Executive Briefings

SPECIAL ISSUE: GLOBAL SUPPLY CHAIN PARTNERSHIPS

BellSouth: Service Quality Trumps Hardware In Satisfying the Customer

The most important part of a phone company's operation isn't the hardware and cables that travel throughout its distribution network. It's making sure those materials are available to customers when they're needed. "Our core competency is service performance," says Bill Hightower, assistant vice president of supply-chain services with Atlanta-based BellSouth. "We are a service company."

Say what you will about deregulation of the telephone industry, but there's no question that it has forced the players to be more competitive. And the best way to lose a customer is to react slowly when systems go down. So BellSouth promises four-hour turnaround time on parts shipments in an emergency. It provides a constant flow of parts and equipment to more than 20,000 service technicians throughout the U.S. Southeast.

Outsourcing is at the heart of BellSouth's logistics strategy. Both warehousing and transportation are managed entirely by outsiders. In the case of transportation and parts-center management in the nine-state southeastern region, that's Ryder System, Inc.

Miami-based Ryder has been serving BellSouth on a regional basis since the mid-1990s. It moves phone and plant equipment, including cables, tools and hardware, from BellSouth's central warehouses as well as some 25 intermediary cross-dock locations. It also staffs those smaller facilities with its own personnel.

In the repair business, nearly everything can be considered an emergency of some kind. Yet BellSouth doesn't rely on large caches of parts to guarantee availability. Utilizing a "near just-in-time" strategy, it tries to keep no more than two days of stock on hand at any location, says Hightower. For the most part, inventory is managed on a "pull" basis, geared toward actual de-mand rather than buffer stock.

Ryder took over a complete transport operation, right down to the drivers, warehouse employees and equipment, says Jerry Hubach, vice president of operations. It now operates approximately 130 power units and 180 trailers on BellSouth's behalf, supported by a dedicated management staff of around 30. Included in the equipment mix are specialized trailers with double decks and lift gates, and flatbeds for big rolls of cable.

The service is specialized, too. Except for the cable, nearly all deliveries are made at night, often unattended, putting parts into the hands of technicians by 7:00 the next morning. Many shipments come from a network of "plug-in" distribution centers (PDCs), operated by Ryder, which deliver critical circuit boards that can be quickly swapped for defective components. "They're the brains of the telephone network," Hubach says.

The system is further supported by a pair of larger, centralized warehouses - one in Suwanee, Ga. for general merchandise, the other in Bessemer, Ala. for plug-in units. Ryder's first job for BellSouth was providing linehaul service from those facilities. Now, in addition to the PDCs, it has taken over management of parts storerooms at the local level, usually in remote areas. There, it's the drivers who put away parts and monitor inventory, triggering orders when levels fall below preset minimums.

At times the situation can be especially critical. "Telecom requires an instant response in emergency conditions, 24 hours a day, seven days a week," says Hightower. In addition to the more recent, human-caused brand of disruption, carriers must confront natural disasters, such as ice storms and hurricanes, on a fairly regular basis. Reaction to such events is worked out in advance, with all parties kept in the loop. Occasionally a shipment must be flown, despite the higher cost.

Ryder's current menu of services for BellSouth extends to the management of reverse logistics. That includes the return of empty cable spools, as well as parts for repair, recycling, redeployment or disposal. Less than 3 percent of BellSouth's returned parts end up in a landfill, Hightower says with understandable pride.

BellSouth expects to ask Ryder for some enhancements in the carrier's tracking of returns, a capability that currently exists only in the outbound direction. For those shipments, Ryder's online tracking and tracing system follows shipments from the time they're received at the distribution centers to final delivery. Status reports are issued every two to four hours.

The BellSouth account has meant more to Ryder than a source of steady income. It has served as the carrier's entree to the electronics and high-tech (EHT) business. Hubach says Ryder hopes to move toward multi-client facilities in that sector, as more cost-conscious shippers dump their private fleets, and embrace outsourcing.

The most important part of a phone company's operation isn't the hardware and cables that travel throughout its distribution network. It's making sure those materials are available to customers when they're needed. "Our core competency is service performance," says Bill Hightower, assistant vice president of supply-chain services with Atlanta-based BellSouth. "We are a service company."

Say what you will about deregulation of the telephone industry, but there's no question that it has forced the players to be more competitive. And the best way to lose a customer is to react slowly when systems go down. So BellSouth promises four-hour turnaround time on parts shipments in an emergency. It provides a constant flow of parts and equipment to more than 20,000 service technicians throughout the U.S. Southeast.

Outsourcing is at the heart of BellSouth's logistics strategy. Both warehousing and transportation are managed entirely by outsiders. In the case of transportation and parts-center management in the nine-state southeastern region, that's Ryder System, Inc.

Miami-based Ryder has been serving BellSouth on a regional basis since the mid-1990s. It moves phone and plant equipment, including cables, tools and hardware, from BellSouth's central warehouses as well as some 25 intermediary cross-dock locations. It also staffs those smaller facilities with its own personnel.

In the repair business, nearly everything can be considered an emergency of some kind. Yet BellSouth doesn't rely on large caches of parts to guarantee availability. Utilizing a "near just-in-time" strategy, it tries to keep no more than two days of stock on hand at any location, says Hightower. For the most part, inventory is managed on a "pull" basis, geared toward actual de-mand rather than buffer stock.

Ryder took over a complete transport operation, right down to the drivers, warehouse employees and equipment, says Jerry Hubach, vice president of operations. It now operates approximately 130 power units and 180 trailers on BellSouth's behalf, supported by a dedicated management staff of around 30. Included in the equipment mix are specialized trailers with double decks and lift gates, and flatbeds for big rolls of cable.

The service is specialized, too. Except for the cable, nearly all deliveries are made at night, often unattended, putting parts into the hands of technicians by 7:00 the next morning. Many shipments come from a network of "plug-in" distribution centers (PDCs), operated by Ryder, which deliver critical circuit boards that can be quickly swapped for defective components. "They're the brains of the telephone network," Hubach says.

The system is further supported by a pair of larger, centralized warehouses - one in Suwanee, Ga. for general merchandise, the other in Bessemer, Ala. for plug-in units. Ryder's first job for BellSouth was providing linehaul service from those facilities. Now, in addition to the PDCs, it has taken over management of parts storerooms at the local level, usually in remote areas. There, it's the drivers who put away parts and monitor inventory, triggering orders when levels fall below preset minimums.

At times the situation can be especially critical. "Telecom requires an instant response in emergency conditions, 24 hours a day, seven days a week," says Hightower. In addition to the more recent, human-caused brand of disruption, carriers must confront natural disasters, such as ice storms and hurricanes, on a fairly regular basis. Reaction to such events is worked out in advance, with all parties kept in the loop. Occasionally a shipment must be flown, despite the higher cost.

Ryder's current menu of services for BellSouth extends to the management of reverse logistics. That includes the return of empty cable spools, as well as parts for repair, recycling, redeployment or disposal. Less than 3 percent of BellSouth's returned parts end up in a landfill, Hightower says with understandable pride.

BellSouth expects to ask Ryder for some enhancements in the carrier's tracking of returns, a capability that currently exists only in the outbound direction. For those shipments, Ryder's online tracking and tracing system follows shipments from the time they're received at the distribution centers to final delivery. Status reports are issued every two to four hours.

The BellSouth account has meant more to Ryder than a source of steady income. It has served as the carrier's entree to the electronics and high-tech (EHT) business. Hubach says Ryder hopes to move toward multi-client facilities in that sector, as more cost-conscious shippers dump their private fleets, and embrace outsourcing.