4 minute read 20 May 2019
Network telecoms mast against blue sky

Why readying network supply chains will help telcos realise their 5G investment

By

Praveen Shankar

EY UK&I Technology, Media and Telecommunications Sector Leader

Broad experience in transformation and operations, driving the 5G agenda, focused on tackling the most pressing and complex business and technology challenges in the industry.

4 minute read 20 May 2019

With the 5G challenge at the forefront of the industry, telcos must ensure they have a network supply chain that can deliver true value from their investment.

The legacy, number and specification of network equipment involved in any telecommunications’ supply chain varies vastly between organisations, but all share one key common denominator: a huge opportunity ahead of the 5G investment curve.

EY research finds that 1 in 10 businesses are already apportioning IT budget to 5G, with a further 50% preparing to upgrade to 5G connectivity in the next two years.

To stay competitive, it’s paramount that providers are aware of the typical warning signs of an under-performing network infrastructure supply chain and the opportunities to capitalise on 5G investments.

The 5G challenge

Containing the explosion in capital expenditure (capex)

The telecommunications data revolution has led to a surge in demand for network capacity, which is increasing with the introduction of 5G.

However, despite capital intensity rising across the sector, cost control and business efficiency tops the strategic priority list for over half the telecommunications C-suite. It is not expected that this increase in network capacity will lead to proportional growth in revenue, meaning much greater pressure on margins.

“The time is now. Status quo is not an option to address the operational challenges of 5G deployment. The telcos that couple large investments in networks with clear articulation of business use cases and operational efficiency improvements will drive the maximum value from their 5G spend.”

Realising business efficiencies

Most telco providers are taking steps to optimise their handset and consumer premise equipment (CPE) supply chains, delivering reasonable benefits back to the business. However, the network materials supply chain, which is typically much larger, valuable, complex and less visible, has often been neglected and is unable to cope with this pace of change. Tackling this ahead of 5G will not only deliver larger financial benefits for the CFO, but also greater speed of 5G deployment, increased flexibility, higher service levels and greater control to the wider customer-facing organisation.

Key ways to build competitive advantage

Treat the network equipment supply chain as a strategic differentiator. Establish a unified supply chain function accountable for end-to-end network materials with a clear supply chain configuration, processes and governance. This will also relieve skilled technical engineers of the administrative burden of calculating, raising and tracking POs, so they can focus on more value-added activities.

Establish end-to-end visibility and control of all network inventory, based on sound master data, deployment and maintenance processes, as the prerequisite for efficiently managing network assets and inventory. A unified process for the classification and recording of equipment reduces the proliferation of different material types and enables greater negotiating power for procurement and control of network assets across your suppliers’ warehouses, your warehouses, sites and staging locations.

Upgrading to 5G connectivity

50%

The percentage of companies preparing to upgrade to 5G connectivity in the next two years

Collaborate across all areas of the business and implement an integrated network planning process to break functional silos and come up with a single view of requirements. Extend this to include your key suppliers and customers, moving away from transactional relationships into partnerships. This enables lead times, inventory holding and project delays to be significantly reduced.

Maximise the use of returns and establish a robust return flow to enable one of the biggest opportunities for long-term savings in a network supply chain. This can also deliver quick wins by using excess unused materials either by reusing across your geographies or by speedy external sales.

Utilise performance management to embed change. Determine consistent deployment and maintenance objectives supported by tiered, measurable KPIs, balanced across the ecosystem and aligned to business strategy. Continuously measure and drive improvements through rigorous governance and actions.

Summary

The telco data revolution has led to a surge in demand for network capacity, which is only going to increase with the introduction of 5G. Providers must be aware of the warning signs of an under-performing network infrastructure supply chain, and ensure theirs will deliver true value from 5G investment.

About this article

By

Praveen Shankar

EY UK&I Technology, Media and Telecommunications Sector Leader

Broad experience in transformation and operations, driving the 5G agenda, focused on tackling the most pressing and complex business and technology challenges in the industry.