Cell Phone PDA Returns Project

1
Cell Phone / PDA Returns Project

• Dr. Dale Rogers
• Center for Logistics Management
• University of Nevada
• Reverse Logistics Executive Council
• Guadalajara Mexico
• November 21, 2002

2
Wireless Handset Returns

• Purpose of Study
• Current Issues
• Survey Data
• Future Issues

3
The Market

• U.S. Cell phone use has grown dramatically
• 340,000 subscribers in 1985
• over 128 million in 2001
• Introduction of new technology
• - PDAs, Smart phone, advance cell phone
  features
• - Technology/Multiple Systems/Platforms

4
Complicated by

• Sold as a Bundled Unit high-tech product bundled
  with a service
• Multiple Business Models
• Multiple Sales Channels
• Multiple Return/Repair Models
• Multiple Channel Player Motivations
• No Clear Benchmarkmarket still in flux
• This is a problem of millions of transactions of
  low dollar value

5
Standard Practice

• Customer returns a handset the retail outlet
  where it was purchased
• Standard practice give customer a replacement
  phone and send the questionable unit back to the
  manufacturer or a third party for testing and
  repair
• BUT phone often turned out to be a "no trouble
  found" (NTF) phone
• Service provider paid cost of the testing as well
  as the costs related to shipping and handling of
  the return, as well as the price of the
  replacement phone

6
The Flow

• Insert Visio diagram here

7
Returnswhy so many?

• Overselling to Customers?
• Focus on preserving Service-subscription?
• Lack of support at Retail level?
• Product performance related issues? (Coverage,
  dropping calls, etc)
• Lack of customer training on new features?
• True design and manufacturing quality issues?

8
Motivating Factors

• Primary Motivation of Service Providers/CarriersG
  rowth
• Secondary Motivation Operational Efficiency

9
Contributing Factors

• Training
• Network performance
• Support programs
• Market perception
• Buyers remorse
• Manufacturing quality

10
The Cost of NTFs
Phone Repair Estimates U.S. Estimated Units
sold 2001 128 Million Average Units
Returned 15 Estimated Returns 19.2
Million Average NTF/NFF 50 Estimated NTF
Returns 9.6 Million Estimated Cost to Handle
Repair 35 / unit Estimated NTF Returns
Cost 336 Million
Based on an eEstimated range of 25-50 / unit
11
Preliminary Survey Results

• THIS SLIDE WILL NEED TO BE UPDATED WITH MOST
  CURRENT STATS ON TUESDAY
• Customer to Carrier/Retailer
• 13-15
• Customer to Retailer
• 17-20
• Retailer/Carrier to Manufacturer
• 90-95

12
What the Future Holds

• Rate of growth of wireless is decreasing
• Revenue from customers no longer will sustain the
  business
• Industry consolidation shakeout
• Interest turned from Growth to Operational
  Efficiency

13
What is Needed

• Currenly there is no good way to file a claim
  from Retail to Carrier and Carrier to
  Manufacturer
•  Need for Software to manage the info around
  repair activity and aggregate information into
  knowledge
•  Inexpensively collecting info is the challenge

14
Mobile Screening Testing

• Examples Agilent (Sprint, Verizon), Willtek
  (ATT)
• Allows the Retail Store Level to
• Quickly identify NTF phones and keep these out of
  the repair process saving unnecessary test and
  handling costs
• Understand history of a customer's phone to
  better handle service problems on the spot.
• Identify trends/models with history of problems
• Track trends through software and database
• Cost approximately 1000 per outletused at
  Retail, Service Provider, and Repair Channels

15
Next Research Steps

• Develop Benchmark Model
• Report complete percentages
• Additional survey questions A,B,C