Executive Briefings

Supply Chain Risk Management in the Communications Industry

Globalization has had an overwhelmingly positive impact on supply chains. Purchasers can now search further afield for goods and services to achieve better value, quality, price or reliability. But for all their benefits, truly global supply chains are not without issues. The trends for reduced inventory, just-in-time ordering and end-to-end automation mean that many companies are hugely reliant on their IT infrastructure and underlying communication services.

Telecom provider networks are often constructed from a tangled web of different technologies from different manufacturers and third-party service providers. Shared infrastructure is also prevalent, with the prohibitive cost of running cables all around the world leading to resource sharing between competitors. Even at a domestic level, competing operators routinely share mobile transmission masts and other infrastructure to reduce costs.

Telcos are all under increasing price pressure which translates into pressure on costs. This goes some way to explain the complexity of modern telecoms operators' supply chains. Hunting for an extra one percent saving here and there results in very complex supply chains involving multiple suppliers and subcontracted relationships spread across the globe.

This complex environment is very difficult to trace from end to end. Imagine a communication between, say, a London head office and a manufacturing facility in the Far East. It is not unusual to find many different companies involved in making that communication happen. The number of parties involved and the physical infrastructure from different providers soon builds up to create a chain which is very hard to unpick. All of this means that in the event of a failure it can be very difficult to quickly pinpoint exactly where the fault lies and therefore how the issue can be resolved. The impact of communications outages on automated supply chains can be massive.

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Telecom provider networks are often constructed from a tangled web of different technologies from different manufacturers and third-party service providers. Shared infrastructure is also prevalent, with the prohibitive cost of running cables all around the world leading to resource sharing between competitors. Even at a domestic level, competing operators routinely share mobile transmission masts and other infrastructure to reduce costs.

Telcos are all under increasing price pressure which translates into pressure on costs. This goes some way to explain the complexity of modern telecoms operators' supply chains. Hunting for an extra one percent saving here and there results in very complex supply chains involving multiple suppliers and subcontracted relationships spread across the globe.

This complex environment is very difficult to trace from end to end. Imagine a communication between, say, a London head office and a manufacturing facility in the Far East. It is not unusual to find many different companies involved in making that communication happen. The number of parties involved and the physical infrastructure from different providers soon builds up to create a chain which is very hard to unpick. All of this means that in the event of a failure it can be very difficult to quickly pinpoint exactly where the fault lies and therefore how the issue can be resolved. The impact of communications outages on automated supply chains can be massive.

Read Full Article