Sunday, August 19, 2007

Nokia to suffer Rs 2,000 crore in ‘Product call-back’, which is common in America.

As mentioned in one of our previous post, owing to defect in its battery BL-5C, Nokia had to call back a lot of batteries to save its reputation. In this process Nokia is going to suffer a total of around Rs 2,000 crore. Astonishing.. Yeah! I too thought so. But this is compulsory.. Nokia had to do this, whatever it costs.


First, I was thinking, how can a company suffer such a loss. Calling back its product from its consumer is real difficult, expensive and almost impossible. But while checking the website of HP for some other work, I found that it had called back its products (especially batteries) a number of times. This seemed strange to me. On referring to some other sources, I found that this was not the first time any company was calling back its product.


nokia

Product Call-back is a common procedure in countries like America. In India also this has happened a number of times. Last year, Laptop giants like Dell, Apple and Lenovo had called back their Laptop batteries owing to the same problem, overheating which may lead to fire. For making faulty laptop batteries Sony had also suffered Rs 830-1230 crore. Talking of loss, companies in America suffer Rs 4.1 Lakh Crore every year from Product Call-backs.


Product call-back is not as easy as it seems. In the present case, Nokia too has tied up with many courier companies for quick delivery of its product. In all these process, many small companies have started helping these giants who are called the Third Party Logistics (3PL). These 3PL's take high fees for their service. In India only DHL and AFL provide this service currently. They say that Product call-back is not common in India yet. So, this business is not successful.


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