Switch Sell

Switch Sell

Copyright 2003, Traffic World, Inc.

Logistics services can turn a profit indirectly by locking customers into a 3PL''s network and capturing more repeat business. That is what Sprint North Supply is doing with a new mobile logistics solution in the maturing wireless communications market.

The usual approach to winning business from wireless companies is to "chase the capital spend," said Carl Rex, director of client solutions for Sprint North Supply. However, "the spend is drying" for these companies, he said, and, having built wireless networks and grabbed market share, they now are looking to streamline their operations.

One way of achieving this is to improve supply-chain efficiency and this creates an opportunity for third-party service providers such as Sprint North Supply. The enterprise has switched its selling strategy to using value-added logistics services as a means of attracting new business. "Our objective is to be a strategic supply-chain partner," said Rex.

Kansas City-based Sprint North Supply is a supply-chain integrator serving network service providers, manufacturers and resellers in the telecommunications market throughout North America. The organization operates seven distribution centers totaling approximately 1,300,000 square feet and handles about $175 million worth of inventory. Although it operates as a 3PL, the enterprise is not a direct competitor to traditional logistics service providers, said Rex. It focuses exclusively on the telecommunications market, he pointed out. "We are leveraging the customer base we have into deeper supply-chain relationships," he said.

The mobile logistics solution being developed initially for wireless network operator Alamosa PCS is scheduled to complete the pilot phase in a few weeks. Alamosa has the exclusive right to provide digital wireless mobile communications network services under the Sprint brand name, throughout a designated territory that covers 15 states and a licensed population of about 15.8 million residents.

Sprint North Supply already was providing supply-chain services to Alamosa prior to the mobile logistics program. The 3PL had implemented solutions to streamline and consolidate several logistics and materials management operations, add forecasting and visibility capabilities for equipment, and reduce the wireless carrier''s inventory investment. The mobile solution takes this effort a stage further by "gathering information in the field down to a granular level," said Steve Karpowich, program manager for Sprint North Supply. "We are trying to capture installed assets, and installed can be spare or active assets in the network," he said.

Critical assets include the cards that Alamosa uses to adjust the capacity of its wireless network. Similar in size and format to the cards used to upgrade PCs, "these are very expensive and very critical to the network," noted Karpowich. The cell towers that are the nodes of a wireless network communicate with switches that route calls to landlines or other cell sites so that mobile phone users can continue their calls while on the move. "It''s a computerized system and as the network grows they add capacity through the cards," he explained. Also, by physically installing and removing cards, a network''s capacity can be decreased and increased in line with demand fluctuations. Network operators like Alamosa "try to maximize their profits according to demand," he said.

The wireless carrier''s service technicians operate 24/7 to maintain the network, and "probably several times a week they are adding and upgrading," said Karpowich. The mobile system tracks the movement of cards and other equipment in the field. He estimated that Sprint North Supply keeps a list of 5,000 unique parts for Alamosa.

High-value items such as cards are barcoded and field technicians use Intermec pocket PCs to scan the equipment with laser sensors. The system records details such as the technician''s location (at a specific switch facility for example), the serial and part number of the item, "and you can search by name if the barcode is damaged or inaccessible," he said.

The system delivers supply-chain improvements on a number of fronts. Network managers can make better procurement decisions because they have more precise information on the inventory being held in the field and in distribution centers. Also, equipment can be more efficiently deployed. As Karpowich pointed out, "Instead of ordering a $5,000 part, they can search the database we are creating and find out if anyone has a spare available." Replacing faulty parts is easier because the database provides an accurate map of where equipment is installed.

Sprint North Supply also is developing "a capability to cover when they send cards off for repair." The system will record what parts are sent and any changes that have been made to the returned unit. In addition to improving the management of repairs, the aim is to analyze repair operations and identify useful patterns, such as which vendors are supplying the most faulty components and which parts are more vulnerable to failure.

According to Karpowich, the mobile logistics program "is largely breaking new ground" in the industry. Moreover, supply-chain efficiency is becoming more important to network operators since they "are stepping back and saying, now that I''ve built (the wireless network), where and how can I make it more efficient." At the same time investors are looking more critically at metrics such as the cost per access line in a network and how well wireless companies are running their businesses.

The pilot is under way in a single market and after completion will be rolled out in Alamosa''s eight other markets. It is too early to give specifics on what supply-chain efficiencies have been achieved to date, but Karpowich said that Sprint North Supply has "reduced cycle times from six months to six weeks" and cut project costs from 15 percent to 20 percent for customers. A digital loop deployment project can easily cost $250,000.

Looking ahead, the plan is to market the mobile logistics solution to other telecommunications carriers. "We''ve got another field trial now with a landline provider, and another that should start in a few weeks," said Karpowich.

In the case of Alamosa, Sprint leases equipment to the wireless carrier and "that''s our revenue source. We are trying to drive more business through reorder and procurement," he said. Since the 3PL had pre-existing supply-chain business with Alamosa, that arrangement may or may not be appropriate for other customers. Still, the cost of the mobile service "is not transactional and it is not time-based" and the basic strategy will remain the same: to use the value-added service as a hook to capture more business.