TowerXchange had the privilege of visiting Vodafone Procurement Company in August 2016, exposing us to possibly the greatest concentration of telecom SCM expertise in the world, responsible for a mind-boggling €25bn annual spend for Vodafone and for selected third parties. Vodafone has 250 procurement, technology and category management experts who buy everything from handsets, to what Vodafone call “Network Site Infrastructure” (NSI). With 13 years’ experience at Vodafone, and seven within the Procurement Company, Solange Karwera is Vodafone’s Senior Category Manager for NSI.
TowerXchange: How does Vodafone buy network site infrastructure equipment and services?
Solange Karwera, Senior Category Manager, NSI, Vodafone:
Vodafone breaks down the Network Site Infrastructure product portfolio into nine categories:
- Power supply, cabinets / shelter
- Antennas
- Cables
- Batteries
- Towers
- Air conditioners
- Civil works (now “deployment services”)
- Generators
- Power cubes / renewables
We also manage accessories and consumables, which includes safety equipment such as fall arrest systems and personal protective equipment.
By consolidating supply chain management and decision making within Vodafone Procurement Company, Vodafone is able to concentrate category management expertise, consolidate insights from our global opcos and partners, and drive toward standardisation, ensuring availability of consumables on demand.
We take a synergistic approach to purchasing with a long term vision, with four key components:
1. Supporting our mature market with an equally mature supplier partnership programme and an aligned roadmap
2. Avoiding anti-competitive exclusivity by awarding multi-year, non-exclusive contracts
3. Standardisation with harmonisation of equipment to drive energy efficiency (embedded within this system is a quarterly check on the level of standardisation)
4. Most important in the context of Europe that it’s a steady state infrastructure – there are less modifications needed even to host new technologies – so Vodafone are well ahead of other MNOs in terms of our ability to host and integrate new technologies, which makes us better prepared for future evolution.
TowerXchange: Please describe Vodafone’s sourcing strategy?
Solange Karwera, Senior Category Manager, NSI, Vodafone:
We focus on the Total Cost of Ownership (TCO), with robust technological and commercial due diligence.
We’re members of the Technology Consortium and various standards bodies, but that doesn’t mean to say we won’t challenge their conclusions when appropriate – we have developed an internal consultancy to identify best fit solutions in disciplines such as energy efficiency, and have extensive testing activities in-house and live field trials. Alongside asking suppliers to undertake their own testing, this gives us extensive knowledge of how a given product works in both good and adverse conditions.
Vodafone is a significant stakeholder and active participant in defining next generation mobile networks because we will deliver significant volume when we roll out 5G. Participating in technology boards and standards programmes helps us to futureproof our testing and harmonise our technical guidelines with future specifications and deployment.
We hold twice annual best practice workshops across all our opco and partner markets, combined with a review of standardisation.
While we have Standard Operating Procedures, there is no steady state when it comes to integrating innovations. We evolve from what we learn in the field, and that continuous learning process proves beneficial in terms of understanding real needs, so it’s not a product centric approach, but an approach driven by the real needs of the business, and driven by what really works in the field, which ultimately drives down cost.
When it comes to the more commoditised elements of passive infrastructure, it’s not just about price, it’s about TCO.
TowerXchange: What are the implications of this approach for Vodafone’s suppliers?
Solange Karwera, Senior Category Manager, NSI, Vodafone:
We conduct a rigorous Health & Safety audit on our pool of suppliers, and conduct a similarly rigorous financial and operational due diligence before on-boarding a supplier, providing the TCO is compelling.
Vodafone never bank on one supplier – there is always a plan B and plan C – which also balances market share and avoids dominance.
TowerXchange: What pricing strategies / pricing models will Vodafone consider?
Solange Karwera, Senior Category Manager, NSI, Vodafone:
The governing concept is TCO with the best commercial model according to need.
Increasingly suppliers are offering turnkey end to end product and services, but we still do a lot of direct product sourcing, and we’ll buy or rent according to need.
Our pricing strategies are market research driven – not just by our internal business cases, but we also examine how the market works, for example by benchmarking to track the cost of steel and the impact of import taxation to track the delivered cost of towers, shelters, perimeter fencing and accessories.
We always leave some room in our selection of suppliers: we hold some capacity back for a challenger to shake up the market.
TowerXchange: How do you drive operational excellence by ensuring productivity?
Solange Karwera, Senior Category Manager, NSI, Vodafone:
The mixture of robust contract management, supplier performance management, and active demand management, combined with the synergistic purchasing and innovative technology driven sourcing strategy I mentioned earlier, enables Vodafone to drive operational excellence in procurement.
Solange Karwera will be joining the expert board on a number of technology working groups being held at the 4th Annual TowerXchange Africa & Middle East, taking place in Johannesburg on 19-20 October. For further information, please visit https://meetup.towerxchange.com/event/33ac6379-8f70-407b-9760-92cef4e0919d/summary
