Verizon Wireless and Cornell Team Up to Study Cellphone Logistics
Cellphones are dense with technology and nearly ubiquitous in the United States and other countries: nearly 90% of US households have at least one of them. Unfortunately for customer and vendor alike, handset models fail and get returned and replaced.
For a company like Verizon Wireless, returns of cellphones due to manufacturing defects, accidents or other reasons have extensive implications for the supply chain as well as for the level of customer satisfaction. 'Reverse logistics,' a phrase that covers the process by which a returned phone is either scrapped, or repaired and resold or certified for exchange, has its own complexities. In a joint research program, Cornell and Verizon Wireless have teamed up in a series of joint research projects to "drive business value through supply chain analytics."
Cornell-Verizon Wireless Project
|Faculty members Gao, Huseyin, Jackson, Shmoys, Caggiano and Frazier return from a visit to the Verizon Wireless Central Returns Warehouse in Fort Worth, TX.
With Professor Peter Jackson as principal investigator, the Cornell team includes ORIE Professors Frazier, Muckstadt, Rusmevichientong, Shmoys, and Topaloglu, as well as ORIE M.Eng. Director Kathryn Caggiano and Professor Oliver Gao of Civil and Environmental Engineering. Ph.D. student Collin Chan is also participating. The faculty involvement spans many of specialties within ORIE. "There are many areas of interest such as statistics, data mining, and inventory analysis that are converging in this work," said Jackson.
The research will focus initially on understanding why phones are returned and how the return rate relates to the amount and type of usage by customers, testing prior to release of the model, and supplier history. This understanding will be used to forecast phone returns, and eventually to explore implications for product design, policies for sale, upgrade and replacement of phones, reverse logistics, and the supply chain for new phones.
Verizon Wireless Perspective
According to Robert Dismore, head of the Verizon Wireless reverse logistics and manufacturing defect quality team, poor "manufacturing quality is costing Verizon money." He is very pleased with the project so far, noting that "Peter Jackson and his team are able to expand upon my team's ideas and follow through on them." He has arranged for team visits to Verizon Wireless facilities and has regular electronic conferences with the Cornell team. "The projects are a great example of cooperation between corporate America and academia," he said.
The research effort originated with Verizon Wireless CEO Lowell McAdam, ME '76 (left). McAdam is a member of the Cornell Engineering College Council, an industry and academic group, primarily made up of Cornell alumni, that provides advice to the Engineering Dean. In addition to the supply chain analytics program, Verizon Wireless sponsors several sustainability projects in the College. Dismore was tasked with getting something going with ORIE, and was pleased that it took only one phone call to Abby Westervelt of Cornell Engineering Corporate and Foundation Relations to get directly in touch with Jackson.
Beyond financial support, the primary contributions of Verizon Wireless to the research are in the form of detailed knowledge of individual products and processes as well as extensive data from the first three months following the introduction of each new phone model. According to Jackson, the team will "take the data analysis to a whole new level" and has already pleased Verizon Wireless with early results of this in-depth data mining activity.
Jackson noted that Cornell's IT infrastructure has made it possible to assure security of data from Verizon Wireless through the Cornell DropBox, a method of transferring files using strong encryption. He said that "what is impressive about working with Verizon Wireless is the depth and breadth of their data warehouse. For example we can look at individual cell phones and track their entire history through the supply chain." He pointed out that the ability to do this will "drive the development of new methodologies for supply chain analysis."
The project is already bearing fruit academically as well as practically. Inspired by the Verizon Wireless interaction, team members Rusmevichientong and Topaloglu are jointly supervising Ph.D. student Chao Ding in the development of an "early failure detection model" that will take into account the trade-off between loss of sales and repair costs in the decision to pull a problematic model from distribution.