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In-depth: The quest for supply chain transformation and end-to-end logistics at Sprint

The quest for supply chain transformation and end-to-end logistics at Sprint

The annual Mobile World Congress (MWC) is far and away the largest showcase for the telecommunications industry. At the end of February this year, more than 120,000 exhibitors met in Barcelona to showcase the most innovative products and services and share the big ideas that will influence the future of the industry. Professionals from 205 countries and territories were present, and around 3,500 members of the international press and media attended.

It's certainly come a long way from its inception 30 years ago as a forum for the global system for mobile communications (GSM) when the protocols for second-generation digital cellular networks (2G) were first deployed. Today the industry is gearing up for the fifth generation. Network operators are jockeying for the first position as 5G rolls out, and among the leaders is Sprint Corporation. Sprint is the ninth largest telecommunications company in the world – the fourth largest when combined with the SoftBank family of companies, based at Overland Park, Kansas, and with over 54mn customers. Its prepaid subsidiaries include Boost Mobile, Virgin Mobile, and Assurance Wireless.

This year's MWC came at a pivotal moment for Sprint, which has stabilized and grown market share since its acquisition by Japan's SoftBank in 2013, placing it in the same stable as other outstanding technology companies. In 2016 it recorded a growth in revenue for the first time in three years (at $33.3bn), added 930,000 postpaid phone net customers, and was rated the number one voice network in the USA. Growth continued in 2017, and by the time of MWC, it was able to make a number of exciting announcements, notably the first six USA markets to undergo 5G transformation starting in April.

Customers in Chicago, Dallas and Los Angeles will begin experiencing significant increases in data speed and capacity, as Sprint rolls out advanced network technology called massive multiple-input multiple-output (MIMO), described as the bedrock of 5G. These will be followed later this year by expansion into additional markets including Atlanta, Houston and Washington, DC. In 2018 and 2019 Sprint expects to deploy thousands of massive MIMO radios, significantly increasing network capacity for millions of customers across the country.

Innovation acknowledged

A highlight for Sprint at MWC was to be awarded the 2018 Global Mobile (GLOMO) Award for Best Mobile Technology Breakthrough. This was for Sprint Magic Box, the world’s first all-wireless small cell, which improves data coverage and increases download and upload speeds by an average of 200%. Small cell technology allows much better and faster mobile coverage, providing average indoor coverage of up to 30,000 sq ft, and with a signal that extends data coverage to Sprint customers in nearby homes and businesses. The company recently hit a milestone of 100,000 deployed Sprint Magic Boxes to businesses and consumers in approximately 200 cities. Sprint plans to deploy more than a million units as part of its multi-year roadmap.

Sprint Magic Box represents an outcome from the company's integrated strategy on partnership, innovation, customer focus, technology leverage and, crucially, end-to-end supply chain management. As part of Sprint's representation at Barcelona, Martin Fijman, VP of Products and Supply Chain, was there to further relations with the global industry, notably the manufacturers of the devices on which we rely. “Everything at MWC was about 5G,” Fijman says. “I think the convergence of 5G technologies, the devices and the digital supply chain is a very powerful combination. Sprint is very well positioned from a technology and supply chain point of view to bring this disruptive technology to the market. We will be the first in the USA with a mobile 5G network, and we will have the devices supply chain in place to make it happen.”

Fijman joined SoftBank in 2014 with responsibility for a multi-billion dollar global spend, negotiating with key manufacturers and managing sourcing strategy, purchasing operations and contract management for Sprint. At the time he was drawn by the vision and leadership that drove the company at this crucial stage of its development, and was excited by the prospect of driving an aligned transformation in its supply chain function. He is adamant that an effective supply chain organisation should fully support the company's strategic vision. Since then, his role evolved to lead and implement a unified devices supply chain across all Sprint consumer products, channels and brands, driving a differentiated customer experience (one of the key corporate goals) at an optimal cost. As such he is accountable for boardroom-level relationships with key partners and manufacturers, end-to-end forward and reverse supply chain operations, inventory and device portfolio management for the organization's three brands: Sprint, Boost and Virgin Mobile.

A unified, digital supply chain

These have been productive years from a procurement perspective. “In 2015 we set out on a major transformation at Sprint,” says Fijman. “Since then Sprint has been successful in reducing its costs by billions of dollars, and device supply chain transformation and collaboration across the business has been an integral part of that.” When he started, the challenge was to lay the foundation for a sound device sourcing structure and build a best in class team. That role has expanded progressively to cover all aspects of the device supply chain, creating what he defines as a unified supply chain that includes both forward and reverse logistic elements.

By unified, Fijman is speaking not only of the work of his product and supply chain team: “It's common in our profession to see people managing supply chains in a vacuum, not aligned with external factors. What I mean by a unified supply chain at Sprint is one that's incorporated in all the elements of corporate strategy and that supports fundamental consumer demand, at the lowest possible cost. It's about facilitating a seamless customer journey across the channels, and working toward having a consistent quality of experience in every channel where we operate. To achieve that, naturally we need comprehensive information and tracking to deliver different service level choices. Furthermore, a very important component for us is reverse logistics. Sprint is the industry leader in device leasing, which demands a very agile and frictionless logistic operation. We had to evolve very rapidly to be able to cope with the millions of used devices that are returned in our reverse logistics operation.”

The number of mobile devices traded in or returned is increasing constantly. The reverse logistics process has traditionally been a challenge for service providers. Automation is now being used to make the process more reliable but this is not a core function for Sprint, says Fijman. “We look for the best economic use for the devices that are returned, but for the most part we work with logistics partners for the processing of the used devices, including their collection and return.”

Procurement at the top table

It's with great satisfaction that over the years Fijman has seen the supply chain role develop in importance, from a backroom to a strategic role. “Whichever way you look at it, in our business bringing a product or device to the customer is a critical function. We have succeeded in aligning our team's goals with the longer term plans of the business. As a company we want to put customer experience at the center and we want to drive cost efficiency. With that in mind it is counter-productive to regard supply chain as a tactical necessity. It sits at the top table when formulating strategy, forward planning and reducing cost. Sprint's corporate goals include being a value leader in the market, driving digital growth, driving expansion and growth. The supply chain is essential to each of these.”

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At the heart of this realignment stands the digital supply chain transformation Fijman has been leading. “We have had a two-pronged approach toward supply chain transformation. The first has been addressing different aspects of efficiency and effectiveness, introducing better service levels and better management of the process of bringing new product to market. The second has been moving toward being a more resilient supply chain responsive to market conditions, a supply chain that can adapt to the changes and disruptions in the marketplace, and reach out to the consumers in a cost-effective way.”

Traditionally, telecommunications supply chains have not been configured to handling individual items close to the consumer point. Fijman continues: “Telecommunications companies have been lagging behind some of the retailers. We are now starting to look into the concept of micro logistics networks, which is essentially facilitating the efficient sourcing and delivery of these items and devices to an end-user.” It is not necessary for telecommunications providers to own these micro logistics networks. As with reverse logistics, it is better entrusted to third-party specialists, Fijman believes. Customer expectations have been shaped by the 'Amazon experience', and they have become used to next-day or even same-day fulfillment of orders. These expectations are beginning to impact the telecommunications supply chain. The only practical solution, he says, is partnering with innovative providers that can bring the capability to directly fulfill consumer demand.

The strategy has delivered stellar results, not all of it from procurement, but in every case with a strong procurement component. Since 2014 the company reduced its costs by over 20%, during a period of growth. Operating expenses have been reducing by between $1bn and $2bn a year, and in 2017 alone inventory levels were reduced by 35%, while stock transparency and availability have increased significantly. “Partnering with external companies has increased the depth and breadth of our network, and enabled us to be more asset light in the way we handle our inventory,” says Fijman.

The responsive supply chain

Technology will naturally play a critical role in designing new models for maximizing supply chain effectiveness in this new landscape of micro logistics. Fijman continues: “We are very fact-based when making any decisions affecting our supply chain. We rely heavily on the data we glean from the marketplace and from customer feedback. This determines our response to customer needs and giving the customer what they want.” Operational and demand planning to optimize or install the in-store portfolio based on SKU velocity is an example of how Sprint uses data to understand the performance of different products in different markets. Fijman expects that new predictive analytic technologies will turn real time demand into the right inventory in the right place consistently.

Alliances and partnerships, vendor management and data analytics are all aspects of what Fijman calls a responsive supply chain. “For me, a responsive supply chain means a customer having the ability to select, to receive and to return a product when, where and how it is convenient for them. That is enabled only through analytics. Customer-centricity is required across all the digital and physical touch points, to drive engagement, satisfaction and loyalty. Proactive rather than reactive, keeping a step ahead of the customer. Giving them what they want before they know they want it.” It's a holistic approach that applies to employees and to partners, he enthuses, felt at every level and at each touch point within the organization as well as outside of it.

At the same time as MWC debates how the industry is going to deliver 5G to its consumers this year, Martin Fijman is preoccupied with technology tools that are either just around the corner or just beginning to make their presence felt. Blockchain, AI, IoT, advanced analytics are all poised to disrupt. “We are in the early stages but I think that over the next five to 10 years we are going to see major changes in our supply chains, driven by these new technologies. I think it will be a tipping point as they become less expensive and more mainstream. At Sprint we are in the pole position in the race to have a supply chain that is differentiated compared with our competition, and at the same time manage the risks that are associated with early adoption of new technology.”

Finally, Fijman reverts to his favorite topic, sustainability. He is very proud of the impact procurement policy has had on Sprint's performance in promoting a socially and environmentally sound supply chain and reducing the environmental impact of products. “We are an environmentally conscious company: sustainability is incorporated in our procurement policies and in the way we deal with any partner in our devices ecosystem”

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