Ahead of 2016’s much-hyped iPhone 7 launch, die hard Apple fans around the world were so desperate to be the first to get their hands on the new device some paid upwards of USD$300 to a stranger to queue up for them 48 hours before stores opened. Some Apple devotees in Sydney, Australia, were even offered USD$3,500 to give up their spot in line.
We witness a handful of these flagship device launches every year – think Apple, Google Pixel and Samsung S7. For customers, the goal is to beat the crowds and be the first to buy a new device in the first release. But for telco retailers, the number one challenge is ensuring availability of enough stock to keep up with this heightened demand – and CEOs are increasingly concerned that their supply chains are not up to this challenge.
These big launches are often the only time during the year when telco and carrier retailer CEOs are kept awake at night thinking about the performance of their supply chains.
The wireless supply chain is a complex web of vendors that manufacture and distribute the various parts a mobile device is built from. To the consumer, this behind-the-scenes process is invisible. The number of components at play within these international supply chains is staggering: in Q3 2016 alone, almost 363 million smartphones were shipped globally.
It’s these critical points in the sales calendar plus vast sales and distribution networks that put wireless supply chains in the spotlight. Telcos and retailers who have a reliable and consistent supply chain have a clear opportunity to attract customers and encourage them to switch providers, with the promise of the latest mobile phone.
In order to gain this competitive edge and build (and defend!) their customer base at these opportune moments, there are three major issues telcos and carrier retailers need to urgently address:
It is vital to be able to offer enough stock to meet customer demand, as launches are a time when many consumers are willing to switch carriers and contracts to get their hands on a the latest smartphone. The best proven way to access more product from the manufacturers is a speedy turn-around-time on selling their product. Unclogging and automating problematic supply chains is critical to be able to offer customers reliable product delivery, as promoted at the point of sale, and win a greater share of product from the manufacturers.
Internal negotiations over which sales channels get prioritised for limited product batches in the absence of agreed criteria can also hinder sales and introduce unnecessary delays. Telcos should conduct an audit of how quickly sales flow through their channels – for example, enterprise teams, online teams, franchisees, corporate-owned stores – to effectively allocate the limited supply of products. They must be seen to be meeting customer demand via whichever sales channel is fastest and an automated process can help with this.
Finally, dealers who earn significant commission from connecting customers onto new plans are often incentivised to withhold limited stock, if they believe a future customer will purchase a more lucrative plan, or with added accessories and insurance. This commission model may work for most of the year, but flagship launch times are when stock needs to move fast to win a greater allocation from the manufacturers. This hoarding of stock is a real issue, and ultimately results in the telco being at risk of losing out if their customers can access product from competitors.
As we’ve explored, the centre of the supply chain management process has a deep dependence on wireless technology and data holds the key to the solution. The challenge during these periods is when manufacturers use real-time data to monitor mobile phone activation time: this shows when a phone is activated by a customer, who is selling the most phones, and in turn, which of their channels can sell-through more units quickly.
One solution to help solve these unusually complex issues, which are unique to the telecommunications industry, is to introduce advanced analytics solutions that use data-driven statistical algorithms to optimise individual store replenishments. This turns big data into store level allocations that reward retail stores and partners that sell the quickest.
Using a highly customer-centric automated approach based on robust data benefits both carriers and retailers, and helps optimise the performance of the end-to-end supply chain through aligning incentives. It promotes internal cohesion between teams and reduces any associated delays and conflicts because stock replenishment decisions are fully automated through pre-agreed policy settings.
Further, a gamification concept is introduced for retailers who are monitoring their supply chains and ensures the focus is on sales velocity. Developing a specially designed dealer portal means staff can access data directly in real-time and they have the ability to instantly check stock levels and allocate products where needed. This removes issues with incentive models and misaligned sales strategies, so it’s win-win for everyone – especially customers.
Retailers are compared against peer stores, and this transparency introduces a competitive element. This helps shift incentives to “sell more and you get more” as opposed to dealers hoarding stock for more profitable customers – and risk slowing sales velocity. Store performance is increased and teams can focus on ensuring they’re delivering exceptional customer service.
This unusually complex issue illustrates the unique challenges the telco industry is facing around product allocation and inventory during flagship launch times. Optimising supply chain data analytics is just one example of how telcos and retailers can use the right technologies and platforms to strategically manage and drive the supply chain to improve the customer experience. These peak sales periods are critically dependent on the wireless supply chain working efficiently, and all parties at the table working cohesively. By harnessing a bespoke, solutions-based approach, they can align incentives and maximise visibility end-to-end to keep one step ahead of competitors.