Lalit Panda, SVP SC and IT, Harman Consumer Group, Inc. Consumer Returns Oct 28 th 2008, Atlanta Making a Business Case for IT Investements in Reverse Logistics

© 2008 Harman International Industries, Incorporated. All rights reserved. Page 2  Increasing Customer experience and service expectations  Increasing SKU diversity and customization  Fast changing product life cycles  Need for better WC efficiencies  Management of complexity and volume  Measurement of quality  Product customization Business Drivers in the Reverse Supply Chain

© 2008 Harman International Industries, Incorporated. All rights reserved. Page 3  Quick response customer interaction  Continuous Product Quality Improvement  Vendor quality management  Faster rotation of working capital  Paring of SKU’s based on returns information  Late cycle product customization  Margin recovery Strategies

© 2008 Harman International Industries, Incorporated. All rights reserved. Page 4 Reverse Supply Chain – Ideal for metric driven operational efficiencies  Process Efficiency measures:  Processing times  People productivity  Returns processing quality – customer complaints  Product Quality measures:  Returns ratio  Defect code metric  Customer Service Measures:  Time to issue authorization  Time to issue credit  Financial metrics  Restricted working capital  Margin impact  Return to cash cycle time

© 2008 Harman International Industries, Incorporated. All rights reserved. Page 5  Business criticality of function  Generation of value  Revenue enhancement  Margin improvement  Customer loyalty and experience  Service parts optimization  Cost Benefit Analysis Business case for IT Investments in Reverse Logistics

© 2008 Harman International Industries, Incorporated. All rights reserved. Page 6  Returns cockpit for full visibility  Online release of returns credit  Fault category tagging  Tracking through returns and repair  Detailed metrics by product, defect code, vendor, time period etc.  Quick conversion to saleable inventory and WC tracking  Automatic shipping replacement orders where warranted  Full visibility to customer on credits/replacements Examples of system enablement

© 2008 Harman International Industries, Incorporated. All rights reserved. Page 7 Forrester’s Business Case Justification Process October 2006, Best Practices “CIO Success Depends On A Credible Business Case”

© 2008 Harman International Industries, Incorporated. All rights reserved. Page 8  B to C Application  SAP service management module  Business intelligence and reporting module  Asset tracking  Inventory valuation and reporting  Inventory movement  Merchandizing with E-Commerce platform integration  Online ATP  Serial number tracking  Integration with accounting Enabling technologies

© 2008 Harman International Industries, Incorporated. All rights reserved. Page 9  Benefit realized  KPI measure before and after  Projected cost vs. actual delivered  Scoped functionality vs. delivered functionality  On time delivery of the capability  Internal rate of return estimated vs. delivered.  Compared to hurdle rate Tracking the results

© 2008 Harman International Industries, Incorporated. All rights reserved. Page 10  Reverse logistics needs to be presented as  A customer service initiative  A revenue enhancement opportunity  A cost reduction driver  A product quality improvement process  A vendor rating metric  A margin recovery method  Process automation benefits and the above should be the foundation of the business case. Summary