Nokia Siemens Networks: Strategic Supply Chain Outsourcing – Johannes Giloth

Nokia Siemens Networks has entered into a long-term IT contract with Capgemini, which now provides order management services to the telecommunications giant. Johannes Giloth, NSN's global head of supply chain and logistics, explains how finding the right partner can help create an effective supply chain.

Nokia Siemens Networks, a leading global enabler of telecommunications services, offers a portfolio of mobile, fixed and converged network technology, as well as professional services including consultancy and systems integration, deployment, maintenance and managed services. The company has a worldwide manufacturing network of seven sites supported by electronic manufacturing services (EMS) partners in seven countries. In addition, its six distribution hubs form a global network of logistics centres, ensuring proximity to its customers.

"NSN is providing innovative solutions and infrastructure for the majority of the world's telecom operators," says Johannes Giloth, the company's global head of supply chain and logistics. "NSN operates in more than 150 countries worldwide with approximately 64,000 employees. Serving customers in different markets requires a decentralised setup. It is easy to imagine how complex the supply chain for operations of this size can get."

A high-performing and effective supply chain that contributes to the value of a company is therefore vital. "It is crucial to have an end-to-end information backbone, to harmonise and standardise processes across a company," says Giloth. "NSN's supply chain is project driven, meaning that we need it to be flexible as we have to cope with many unforeseen demands. However, the flexibility our decentralisation requires had, over time, led to the creation of various fragmented, locally sub-optimised processes, and in many parts resulted in unclear roles and responsibilities.

"It is crucial to have an end-to-end information backbone, to harmonise and standardise processes across a company."

Our vision of the supply chain is a succession of end-to-end, highly standardised processes contributing to short lead times, ensuring flexibility and a lean supply chain in terms of costs and structure. This is what we have set out to achieve."

Giloth explains why NSN opted to outsourcing to a BPO provider as opposed to optimising in-house. "We decided to have an external partner help us transform the supply chain, and the provider had to have a clear commitment towards this with a real stake in the business, we didn't just want a consulting approach," Giloth notes. "The partner search was based on three pillars: cost reduction; process transformation and improvement, including IT expertise; and a perspective for NSN's people – because we, as a company, couldn't provide an appropriate outlook for them any more. We think that Capgemini is the right partner for this ambitious undertaking."

NSN is focusing on improving its customer service, while outsourcing roughly 30% of its order management  operation to Capgemini. The BPO provider is supplying services including customer order management, distribution and customer invoicing. Giloth believes that Capgemini's strategic approach to supply chain transformation, its ability to capture and incorporate learnings from its market knowledge business, and its suite of enabling tools and technology will allow NSN to optimise its supply chain operations and achieve a competitive advantage. "You can completely screw up the business with a low-performing supply chain," Giloth adds. "Yet a high-performing supply chain can contribute to customer satisfaction and be a differentiating factor."

Under the terms of the recent agreement, nearly 400 employees from NSN joined Capgemini BPO supply chain services teams from several countries, including Brazil, Finland, Germany, India and the US. Giloth notes that Capgemini's capability to take on staff was another contributing factor in NSN's decision to select it as the company's partner. "We feel very responsible for our people," adds Giloth. "NSN wanted to find a solution that is best for the company's employees impacted by this change. Since Capgemini wanted to grow in this area of the business, it was a perfect match."

NSN is confident that these plans will considerably improve its order management performance. "We now have allies to help us, and this is an important deal for Capgemini as well," Giloth says. "Capgemini can provide us with support that goes beyond the contractually agreed measures in terms of IT and business process know-how, which really creates the momentum that we seek. All of these aspects came into play, and is the reasoning behind what helped us choose the right partner."