Reducing Electronic & Hi-Tech Product Damagein a Global Supply Chain

Damage Risk for Electronics Distribution

Electronics Supply Chain Example - HDTV

Distribution Center

Source: Council of Supply Chain Management Professionals

The longer the supply chain, the greater the risk of damage.

The average number of times a product is handled

before it reaches its destination

Damage Risk in the Supply Chain

In 2012, U.S. shipment sales of consumer electronics were estimated to be worth $197 billion and are steadily increasing.

- Consumer Electronics Association

Damage Risk in the Supply Chain

Shock and vibration are estimated to cause 20% of failures

in electronic products.

-D. Steinberg, Vibration Analysis for Electronic Equipment

Damage Risk in the Supply Chain

For many hi-tech companies, warranty costs are nearly equal to new product development expenditures. In 2011, an estimated $800

million was spent processing defective product returns.

-Ops A La Carte & Accenture

Managing Damage in the Supply Chain

How Can ShockWatch Help?

ShockWatch offers a variety of devices which can help:

■ Reduce overall product damage

■ Provide indisputable evidence of mishandling

■ Act as a visual deterrent to improper handling

■ Promote chain of accountability for all product handling

■ Reduce warranty claims resulting from mishandling

■ Confirm effectiveness of packaging

ShockLog

Multi-use recorderComplete event analysis

and journey profilingG-View

Threshold alarms for3 axesP

erf

orm

an

ce

Full Analysis Data Recorders

Indicators

ShockWatch Product Portfolio

ShockWatch Label, SW2. MAG, Clips,

Tilt

Single-use Low cost

Go – No/Go

Price

Simple Data Recorders

Increasing Value to Customer

ShockWatch Product Line• Solutions range from simple

indicators through full data recorders

• Customers are able to scale their monitoring needs over time – start with a recorder and scale to an indicator when supply chain becomes stable.

ShockWatch 2 Impact Indicator

The ShockWatch® 2 is a patented, field-armable impact indicator that reveals the mishandling of goods in the supply chain

A wide variety of sensitivities is available to match customer requirements

Each device is tamperproof and serialized

ShockWatch 2 and Companion Label on product packaging

ShockWatch Flex

The Flex is a reliable, tamperproof impact indicator that reveals if your product has been subjected to unacceptable handling

Ability to monitor equipment that may lose calibration or products that may be damaged with mishandling

Optimal when mounting an impact indicator is complicated by product shape

ShockWatch Flex mounted to product

How a Monitoring Program Works

Monitoring Program

When used in conjunction with companion labels, alert stickers, caution tape, posters, and

communication tools, ShockWatch indicators become a highly effective damage reduction and

prevention program.

To aid in communication with program participants, ShockWatch provides customized letters for

your carriers and customers. These letters describe the ShockWatch program and detail the steps

to follow in the event a shipment is received with an activated label.Posters are available for the sending and

receiving docks. These posters are

another reminder of the ShockWatch

program details.

Alert tape and ShockWatch companion

labels are additional tools that increase

the visibility of the handling requirements

of your package.

Why Implement a Program?

Create an atmosphere of accountability that increases customer satisfaction

Inform & educate ■ employees on how to properly mount the product■ carriers on accountability and liability to damages while in their

possession

Receive results through receipt records from your distributors & customers

Mitigate risk by providing data that helps managers make decisions

Decrease costs through effective packaging & handling of products

Most successful with collaboration from the carriers & your shipping, warehousing, and packaging departments.

Estimated Return on Investment Typical ShockWatch users see damage rate reductions of 30-70% within 6 months

Company’s est. total shipments per year

X Company est. damage rate = Company damaged units

250,000 2% 5,000/year

Company’s damaged units

X Avg. replacement / repaircosts per unit

= Current yearly costs for replacement / repair

5000 $300 $ 1,500,000

Company’s units shipped per year

X ShockWatch unit cost = Total ShockWatch investment

250,000    $ 1.00 $ 250,000

Current yearly costs for replacement / repair

x Conservative damage reduction rate using a ShockWatch*

40% decrease in damage equates to savings of

$1,500,000 40% $600,000

• Reducing your damage rate by 17% pays for total investment. A conservative 40% reduction more than doubles your return.

• Not captured in current costs (that may be reduced with monitoring program):• Administration fees• Freight (if furniture cannot be repaired in the field)• Unhappy customers (customer service manpower)

IncludedInstructions

Identify a champion Train

Apply Impact Indicator

Companion Tools

Typical Implementation Process

Instructions for placement included for each order

Identify a champion to drive development, documentation, training, implementation, enforcement, & tracking

Acquire companion tools

Train necessary employees

Apply impact indicators to outbound shipments

Educate shippers and handlers

Communicate with carriers &

customers

Who Benefits from a Monitoring Program?

Manufacturers – know where trouble spots are in the supply chain and can take steps to help address the issues

Carriers – have evidence that products were handled with appropriate care during the transportation process

Retailers – increase the amount of saleable product and reduce the amount of time and energy expended to deal with damaged product that must be repaired, replaced, or scrapped

Customers – get the goods they want without the aggravation of product showing up with damage

Reducing Damage Helps You...

Cut expenditures

Improve efficiency

Increase customer satisfaction

For additional informationContact: info@shockwatch.com or visit

www.shockwatch.com