Reverse Logistics

Saturday, January 14, 2006

Turn Around Time (TAT)

Turn Around Time (TAT) is probably the most important KPI in any Reverse Logistics operation involving a customer service aspect. In an earlier blog, I defined TAT as 'The time from customer service request to problem resolution'.

However there are lots of interpretations possible within this definition depending on your point of view. I know of one company in Consumer Electronics that tracks five different flavors of TAT. Here are some possible interpretations.

1) TAT from the perspective of a consumer returning goods at a store.
The consumer may get almost instantaneous problem resolution by the issuing of a credit note or exchange item, if the return is made to a store. Online and mailorder returns may require a longer TAT because of the transportation times involved. If the return is deemed repairable then the client may be waiting a significant time while the product is processed at a service facility and reunited with its owner.

2) TAT from the perspective of a retailer/dealer.
Once a return is at a retailer/dealer's premises the problem moves back the supply chain and a fresh TAT relating to the next leg of the chain needs to be calculated.

3) TAT from a 3PSP's perspective.
A Third Party Service Provider's (3PSP) definition of TAT will be limited to the time the returned product is under their control. For example, a repair company is likely to measure TAT from the point of arrival of the defective item to its shipment if it deems that other aspects of the process are outside its' control. A freight company may similarly measure the pickup to delivery time delta.

4) TAT may sometimes also be measured from point of customer complaint to disposition (scrap, recycle or resale) of of the returned item. Here the objective is to shorted the overall supply chain pipeline.


A point about the measurement units of TAT:
TAT is obviously measured in time units. Depending on the specifics of the industry sector the measurement unit could be in seconds, hours, days, weeks or months. According to Jose Garcia of Microsoft, who has responsibility for XBOX repair in North America, the appropriate measurement unit for XBOX service is 'weekends'. Microsoft, in analyzing complaints and commendations from customers after receiving service, noticed that customers whose XBOX was missing for no more than one weekend considered Microsoft service good regardless of the number of days it was away for repair.
Microsoft adjusted their logistics processes accordingly. Units requiring a two day shipment are usually dispatched on a Wednesday while units requiring a single days shipment are dispatched on a Thursday. Microsoft will expedite units that are in danger of exceeding the magic one weekend TAT and will pay extra for freight if necessary to achieve the magic goal. A one weekend TAT can of course be measured as varying from seven to twelve days so measuring TAT for Microsoft in days might not yield the insight they need.

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I think its great topic, and i agree to have more than one TAT , but if we consider the direct consumer return i think it main TAT (OCT - Order cycle time) will be from the time the RMA order entered in the web tool ( customer online interface tools) to the time of the product booked in the WMS (Confirm received). and other TAT should be considered form that time up to re-send the products to the sales point

 
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