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BUSINESS PROCESS STUDY REPORT

How UPS Supply Chain Solutions helped Toshiba Laptop repair process and reduce the turnaround time for repair to provide better value to customers.

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Contents / Description

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Business Process and Objective of the study

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About the Company

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Illustration of RAD and Flow chart of the process

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Learnings and findings from the project

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Bibliography

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1.Business Process and Objective of the study Business Process: A business process is a set of coordinated tasks and activities, conducted by both people and equipment, which will lead to accomplishing a specific organizational goal. In other words it is specific event in a chain of structured business activities that typically changes the state of data and/or a product and generates some type of output. A business process is composed of different processes designed to add value by transforming inputs into useful outputs. Inputs may be materials, labour, energy, and capital equipment. Outputs may be a physical product (possibly used as an input to another process) or a service. Processes can have a significant impact on the performance of a business, and process improvement can improve a firm's competitiveness. The management of various business processes comprises of the interaction between people, application and technologies in a process which caters to create best customer value. Examples of business processes include receiving orders, invoicing, shipping products, updating employee information, or setting a marketing budget. In our case it may be parcel tracking and delivering and reverse logistics.

Objectives: The objectives of our study are as follows: •

It helps us to understand the different processes and their inter relations which lead to desirable outcome.

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It helps to understand the features of real world processes that we want to reflect in process models.

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It helps to understand the specific process and enables us to suggest modifications if required.

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It helps to understand the various roles and their interactions involved in the process.

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It helps us to understand the various business flow logics i.e. (Information, Control and Transaction) and thereby creating a clear view of material and data flow.

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In a larger context the management strategy behind various processes (viz. Reverse Logistics) could be understood well.

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2.About the Company History of Transformation: UPS has been in the package delivery business for 95 years, providing services to businesses and consumers worldwide in more than 200 countries. In 1994, UPS began to investigate the potential of e-commerce and started an internal group focused on enabling e-commerce. UPS redefined its core business and found ways to change its structure and processes, forming new businesses to take advantage of new opportunities.

Products and Services: UPS is in the transportation industry. They move goods, information, and funds between individuals and companies. Their operations provide delivery by land and by air, and they offer services at customer shipping centres, as well as online through UPS.com. They operate in more than 200 countries worldwide, do business in 15 different languages and dialects, and deliver an average of 13.2 million packages per day.

Catalyst for Change: UPS was interested in finding ways to leverage their extensive infrastructure and expertise in basic transportation of goods, services, and information. They wanted to enter new markets and continue to grow. They also wanted to undergo a more fundamental change—to transform their company into an enabler of global commerce.  Purpose: (why they are in business): To enable global commerce.  Mission: (what they seek to achieve): Fulfil their promise to constituents by: • • • •

Serving customers evolving needs Sustaining a strong and employee-owned company Continuing to be a responsible employer Acting as a caring corporate citizen

 Strategy: When UPS began the process of transformation, they started at the basic level—taking a hard look at their core competencies and expertise. They also examined the assets in their multifaceted infrastructure, from data communications, to their fleets of trucks and aircraft, to their call centres. With additional investment in information technology (at the rate of more than $1 billion USD per year), they were able to transform a very sizable company in record time. With the surge in e-tailing as well as B2B e-commerce, UPS was able to foresee the importance of electronic information to the transportation industry. As early as 1985, they began improving their data networking applications to enhance communications with their customers and increase efficiency. For instance, they built up their IT network and database in order to collect and track over 200 data elements for every

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single package that they ship(they ship over 13 million packages everyday) Consequently, they were well poised to help the multitude of new B2C online companies who came to rely on UPS for shipping. UPS was able to offer these new companies tracking services as well. Now, through their eLogistics service, small B2C companies (as well as large companies) can have their own virtual logistics department hosted at UPS. UPS has significant call centre expertise and infrastructure to handle the call volume generated by more than 13 million package deliveries daily. Now as more of their tracking requests come in through their Web site (about 2.5 million requests per day), the excess call centre capacity is utilized for their customers' business infrastructure. UPS is already doing this, and an example of one of their customers is Nike.com. All of Nike.com's back-end systems are provided and managed by UPS, along with order handling at a UPS worldwide logistics centre, and then on to UPS fulfillment, and some of the shipping as well (depending on the destination).

Justification for process: We have chosen reverse logistics process due to following reasons: 1. Reverse logistics is rapidly becoming an integral component of retailers and manufacturers profitability and competitive position because •

Customers generally spend 5 to 20 times the initial sales price on subsequent services and consumables.

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Dell Computer Corp. says about 5 percent of its online computer purchases are returned, versus CompUSA’s 10 percent return rate.

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As of 2003, annual global service parts logistics (SPL) spending was estimated to be $21 billion, increasing at a rate of 7 percent per year.

2. With the proper strategies and metrics in place, reverse logistics should be part of the larger product and customer lifecycle strategies and can serve as a foundation for establishing customer loyalties and increasing market share. 3. On April 2, 2004, the Digital Product Division of Toshiba America Information Systems, Inc. and UPS announced a new laptop computer repair process designed to reduce turnaround time for customers to four days or less which was earlier about 10 days. 4. Toshiba expects to build customer loyalty, improve customer satisfaction, and save millions of dollars by streamlining its service operations and gaining better inventory visibility.

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3.Description about RAD and FLOW CHART for reverse logistics: Reverse logistics is the logistics process of removing new, used or defected products from their initial point in a supply chain, such as returns from consumers, over stocked inventory and getting back to the manufacturer. A reverse logistics operation is considerably different from forward logistics. It must establish convenient collection points to receive the used goods from the final customer or remove assets from the supply chain so that more efficient use of inventory / material overall can be achieved. It requires packaging and storage systems that will ensure that most of the value still remaining in the used good is not lost due to careless handling. For example, T-Shirts with minor flaws like improper logo print of the manufacturer or unnoticeable stitching flaws are often sold at discounted prices by specialized retailers. The collection of the flawed clothes from the various stores and reselling them at the discount shop is an example of reverse logistics. The following steps are involved in the Reverse logistics process that we have studied: 1. Customer identifies a problem which cannot resolve at his end. 2. Customer calls to the call centre executive and describes the problem. 3. Call centre executive provides a measure from his trouble shooting. If the problem is solved as per the instruction, then the process ends. 4. Otherwise the Reverse logistics process begins at this point. 5. Call centre executive enters the information regarding customer complaint, address etc into the database and a grievance number according to the complaint is generated. 6. The ups executive is simultaneously contacted by the call centre executive for providing the details about the customer complaint. 7. UPS executive contacts the customer and time for collection of machine is fixed. 8. UPS executive then send it to nearest supply chain solution unit through their global hub. 9. Toshiba certified professional as per the complaint details attend the problem and delivers back to customer. 10. The whole process takes 4 days which is half then the earlier unit.

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STEPS 1

INFORMATION FLOW CUSTOMER GIVES PROB. DETAILS

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SUGGEST PROBABLE SOL. CUSTOMER C. EXEC GIVES CUSTOMER A GREVIANCE NO. CUSTOMER C. EXEC SENDS ADDR. DETAILS & GREV. NO TO UPS EXEC.

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A RECIPT IS ISSUED TO CUST. DELIVERS GREVIANCE NO TO THE TCP

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CONTROL FLOW FROM CUST. TO C.C.EXEC FROM C.C.EXEC TO CUST. FROM CUST. TO C.C.EXEC

TRANSACTION FLOW

CC EXEC DIRECTS PROB. & ADDR. TO UPS EXEC.

FROM C.C.EXEC TO UPS EX. FROM UPS EXEC TO CUST. FROM CUST. TO UPS EXEC. FROM UPS EXEC TO TCP FROM TCP TO UPS EXEC.

9 FROM UPS EXEC TO CUST.

CUST PAYS TO UPS EX. WHEN LAPTOP IS DELIVERED

Business Process Logics: ABBREVIATIONS USED C.C. EXEC-CUTOMER CARE EXECUTIVE UPS EXEC.-UPS EXECUTIVE CUST.- CUSTOMER Information flow describes the flow of information among the various actors of the process based on the illustration above we can see that in various steps that there is a flow of information like the problem that originates from the customer's end is converted to grievance number which takes various forms during the transfer of packages to and fro from the ups executive and Toshiba certified professional. Similar is the case with control flow where the control switches between customers, call centre executive, ups executive and Toshiba professional. In transactional flow the flow of decision and values involved in the process is studied like customer care executive directing the problem to UPS executive.

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Comparison of old and new System with Reverse Logistics Toshiba is one of the leading suppliers of laptop in the U.S. Toshiba has recognized that post-sales service and ease-of-use are critical ways to build positive, long-term relationships with customers. Toshiba wants a wide-ranging customer service designed to raise the bar in the highly competitive PC market. They expect to build customer loyalty as its customers recognize that if they ever do have a problem with their laptop, downtime will be held to an absolute minimum. Toshiba also expects to save millions of dollars by streamlining its service operations and gaining better inventory visibility by using UPS’s information technology. The computer maker also expects to gain valuable data about product performance that will help improve future product design and manufacturing.

Solution offered by UPS: In 2004 Toshiba America Information Systems, Inc. and UPS announced a new laptop computer repair process designed to reduce turnaround time for customers to four days or less which earlier use to take up to ten days and up to seven shipments in the process. The new repair program will utilize The UPS Store retail network for professional packaging and convenient drop-off of laptops; UPS’s package delivery network for movement of customer computers, and UPS Supply Chain Solutions for parts management and technical repair. The new process benefits Toshiba’s United States laptop customers, including consumers and business professionals. The process utilizes a specially-designed repair centre at UPS Supply Chain Solutions logistics and technology campus in Louisville, Kentucky. The 2 million-square foot campus, which specializes in high-tech support, is adjacent to the UPS World port global air hub. The proximity to the air hub means it is possible that a laptop can be received, repaired and shipped directly to the owner in the same day, with delivery as early as 8:30 a.m. the next morning. UPS Supply Chain Solutions repair technicians are certified to repair the entire laptop.

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4.Our learning and findings from the assignment In our study of the reverse logistics process of UPS we find that there are different roles and responsibilities played by different people like customer, call centre executive, UPS executive and Toshiba professional. Here UPS executives act as a Unique Functional group because they have distinct set of actions and responsibilities to act upon and customer and call centre executive acts as Generic Type of a person. We have observed that sequential relationship exists between call centre executive and customer. While here conditional relationship exists between customer, UPS executive and Toshiba certified professional. The basis for conditional relationship is that customer calls for a UPS executive only when the problem is not solved even after the measures provided by call centre executive. We have understood the various roles (customer, call centre executive, UPS executive and Toshiba professional) and interactions between them. This has helped us to understand the reverse logistics process better and gives us an in depth insight of whole mechanism.

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Roles/Actions/Responsibility: Serial No. 1 2

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Roles Customer

Actions/Responsibility Customer encounters a problem which compels him to call for a call centre executive. Call centre Call centre executive listens to the problem carefully executive and suggest a measure as per the pre-defined trouble shooting manual. If the problem is not solved then the details regarding customer complaint (address, grievance number) are given to the UPS executive. Ups executive Ups executive calls up to the customer for fixing the time for collection of machine. The machine is delivered to nearest ups supply chain solution unit where a team of Toshiba certified professional works. This is done within 24 hrs of collecting the machine from the customer. After the rectification of the problem the machine is again delivered back to the customer. The whole process takes 3-4 days at the maximum which is almost half of the time taken earlier. Toshiba The Toshiba certified professional understands, certified analyses and rectifies the problem in an effective professional manner. As soon as the problem rectification and testing of the same is over, the machine is again handed back to the UPS executive for quick delivering to the customer.

Case Process: Anything that undergoes a process before reaching a desirable state is called a Unit of Work (UOW). Unit of Work in reverse logistics are: 1. Customer decides to return one or more product. 2. Sorting of packages and routing is done to the correct locations. 3. Customer Complaint at a call centre. 4. Repair process is done at the ups centre.

5. Transferring of document to financial transaction process.

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Case Management Process:

ACTIONS Planning

ROLES BoD

Organizing

Management Teams

Negotiating

Call centre Executive

Prioritizing

Tracking Teams

Scheduling

Progress Chasers

ACTIVITY Decides number and locations of warehouses and supply chain solution units Organizes the different processes concerned with the tracking, delivering and reverse logistics. Gives measures about the rectification of problem and various steps concerned with the troubleshooting. Plan to decide which complaint parcel to transport to which warehouse for repairing. Timely progress of repairing process and delivery process is scheduled

1. Manage the flow of defected product to and fro from the UPS centre.

2. Supervisor manages the flow of repair product. 3. Finance manager in UPS manages the flow of finance.

Case Strategic Process: The main strategy of reverse logistics is to bring out the best synergy between Toshiba and ups. Ups got a big client and Toshiba was able to provide better after sales service. It was a win to win situation for both the companies. 1. Shipping time required for the flow from UPS to Toshiba and back to UPS

is reduced from 10 days to 4 days. 13

2. It makes the returning process more convenient. 3. The introduction of reverse logistic process will streamline the services and support efficiencies which will give a firm a dominating position for Toshiba in the present competitive market. 4. This new repair program will utilize the UPS store retail network for professional packaging and convenient drop-off of laptops. 5. It will eliminate multiple transportation steps, centralize parts and reduce costs.

5. BIBLIOGRAPHY 1. Flattener#8 Insourcing What are the guys in funny brown shorts really

doing- World is flat by Thomas Friedman(A brief history of the globalized world in the 21st century.)-Allen lane publishers-2005. 2. www.ups.com/casestudies/toshiba 3. www.toshiba.com 4. www.mobileinfo.com/bestpracticecasestudies/ups

5. Peachpit:case study : UPS ,Inc.

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