IT Insights. Microsoft IT automates a supply chain business process with Microsoft Azure. A service of Microsoft IT Showcase.

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1 IT Insights A service of Microsoft IT Showcase Microsoft IT automates a supply chain business process with Microsoft Azure July 2015 The Microsoft online and brick-and-mortar retail stores previously used a product returns process that required manual data entry and multiple systems. A new solution uses Microsoft Azure to enable customer selfservice requests for return labels. The new system has improved the customer experience while reducing support time and minimizing errors. Executive summary The manual returns process worked, but was in need of updating. Now that Microsoft Azure is available as a platform, it can host a new, automated solution that benefits both Microsoft and consumers. Microsoft IT designed, built, and rolled out this solution; customers embraced it; and Microsoft has realized measurable benefits from it. Situation The old product returns process was in place for years. Although the process worked, its flaws had become increasingly evident to both customers and Microsoft. Because much of the process was manual, errors could be introduced at several points, and the process took too long for customers. These were the steps in the manual process: Article Note: The process that is described here applies only to hardware products. A different process (not covered in this article) is used for digital products. 1. After purchasing and receiving a hardware product, a customer finds a defect in it or has buyer s remorse and decides to return the product within the free returns period. 2. The customer calls Microsoft Online Store Support to start the returns process and request a refund. 3. The customer gives information to a Microsoft Support agent, who creates a return merchandise authorization (RMA) for the customer s order. 4. The agent works with the carrier (such as UPS) to generate a return shipping label, which is sent via to the customer, together with shipping instructions. This process takes up to 24 hours after the RMA has been created; in other words, it cannot be completed at the time of the customer s initial call. 5. The customer can now put the merchandise in a box, attach the return label, and drop the box off with the carrier or have it picked up. If air shipment is available at the customer s location, the label can be used for air shipment; otherwise, it can be used for ground shipment.

2 2 IT Insights: Microsoft IT automates a supply chain business process with Microsoft Azure This process had the following disadvantages: The process required a lot of manual intervention, which allowed for mistakes and failure points. The manual process typically caused a delay of at least 24 hours for customers. Because inventory was updated through a manual process, input errors were possible. Solution Microsoft Support requested that the old system be replaced. Working together, the Microsoft Support, Microsoft Store, and Microsoft Supply Chain IT teams decided to automate the manual returns process to benefit both Microsoft and its customers. The new process would let customers request a return for a product that they had purchased, print a shipping label, and use the label to send the product back. Goals of the solution After examining the customer experience and the costs that were incurred by Microsoft, solution architects, business representatives, program management, and developers on the Microsoft Support, Microsoft Store, and Microsoft Supply Chain IT teams defined the following goals for the new automated solution: A user-friendly flow to improve customer satisfaction Support for mobile devices Zero tolerance for faulty credit calculations or assignments The capability to generate a PDF for customers that included the shipping label, instructions, and drop locations The new automated process should benefit customers all over the world. Based on the customer s geographic location, the shipping label that is generated has the address of the correct Regional Operations Center (ROC). The current ROCs are: EMEA Canada United States (including Puerto Rico) Technical design Australia and New Zealand (not included in automation) Singapore (not included in automation) Japan (not included in automation) The Microsoft Customer Services and Support (CSS), Microsoft Store, and Microsoft Supply Chain teams designed the solution with the following technical aspects in mind: Cloud utilization. Take advantage of the benefits that are provided by the Azure platform as a service (PaaS), such as scalability (high throughput numbers) and elasticity (the ability to autonomously adapt its capacity to workload). Multi-tenant design. Allow multiple companies to be hosted under a single service provider. End-to-end automation. Note that the service does not currently offer end-to-end automation, but it does contain automated returns initiation and return label creation. Error checking. Ensure that requests are valid before they are passed on to the carrier. Globalization. Be global-aware, and support Unicode and double-byte character sets (DBCSs). Technology of the solution A primary goal of the Returns Service project was to build the solution by using the Azure PaaS. The following Azure features were used to build this solution: Azure Cloud Services: Azure web roles and worker roles

3 3 IT Insights: Microsoft IT automates a supply chain business process with Microsoft Azure Access Control Services (ACS) Azure Service Bus (ASB) Azure Blob Storage (ABS) and Azure Table Storage (ATS) Azure Management Portal (AMP) For more information about these Azure features, see Microsoft TechNet. The following technologies were also used: Microsoft StreamInsight, which is used to help visualize real-time performance data for monitoring of the service ITextSharp, a third-party tool that is used to create PDFs by converting content from HTML REST-based Web API services Microsoft Visual Studio The Microsoft Online Store (MicrosoftStore.com) Solution timeline The automated returns service was created and rolled out in the second half of 2014: Design timeframe: Summer 2014 Build dates: August 6, 2014 October 29, 2014 CSS training: October 2014 Go-live date of the service (roll-out to MicrosoftStore.com): November 4, 2014 Steps of the automated process For issues such as product returns, the best customer service for all parties involved is self-service. Customers feel in control of the returns process, and can complete it as quickly or slowly as they want. For Microsoft, a self-service process frees up CSS resources to respond to more complicated issues, and it reduces the costs that are associated with customer calls. These are the steps in the self-service process: Note: Customers can switch to an assisted model in step 2, but that model still uses the Azurebased label generation service. 1. After purchasing and receiving a hardware product, a customer finds a defect in it or decides to return it for another reason, such as buyer s remorse, within the free returns period. 2. The customer has two options: continue on his or her own, or request help from Microsoft CSS. Option 1: Self-service For this option, the customer drives the process to completion. a. Using a web browser, the customer navigates to the Microsoft Store webpage ( and signs in to his or her Microsoft account.

4 4 IT Insights: Microsoft IT automates a supply chain business process with Microsoft Azure Figure 1. User account page options at MicrosoftStore.com b. The customer clicks the Order history or Return history option. On both pages, the customer can read about the steps for returning an item. Built-in return eligibility logic determines which orders can be returned. Figure 2. Order history page on MicrosoftStore.com c. The customer enters additional information and submits the request for a return shipping label. d. The service displays the Return Success page to the customer; this means that the label was successfully generated, and the customer can now print it. If customers do not receive a label, they can retry the RMA request or call Microsoft Customer Support.

5 5 IT Insights: Microsoft IT automates a supply chain business process with Microsoft Azure e. The customer can retrieve the label now or return for it later. Option 2: Assisted service For this option, the customer requests assistance from Microsoft CSS. a. The customer contacts Microsoft Online Store Support to start the returns process and request a refund. b. A Microsoft Support agent in the retail store asks for information about the customer and the product, and enters this information. c. The agent starts the Returns Request application. d. The agent generates a return shipping label, which is automatically ed to the customer. e. The agent informs the customer that a label has been sent. f. The customer can retrieve the label via . Alternatively, the customer can go to his or her account online, and print the label from there. 3. The customer uses the pre-paid label to ship the merchandise via UPS. Benefits Fewer errors and failure points Because the return address is automatically selected, the process no longer depends on agents selecting the correct warehouse during label creation. In addition, customers can request multiple labels during their first call if they need to ship multiple items. In the old process, customers had to make a separate call to obtain additional labels. Easier process for customers The following table shows self-service returns data through mid-april Although self-service returns amounted to only 38 percent of the total, this number is significant, because the new returns service had been available for only five months when this count was made. Table 1. Agent-assisted vs. customer self-service returns Return method Order count Percentage of total Agent-assisted 45,994 62% Customer self-service 28,263 38% Total 74, % Although a large and growing number of self-service returns may not directly indicate ease of use for customers, it does provide circumstantial evidence that many users, after initiating a return by using the new service, were able to complete it on their own. For information about a measured increase in customer satisfaction, see the Gains in customer satisfaction section.

6 6 IT Insights: Microsoft IT automates a supply chain business process with Microsoft Azure Faster process for customers In the old process, it took up to 24 hours to create the return label, which meant that customers could not return products on the same day. In the new process, customers can ship products within minutes of requesting a return. Efficiency gains show up as cost savings for Microsoft. The following table shows the cost savings to Microsoft CSS through mid-april Once again, these numbers are significant, because the new returns service had been available for only five months when this calculation was made. Table 2. Cost savings to Microsoft CSS Category Savings to CSS Call prevention $169,578 Automated label creation $119,100 Escalation prevention $166,045 Total $454,723 The automated solution was launched in November By April 2015 possibly earlier Microsoft IT had already made up its development costs. Gains in customer satisfaction The following chart shows data for year-over-year customer partner experience (CPE, a measure of customer satisfaction), through March Figure 3. Customer satisfaction from 2014 to 2015 CPE is a primary measure of customer satisfaction at Microsoft. These CPE numbers were based on survey results that were taken after customers called Microsoft Customer Support and completed the support experience. In this survey, the customers ranked their experience on a scale of 1 to 10. In the chart, the top box figures correspond to scores of 8, 9, and 10 on the survey, and the bottom box figures correspond to scores of 1, 2, 3, and 4. Scores of 5, 6, and 7 were disregarded. Between November 2014 and March 2015, there was a 10-percent year-over-year increase in customers who provided top marks on their experience and a 7-percent decrease in customers who provided bottom marks, yielding a remarkable 17-percent net year-over-year improvement. Because

7 7 IT Insights: Microsoft IT automates a supply chain business process with Microsoft Azure the new process eliminated the 24-hour wait for customers, most of this improvement in CPE can be attributed to the immediate processing of label creation. Future versions Although the first version of the returns service has improved upon the old manual solution, further improvements are possible. The following features could be added to a future version of the returns service: Cross-border trade invoices. The first version did not incorporate cross-border trade invoices. Locales that require this type of invoice include Switzerland, Norway, Liechtenstein, and New Zealand. Although customers in those countries can obtain return shipping labels through the returns service, Microsoft must still create the required trade invoices for them manually. The trade invoice feature was included in the original design request for the returns service, but it was cut from phase 1 because of time constraints. Processing of customer refunds. A system that incorporates true end-to-end automation would process the refund for a customer at the point of receipt, and would incorporate standardized deduction codes based on rationales such as missing contents. The current system uses a manual Microsoft SharePoint communications process; but in a future version, when a warehouse receives an RMA, a worker could scan the bar code of each returned product. The bar code scans would then automatically trigger refunds to the customer. Returns to physical stores. The first version of the returns service did not change the experience of customers who returned merchandise to a physical Microsoft store. However, as Microsoft incorporates omni-channel retailing to advance the integration of physical and online stores, the physical stores will gain access to centralized returns management through the returns service. Additional carriers. Currently, the returns service is integrated only with UPS. In the future, it could be integrated with other carriers, such as FedEx, DHL, or Australia Post. Conclusion Microsoft Customer Support was spending too much time running a manual process to supply shipping labels to customers. This represented a business problem for Microsoft. In 2014, three teams came together to design a multi-tenant cloud-based solution that would automate many of the steps. By using the Azure PaaS, they were able to develop a solution that enables better and faster customer service while saving Microsoft money. The returns service represents a successful project that has achieved cost savings to Microsoft, ease of use for customers, and fewer errors all around. For more information For more information about Microsoft products or services, call the Microsoft Sales Information Center at (800) In Canada, call the Microsoft Canada Order Centre at (800) Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information via the World Wide Web, go to: Microsoft Corporation. All rights reserved. Microsoft and Windows are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. The names of actual companies and products mentioned herein may be the trademarks of their respective owners. This document is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.