UScellular gave a presentation on the work they are doing to improve their customer service – a key strategy for the company – based on improving supply chain capabilities. Wireless telecommunications systems transmit voice and data signals over networks of radio towers using FCC-licensed radio spectrum. Wireless service providers have system interconnects to allow calls outside of their region. UScellular’s annual report highlights that “a high-quality network, backed by continued investment in that network, is an important factor in UScellular remaining competitive.”
The presentation was given to the Association for Supply Chain Management (ASCM) a few weeks ago. Amy Augustine, the Network’s Senior Director of Supply Chain was also recognized by the association with the Award of Excellence.
Rapid change in an asset-intensive business
UScellular is the fourth largest wireless service provider in the United States, distinguished by its dedication to rural communities in America. The company serves customers with approximately 5 million total retail connections. The US cellular network that supports these customers was built locally, with an emphasis on serving underserved areas. The Company’s cellular network includes approximately 7,000 cell sites. In 2020, UScellular reached a major milestone by launching the deployment of 5G technology on its network. Although the company has its roots in regional development, its growth has opened up opportunities to gain efficiencies through centralized supply chain planning.
UScellular restructures its network supply chain
UScellular historically operated with a regional structure. Being local has allowed the company to understand the nuances of the community, like knowing dead spots with inadequate cellular coverage. However, as supply chain practitioners know, operating regionally or in silos tends to create inefficiencies that can be addressed through broader operational visibility and holistic rather than local optimization efforts. As UScellular has matured, its supply chain has evolved – a centralized supply chain function was launched in 2000. This Chicago team is responsible for logistics and coordinating efforts with suppliers . Earlier this year, they added a supply chain planning function to the Chicago team. UScellular noted some of the key goals for its current supply chain transformation, much of which can be achieved from centralized supply chain planning.
A centralized structure could provide standardization while offering efficiencies through bulk purchasing, a broader understanding of material needs, and more efficient shipping practices. Visibility across the entire supply chain can also improve the ability to locate inventory and more intelligently prioritize material allocation to projects. Centralized planning with information from across the organization can drive more holistic optimization and improvements in alignment with business goals.
Deploying a Cellular Site is Complex!
Building a cell tower is more complex than most imagine. In project-based, build-to-order supply chains, understanding the critical path is critical. Any well-managed project has scheduled tasks that determine the duration and cost of the project. Many tasks do not need to be tightly sequenced, but if critical path tasks do not occur on time, the project is delayed and often goes over budget.
Moreover, projects rarely run smoothly. For this reason, supplier reliability, supply chain resilience, and agility were among the top considerations for UScelluar’s supply chain transformation. The supply chain team conducted an in-depth analysis of 3 key projects and determined that 61% of components were internationally sourced and most critical components were manufactured in Asia or Europe. Meanwhile, lead times for materials ranged from 9 days to 9 months. Therefore, proper planning is required to source and receive critical components in advance to ensure that these materials do not cause a bottleneck to the project.
UScellular uses 13 warehouses across the United States, positioned so that every cell site in the network is within 500 miles of a warehouse. But the company wasn’t sure it was the most effective network for its priorities. With these considerations in mind, the US cellular supply chain team took a step back, imagining the criteria for an optimal and efficient way forward. They named this initiative Project Network Enterprise Optimization (Project NEO
The team knew they wanted to be able to scale and scale quickly and realized this would be made possible by reducing complexity to achieve economies of scale. They looked at 2 years of data and determined that one in seven sites built was a unique setup. So they took the 80/20 rule, worked with the engineering team to determine the requirements, and whittled down 47 unique builds to 4 standard builds that would accomplish 80% of what they needed.
Then, the cell sites vary considerably. But often construction sites are a very small work area between a sidewalk and the street. This lack of space complicates the installation work of the field team. To simplify the installation process, the supply chain team laid out four pallets on the floor of a warehouse and developed the most efficient way to kite the materials so that engineers in the field could access the materials in the order of use when in the field, enabling efficiency at the point of installation.
Poles for cell towers are custom materials with long lead time. Some small cell sites are attached to street poles. Very often, existing street poles lack the structural integrity to handle cellular equipment, forcing cell providers to install new poles. Local jurisdictions also require cell providers to use poles suitable for the environment. The supply chain team looked at how to streamline this process. They worked with a pole supplier and created a “pole library” and simplified the process, with due diligence upfront to ensure materials would meet requirements before ordering, reducing risk inventory mismatches down the line.
Finally, they analyzed the loading level of their trucks. They determined that shipments were going to the same area multiple times, with no bulk shipments. They identified a multi-million dollar opportunity to reduce costs through more efficient shipping. They also discovered that they could currently reach 95% of their sites in four hours or less. But with half the number of warehouses, they could still reach 95% of sites in six hours. This presented a potentially significant opportunity to simplify the warehouse network at some point in the future.
The path to follow
USCellular is not done with this transformation. To get where they want to be, they need transparency and visibility to mitigate risk. They believe that future supply chain challenges, such as plant closures and supply chain disruptions, can be mitigated with upstream visibility. Additionally, workforce engagement is important given the expected increase in the need for supply chain talent and the constrained workforce. Change management is an important and ongoing process that must be managed. They try to be open-minded in their thought processes. Finally, they strive to prove their concepts through the presentation of data and facts.
Clint Reiser, director of supply chain research at ARC Advisory Group, is the lead author of this article.