers for returns at places like staples or mail boxes etc. or providing ups call/ship tags for warranty service.in addition to these efforts, philips
83、;joined the ease of use (eou) roundtable () in 2002. the ease of use roundtable is a pc and consumer electronics industry association committed to improving the cons
84、umer experience with high-tech products. participants include leading manufacturers and retailers. intel founded the roundtable in 1998 when industry data indicated that the number-two&
85、#160;reason people were not buying pcs was because they were too hard to use.the ease of use roundtable looks at how companies can base new product creation, design,
86、 and operability on the desired user experience rather than developing a technology and looking at how to sell it afterwards. for example, high- tech companies may l
87、ook at designing printers and computers so that a when a printer is hooked up to a computer, the computer recognizes and sets up the software needed for it
88、;to work. this is accomplished through using human-factor engineering (hfe)a growing discipline in the pc and consumer electronics industriesto create initial experience predictors (iep
89、s). an initial experience predictor is a checklist tool that provides the design team with a series of questions that help predict what a user's out-of-box experience
90、 with a product will be. the iep was invented by intel and further developed by the eou roundtable. it can be used during product development to take the e
91、nd consumer's needs into account when designing the operation, packaging, and instructions for use of a new product. doing this should decrease the number of no-defect-fou
92、nd returns as well as reducing support center calls and improving customer satisfaction. such improvements will add significantly to the bottom line for all manufacturers, avo
93、id unnecessary returns at retail, and lower call center and other support costs driven by product complexity. all of this will help expand the market for easier-to-use
94、60;pc and consumer electronics products.yet, while there is much potential in using human-factor engineering and interactive experience predictors, room for improvement still exists. ph
95、ilips has begun using these techniques in designing its products but with varying degrees of success. while returns have decreased, we have found it difficult to account&
96、#160;for differences in how consumers around the globe approach electronic products.eou roundtable members also participate in setting industry standards for usability. the eou also
97、0;publishes guidelines to help development teams produce design enhancements that reduce the setup time for new computer operating systems. the ease of use roundtable guidelines
98、60;and white papers have helped the high-tech industry, including philips, develop and expand the use of quick setup guides and reduce over-designed owner's manuals. manufactur
99、ers, such as philips, that adopt "ease of use" as the next frontier beyond quality will win at the retail and consumer level.retailer steps: new policies and
100、60;technologiesretailers, for their part, also have been making changes to reduce returns and their reverse logistics flow. based on philips research, some retailers have improved&
101、#160;store signs to include important information, such as subscription service fees and minimum systems requirements, at the point of sale. retailers also are training their
102、sales associates to provide customers with more information about product operation and subscription service fees for such things as satellite tv.additionally, in the last two
103、;years, retailers have made an effort to gain more control of returns from consumers. some of these efforts simply involve enforcement of previously existing return policies. many retailers, such
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