Nokia Networks, a 150-year-old Finnish company, has forged an incredible record of reinventing itself. Change and evolution have helped Nokia survive for more than a century. A long history of successful change is embedded in today's Nokia Networks supply chain success.
To understand the success of Nokia Networks' supply chain operations, it is important to understand where the company came from; its challenges, its changes, and its metamorphosis from its beginnings in the paper industry back in 1865 to its present position as a global telecommunications leaders.
Nokia evolved from a paper industry to being a leader in wireless technologies and connectivity of people. The company counts today with three main divisions: Nokia Networks (responsible for the main sales and revenues), Nokia Technologies (tasked with advanced technology and licensing), and HERE (a division focusing on mapping and location intelligence business).
According to Padraig Healy, vice president supply chain management at Nokia Networks, in 2014 the revenue from the Networks business alone was €11 billion. Nokia is number two in the global market of telecommunications services business; it operates in 120 countries, has 400 customers, and counts with 162 public references in LTE sites.
The industry in which Nokia operates can be highly disruptive. Nokia and its competitors create the environment for the Internet of Things (IoT) to connect and interoperate with each other. “There is going to be an acceleration of the interconnectivity of those things in the next following years, which is going to create huge pressure in bandwidth, in access, in response time, in the ability to stay connected,” said Healy during his presentation at the High-Technology and Electronics Supply Chain Summit (See Top High-Tech Supply Chain Topics in Pictures) in Amsterdam earlier this year, where he shared Nokia Networks' experiences towards excellence in supply chain operations.
Healy explained how Nokia sees a phenomenal growth in the future with the number of things that are going to be connected to an engaged audience of global supply chain leaders.
According to Healy, the Finnish company went through a challenging number of years and had to manage its way through. “Nokia comes from integration challenges, profitability battles, and industry induced volatility,” said Healy, adding that Nokia has created innovation, leadership, and customer offer by integrating the best of the Nokia, Siemens, and Motorola companies, integrating the operations setup into customer responsibility.
With a focus on visibility, Nokia Networks has designed a supply chain that stands out. “It's pretty mathematical, at the end of the year the results what you get pretty much are driven by your performance; if you didn't get your numbers right you didn't get your reward,” Healy said.
Addressing Supply Chain Challenges and The Need for Transformation
Nokia designed a supply chain that would respond to increase in demand on a sustained basis, however, “demand at the end of 2013 skyrocketed,” said Healy,” and the company's response was not as fast as it should have been. It was then when “suddenly, supply chain became really popular within the company,” Healy added. Creating engagement with the leadership team and keeping focus on it to make the supply chain a priority was of paramount importance within the transformation process.
Nokia Networks is conscious about not creating risk products within the supply chain. Increased manufacturing capacity created an opportunity for innovation in manufacturing. What Nokia couldn't do, they would outsource. The company set to becoming more process driven. “Transformation and outsourcing have been a significant part of the overall journey,” noted Healy.
Execution focus: growth & agility
Nokia Networks had a goal to increase customer satisfaction with on-time delivery while improving profit and growth with world-class people. This was accomplished by:
- Enabling the company growth through agility and customer focus
- Sustaining cost position through total cost ownership and end-to-end cash management
- Performance through quality and lean execution
- Enabling through skilled and engaged people
“The things we are focused on are growth and agility,” said Healy. For Healy, agility is about understanding flexibility first, the things that can be done within the inheritance capabilities of the company's processes. “Agility is about making sure that you understand how quickly you could respond to the unknown,” he said.
He offered some best practices around Sales & Operations Planning (SOP):
- Don't wait for the crisis to happen before improving your planning process
- Support will be needed from across your business to enable a functioning SOP process
- To do it right requires the right level of investment
- It's okay if your SOP is different, in fact, it needs to be
- It's all about the people
“It's all about the process and the quality of inputs. It requires full transparency from all parts of the business, research and development, sales, supply chain, etc. If anyone holds important information back it will damage the integrity of the process and as a result the quality of the output,” Healy told EBN.
Nokia Networks wins Supply Chain Management Award
It's not coincidence that in June, Nokia Networks won the Supply Chain Management Award 2015 for Excellence in Supply Chain Operations at the EXCHAiNGE conference. The award honors outstanding ideas in supply chain management. The jury called Nokia Networks “an excellent example of how a company's supply chain can become a key ingredient in its success story.”