Ahmed Saeb has been with Vodafone for ten years, initially in Vodafone Egypt then for the last seven years with the Vodafone Procurement Company. He has experience as a Network Deployment and Structural Engineer, which he and his team have drawn on to create a unique role managing a category they call ‘Deployment Services’, spanning everything from site acquisition to design, installation and construction. By re-engineering this part of the supply chain, the team has been able to generate double digit cost savings for several Vodafone Local Markets.
TowerXchange: What is the scope of what Vodafone calls ‘Deployment Services’?
Ahmed Saeb, Principal Category Manager Networks SCM Technology, Vodafone:
Our seven-person strong Deployment Services Category team covers land acquisition, site surveying, design, construction, rigging, installation and commissioning, integration and optimisation, warehousing and logistics.
TowerXchange: How can Vodafone’s centralised procurement strategy bring efficiencies to the highly fragmented and localised supply chain of deployment services providers?
Ahmed Saeb, Principal Category Manager Networks SCM Technology, Vodafone:
Given the localised nature of deployment services, it is not always immediately obvious how a central procurement function like ours can add value, but we leverage our category intelligence and global best practices to improve the overall cost base and leverage process management and analytics to generate efficiencies.
We individually perform a study on each market in which we operate. Using this category intelligence and encompassing the local market specific drivers like the economics and resource availability, we deliver the right strategy for the market. We find although every market has its own challenges, there still are many commonalities that you can leverage best practices.
We have implemented this numerous times and have delivered double-digit savings on every RFP we’ve managed!
TowerXchange: How do Vodafone apply your strategic sourcing philosophy to Deployment Services?
Ahmed Saeb, Principal Category Manager Networks SCM Technology, Vodafone:
In my experience too many organisations are sourcing deployment services tactically – not treating their suppliers as strategic partners. As a result many suppliers don’t have the ability to forecast cash flows in the long term, which makes it more difficult for them to invest in their own capabilities and capacity and this directly impacts the buying organisation in cost.
too many organisations are sourcing deployment services tactically – not treating their suppliers as strategic partners. As a result many suppliers don’t have the ability to forecast cash flows in the long term, which makes it more difficult for them to invest in their own capabilities and capacity and this directly impacts the buying organisation in cost
We try to make things easier for suppliers by agreeing multi-year deals, and by using the correct tendering methods. We will also empower our strategic suppliers by providing low or no cost training on installing and managing new equipment and we strengthen their own supply chain by allowing them access to some of our selected deals.
Moreover, we take a deep look into pricing models. We ensure that the method used to price key components of the deployment does not allow the fluctuation of cost to our stakeholders during the lifetime of the contract nor place unneeded cost risk to the supplier, creating a negative impact.
We will also implement process management to further optimise costs. For example, within one European infrastructure sharing joint venture company, we found a lack of integration between Deployment Services in passive and active equipment, which often meant two visits to the site, two cranes, and two road closures where one would have sufficed. By eliminating handover points between suppliers, we were able to eliminate duplicate costs yielding significant savings to both the towerco and the MNO.
Moreover, we have across the years developed a specialised contract for purchasing of deployment services that protect us from incurrent risks, while also ensuring that the contract is not cumbersome for the supplier.
TowerXchange: How do Vodafone generate cost savings from Deployment Services?
Ahmed Saeb, Principal Category Manager Networks SCM Technology, Vodafone:
This is done by looking at many aspects from price to the overall deployment process.
Over 250 construction companies have signed with us; giving the Vodafone Procurement Company very broad knowledge of the supply chain in this specific category and ensuring we can identify areas of weakness in any model and identify corrective solutions.
A common example of these solutions is demonstrated in the fact that we often find in any given market, there are a finite number of local deployment services partners. In such markets we find it useful to disrupt these usually stagnant markets with dependable suppliers working in other markets, but which might not have a presence in that particular country yet, to shake up pricing and deliver better value for our customer. It is common for construction companies to move through different markets, but less common in the telecom construction space and we are trying to encourage this change.
For example, we decrease cost by the disintermediation of ‘layer cake’ – suppliers who take a margin but subcontract most of the work – while ensuring that the right skillsets are in place with the direct supplier to manage the deployment without the intermediary.
With more than 250 deals in place to date, we have access to wide ranges of pricing globally and Vodafone is continuously benchmarking price and costs, and monitoring market trends, ensuring that we have the best price at all times across our markets.
TowerXchange: Can Vodafone give an example on how you would determine the right cost of a site for example a Greenfield Site?
Ahmed Saeb, Principal Category Manager Networks SCM Technology, Vodafone:
The typical answer to this question would be to break down the site into its key cost drivers in that market and apply a bottom up total. For example in developing markets, the material cost typically outweighs the service and obviously the key material in a Greenfield is steel which is used in the tower, fence, concrete reinforcements and possibly cable trays. We have access to live commodity pricing globally in which we can identify the right costs for these components, similarly, we have tools to monitor workforce day wages and other key price drivers. You would then combine these items to build the right costs. I would typically follow that analysis with a comparison to the current rates and to other similar markets in terms of geographic / economic conditions.
However the challenge is not building and comparing cost, it is rather challenging it and influencing a change, and understanding these key components is essential to finding the solution. For example, some of these components can be outsourced effectively to lower cost markets or you can use a design that decreases the needs for some of the expensive components but those are limited examples, just addressing the icing on the cake.
