THE BRAINS BEHIND THE OPERATORS

They call it Queen Mary on the Prairie. It's a 300,000 square-foot structure — not including another 100,000 square feet of outdoor storage and delivery bays — that sprawls across the flat land in Eastern Kansas. It sits at the transportation crossroads of the U.S. Trucks and materials and people go in and out of its doors and docks day in and day out. From the outside, it could be any kind of large-scale warehouse.

This particular structure, however, houses more than 36,000 products — everything from spools of cable to deployment-ready network infrastructure — from more than 1300 manufactures with a collective worth of more than $175 million, ready for delivery to service providers all over North America.

It is the Kansas City headquarters of Sprint North Supply, a unit of Sprint that's variously described as a supply chain integrator, distributor, logistics provider, network deployment facilitator and carrier consultant. All of those descriptions happen to be accurate, which makes the facility far more than a warehouse. The building and the campus that surrounds it is the epicenter of a $1.2 billion, 1300-employee business. The Kansas facility is one of seven that cover a total of 1.3 million square feet (the others reside in Los Angeles; Groveland, Fla.; Dayton, N.J., Warsaw, Ind.; Fayeteville, N.C.; and Arlington, Tex.).

The core mission of Sprint North Supply is to help telecom carriers, value-added resellers, enterprises and equipment suppliers streamline whatever it is they need to streamline — inventory storage, supply chain management, network deployment and other efforts. Sprint North Supply is helping its customers achieve what is certainly one of their most important goals, if not the single most important one: reducing costs.

“Our foundation is distribution,” said Dennis Huber, president of Sprint North Supply. “Everything else is a value add.”

That distribution foundation, however, is solid. It dates to 1905, when the company was founded as Union Electric. It became United Systems Supply in 1965 and merged into North Electric in 1971 as a subsidiary of United Utilities, which became United Telecom in 1972 and Sprint in 1992. As far back as 1988, North Supply was pulling in $500 million in annual sales as the distributor for all United Telecom companies. By 1997, Sprint North Supply was generating $1.1 billion in annual sales.

The company's distribution capability also provided the anchor for expansion into engineering, integrating and deploying network facilities. The company's customer sweet spot is in that category of smaller telcos known as independents or rural ILECs — companies like FairPoint, TDS and CenturyTel, to name only a few. But the company also counts some larger wireline carriers among its customers, as well as wireless carriers like U.S. Cellular and Alamosa PCS and thousands of VARs.

“Our play is everything from simply selling them antennas to helping them do their design to helping calculate their backhaul requirements,” said Brad Clark, vice president of marketing. “Our intent is to become a driving force in providing not just equipment, but also services. We're taking a consultative approach.”

The company's capability is well represented by the Kansas City facility — the complexity of which might make it resemble a kind of Rube-Goldberg machine, but the efficiency of which makes it operate like anything but. Sprint North Supply has no choice but to run its operations smoothly, considering the volume of transactions it processes daily, the complexity of many of them and the accuracy required to facilitate all of them.

“We're focusing on how we can maximize every second,” Huber said, noting that the company marked a 14% efficiency improvement in 2003 over the previous year.

The facility's features range from the high-tech to the more ordinary: an advanced bar coding system; and an 802.11 network that tracks inventory as it moves around; automated order picking systems, called pick modules, in which categories of equipment are zoned to speed packaging; and a machine that cranks out plastic bags full of air that reduce the weight of orders and make shipping more economical. “There's an efficiency implicit in everything we do,” Clark said.

Not only does Sprint North Supply's distribution capability streamline its own operations, it also does so for its customers: By housing and managing inventory for many manufacturers and carriers, the company can help them realize significant savings.

And Sprint North Supply's efficiency extends well beyond inventory and distribution. Its integration center has an assemble, wire and test (AWT) capability where the company builds various types of network cabinets to spec, installing and testing components and making infrastructure installation-ready upon arrival at a carrier site. There's also a cut cable program that reduces waste by providing accurate lengths of cable — a seemingly mundane capability, but one more that helps the company realize savings that it can pass on to customers.

“The distribution center is a distribution center,” Huber said. “But once you take customers to the AWT, light bulbs go off.”

The integration center is where much of the larger-scale work takes place. For example, the company's ExpressDLC is a fully wired and tested digital loop carriers system that is mounted on a customized steel frame engineered and patented by Sprint North Supply. The fully assembled system and powered system is shipped to a prepped site, where it is installed and concrete is poured around the frame. The elimination of a concrete pad as part of the pre-provisioning process makes transport more efficient, cuts down job-site time and significantly reduces costs. The ExpressBTS accomplishes similar results with base transceiver systems for wireless networks — again, all part of Sprint North Supply's mission to help various types of carriers optimize processes.

“They've evolved pretty dramatically from when I first came to know of them as basically a warehouse operation to eventually having a product portfolio strategy,” said John Celentano, president of telecom consultancy Skyline Marketing Group. “ExpressDLC is a good example of that: They'll mix and match different products to customize what works best for a carrier. They actually go through some engineering, and by doing that they get their customers bigger bang for the buck.”

The fact that Sprint North Supply has been able to expand its portfolio of services beyond inventory and distribution is due in part to its parent, which also happens to be Sprint North Supply's largest customer. But the company's customer reach outside the family is substantial, and ever-increasing. “We've grown our business in the non-Sprint space significantly, and we haven't added a penny to our opex,” Huber said.

The company traditionally has had difficulty engaging carriers that consider it to be a competitor, but it's even starting to achieve that through various channels. “It's difficult for me to call on AT&T wearing a Sprint shirt,” Clark said. “But there are a lot of intermediaries we work through. We also find that a lot of major carriers have diversity goals in their spending. That gives us a chance into some of them that we wouldn't otherwise have.”

Sprint's ownership is a boon for Sprint North Supply in other ways — size being perhaps the most significant. “They're in a unique situation because they have the scale that not too many others do,” said Celentano of Skyline marketing.

The company also leverages its Sprint affiliation for initiatives like helping smaller wireless service providers that use CDMA technology forge roaming alliances, or taking standards in Sprint's labs and pushing them out to carriers that don't have the ability to do quality assurance and quality control.

“Think about it as the Good Housekeeping Seal of Approval,” Clark said. “There's a level of confidence for a small guy who's under a time crunch and doesn't have the time to do it.”

With manufacturers, Sprint North Supply often plays the role of technology broker, helping connect small vendors with carriers that otherwise might never know of them.

Despite its alliances on the vendor side, Sprint North Supply is able to maintain a neutral arms-broker status, even in the eyes of competitive suppliers. “The challenge for me is to sit down with Nortel in the morning and Alcatel in the afternoon and talk about competitive products,” Clark said. “It's a tricky balance.”

That success is due in part to the fact that carriers and vendors know the company's decisions are based on the company's understanding of the right kinds of products and services for the right size carriers — which, in fact, is exactly how its sales force is organized. “The fundamental change in what we're doing is that we're selling, not just taking orders,” Clark said.

As for the future, Sprint North Supply intends to help its core customers decipher the cost deployment issues of initiatives like voice over IP and fiber to the premises to help them find success there — and even potentially make them trailblazers.

“I'll put money on the fact that the first fiber-to-the-home deployment will come out of an independent,” Huber said. “We have some tremendous opportunities we haven't taken advantage of. There are markets out there that are completely untapped.”