The supply chain crisis is the worst it’s been for 50 years and industry leaders expect issues to continue this year. Impacted by challenges from COVID-19, the conflict in Ukraine, the fuel crisis and labour shortages, sourcing hardware is now a defining challenge for companies and a process which is increasingly complex, time-consuming and expensive.
The telecoms sector, like many others, has not been immune to these disruptions. According to research by TXO, 85% of telecom operators had project timelines disrupted, 78% had to wait over three months for new equipment from original equipment manufacturers (OEMs) and 54% experienced an 11-30% cost increase on all network hardware from OEMs, making sourcing new equipment increasingly challenging.
But as governments continue to prioritise fiber and 5G rollouts, telecom operators are under more pressure than ever to extend connectivity and meet targets. In response, they are seeking new ways to navigate the chaos and ensure operational resilience. One solution gaining momentum is joining the circular economy. By reusing, repairing, refurbishing and recycling used equipment, 84% of operators believe they can help solve supply chain challenges and accelerate network deployment. Here’s how:
Saving money on hardware
The supply chain crisis has led to soaring costs of new equipment, making it increasingly unaffordable for some operators. While just over half (54%) of operators say they experienced an 11-30% cost increase on all their network hardware purchased from OEMs, an unfortunate 6% experienced a 31-50% increase.
However, the circular economy provides an alternative solution. By opting for refurbished equipment, operators can achieve substantial cost savings without compromising on quality or performance. Refurbished equipment undergoes meticulous testing and refurbishment procedures, ensuring a cost-effective alternative that maintains quality and performance standards. As a result, the majority (82%) of operators said they would consider buying refurbished network equipment to save money.
This is a significant shift away from the legacy mindset that hardware sourced from the secondary market was unreliable and less efficient in comparison to hardware purchased new, from OEMs.
Considering also that the secondary market occasionally provides new equipment — often 50% to 90% cheaper compared to new equipment bought directly from OEMs — the heightened appetite for sourcing from here is not surprising. Operators are starting to see that it is not just older equipment, but also surplus or unused equipment from operators who have over-ordered or abandoned projects, that is often available.
Timely project completion
The supply chain crisis has left telecom operators in the frustrating position of waiting for extended periods to receive new equipment from OEMs. As discussed, our research found that supply chain issues have disrupted project timelines for 85% of operators, with over a third (34%) experiencing delays of six months or more. And the delays have been more pronounced depending on the type of operator: 94% of regional service providers suggested they waited over three months for critical equipment from OEMs versus 70% of fixed-line and mobile network operators who said the same.
By diversifying the supplier base and sourcing equipment from the circular economy, operators can mitigate the risks of extended delays. Access to refurbished equipment is often quicker to source, ensuring that projects stay on track and are completed within the planned timeframes. This approach avoids prolonged wait times for new equipment and expedites network deployment, allowing operators to maintain momentum and remain aligned with bold government ambitions. Nearly four in ten (38%) operators said they already use the circular economy to help alleviate long wait times caused by supply chain disruptions, with 32% suggesting that while they don’t use it, they would consider buying from the circular economy to avoid supply chain disruptions.
Improved network performance and customer satisfaction
Perhaps most crucially, supply chain disruption has also had a deep impact on network performance and in turn, customer satisfaction. Forty-five% of operators said that network performance was impacted and 42% reported that customer satisfaction had been affected as a direct result of supply chain disruptions. Meeting customer demands becomes increasingly difficult when essential equipment and materials are unavailable. In an industry working hard to generate more value for and from customers, compromised network performance can be particularly damaging. One of the operators responding to our survey suggested that their “Trustpilot reviews are now below 3 stars” due to the disruption.
By leveraging the secondary equipment market, operators can swiftly obtain necessary components, minimising network downtime and maintaining service levels. This enables them to improve, or at least maintain, network performance, and enhance both customer satisfaction and loyalty.
Increased sustainability benefits
Embracing the circular economy not only addresses immediate supply chain challenges but also contributes to long-term sustainability goals. By incorporating refurbished equipment into their operations, operators can minimise waste, reduce their carbon footprint and support the overall sustainability of the industry. This approach aligns with the increasing global focus on environmental responsibility.
As supply chain issues continue to disrupt operators, more and more of them are aware of the circular economy and its benefits. 58% have already begun to reuse, resell and/or recycle excess/legacy telecom network equipment within their business, whereas 23% say they are aware of excess/legacy telecom network equipment in their company that could support the circular economy but haven’t done anything with it yet.
Adopting a circular future
The circular economy offers operators a viable solution to navigate the supply chain crisis. By adopting refurbished equipment and embracing circular principles, operators can achieve cost efficiency, ensure timely project completion, improve network performance and contribute to sustainability goals while also diversifying sourcing.
Overall, this approach provides a pathway for operators to overcome the challenges posed by the supply chain crisis and emerge stronger and more resilient in the face of future disruptions.
