Reality Check: Optimizing the supply-chain ecosystem

Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
Last month, I ended on a compelling and interesting note: “Finally, particularly during these tough economic times, companies also need to optimize their supply chains to minimize cost and reduce time to market. … In my next article, I’ll focus on how all of the players in the wireless ecosystem – the operators, the manufacturers and the retailers – are focusing on making their supply chain the best it can be.”
I believe this development bodes well for the entire wireless ecosystem, and allow me to explain why.
Historically, manufacturers, operators and retailers each focused on capturing and defending their respective market shares, fragmenting the wireless ecosystem. Manufacturers held nearly half of the wireless telecom supply chain, from R&D through sales and marketing, while operators similarly held nearly half of the supply chain, from logistics and compliance through reverse logistics and customer service. Freight forward services bridged the gap, providing postponement customization, distribution, and logistics and compliance. For their part, retailers held a parallel portion of the supply chain, from distribution through point of sale. Each player had divergent strategic interests.
Over the past two years, the wireless ecosystem has experienced fast-moving changes – further compounded by the tremendous ongoing innovation happening in telecommunications and wireless.
–Apple, with hardware and operating system DNA, has redefined the supply chain with a holistic communications platform connecting Apple directly to consumers.
–Google, expanding its Internet presence into mobility, has launched the Android platform with multiple partners, and followed closely with the Google phone, which is available online directly to consumers.
–Mobile and fixed wireless devices of all types are handling unprecedented volumes of data, for business, social media, and emerging uses such as e-health, financial transaction, M2M and smart grid applications.
–As smartphones and quick-messaging devices have proliferated and mobile Internet usage has skyrocketed, the need to manage network capacity has increased enormously, as have the stakes to maintain brand equity.
Concurrently, the global economic downturn has forced all of us in the wireless ecosystem to recognize that we are more affected by one another’s actions than we had previously acknowledged.
Wireless executive are increasingly feeling the need to take action to (re)grow revenues, increase profitability, and inspire lasting brand loyalty. We heard this sentiment repeatedly in keynotes and private conversations at the Mobile World Congress in Barcelona and the World Economic Forum in Davos. For me, it was succinctly captioned in a World Economic Forum report: “Often, issues of poor monetization in the digital world arise from poorly aligned incentives along the value chain.”[i]
While each company must decide its own best course of action, we see a strong trend as wireless manufacturers, operators, and retailers alike take proactive measures to drastically cut costs in less critical areas, to enhance their ability to provide products, services and experiences their customers crave and will pay for.
And this is good news for all industry participants and importantly consumers.
As they narrow their focus on their core strategic goals, many wireless players are recognizing that closer supply chain integration reduces risk and strengthens their competitive position. In each instance, the benefits are clearly demonstrated: The more transparent and more strategically aligned the supply chain, the more efficient, predictable and profitable all of the partners’ operations become.
From a manufacturer’s standpoint, working in closer concert with network operators and retailers smoothes demand for new devices and makes both sales and revenues more predictable, as it reduces inefficient promotion and return costs.
From an operator’s perspective, tightening relationships with manufacturers and retailers increases forecast accuracy and availability of high-demand and high-ARPU devices.
From a retailer’s vantage, greater coordination with manufacturers and operators leads to increased customer satisfaction and higher stock turnover.
Moreover, application and content developers are also finding greater acceptance from the traditional players, as end-users enthusiastically embrace new ways to interact with one another and the world around them.
Meanwhile, distribution and logistics service vendors are also learning that what used to be a box-moving business is rapidly becoming an information management business. The most advanced players in this category offer high-value, collaborative, data-intensive services that go well beyond shipment tracking, and deliver much more than freight.
Anecdotally, I see supply chain alignment initiatives undertaken by widely diverse companies, operating in markets around the world, consistently return combined savings and new revenues, and accelerate time-to-market by four weeks or more – significant performance gains, captured through nimble application of deep and comprehensive supply chain intelligence.
I believe these results affirm that data has become the lynchpin to the wireless ecosystem, for manufacturers, operators, retailers, developers and others, as much as it has for end-users. In short, we all face an increasingly pointed opportunity to make more efficient, more profitable, and more competitively advantageous use of data about, in, and for our supply chains.
Drawing these observations together, I predict that the “winners” in this decade will be the companies – both small and large, consumer and commercial – that most effectively convert raw end-to-end supply chain data into integrated, forward-looking, actionable strategic intelligence, so they can focus on delivering strong brand experiences that reliably transcend mere satisfaction to cultivate customer delight.
Of course, today the best practices of supply chain performance must go beyond excellence in strategic alignment, to a still deeper level where customer intelligence directly influences product design, manufacture, features, and service. These next-wave initiatives will deliver meaningful reductions in material and transportation waste (including greenhouse gas emissions), toxics use and energy consumption. With regulatory variations across countries and regions, there is no single prescription for “greening” the wireless ecosystem. But presented with the potential to harvest significant cost savings, as well as customer and employee loyalty dividends, many companies aren’t waiting to be shown the way.
Next month, I’ll discuss some of the approaches wireless companies are taking to green their operations, from device design and packaging to promotions, and to reap tangible rewards for those efforts.
[i] “Enabling Growth: Horizontal Opportunities for the ICT Sector”. World Economic Forum, February 2010.
Marcelo Claure is the chairman, president and CEO of Brightstar Corp., a leading global services company providing innovative distribution and supply chain solutions to the wireless industry. Brightstar offers leading wireless and IT manufacturers the largest global reach, enabling the right product to be in the right place, at the right time. Brightstar’s supply chain solutions are used by the world’s top network operators and retailers to improve financial results, increase EBITDA and turn their supply chains into a competitive advantage. For more information on Brightstar, please visit www.brightstarcorp.com.