Equipment Tracking

Whether they like it or not, wireless carriers are more than service providers. They also are subscriber-equipment providers. Although offering high-quality service may be carriers' primary focus, user devices are the vehicles that drive that service, and carriers need efficient ways to manage those devices as well as their accompanying accessories.

Pick & Choose Some carriers choose to limit the number of manufacturers they work with as a means of controlling inventory. Obviously, the fewer vendors they buy products from, the fewer phones and accessories they have to manage. Another benefit is the price break for buying larger volumes from a fewer vendors. Karen Merkel-Liberatore, Cellular One Group director of public relations in upstate New York, said that her group deals principally with Motorola and Nokia. Because it has limited the number of vendors and also because of its corporate affiliation with SBC Communications, Cellular One is able to buy equipment at an advantageous price.

Prediction Predicting consumer buying habits is a risky business, which makes ordering phones and accessories a difficult task. To some extent, past sales help inventory managers decide what to order and when, but even veterans continue to find inventory management a challenge. "There's a lot of things you still can't read in this industry," said Jeff Battcher, BellSouth manager of media relations. "Even with our 12 to 14 years of experience, there's a lot of things that you've just got to go by gut on in this business."

Battcher said BellSouth looks at historical data, and those who manage the inventory work with the marketing department to learn about upcoming offers and promotions. The inventory managers ask such questions as "Is this going to be a really rich offer?" and "Do the particular vendors have a program where they're going to give us a discount if we order a certain number of phones?"

Battcher said BellSouth takes a variety of things into consideration, and the company tries to bulk up and order more phones for the busy seasons. Phone sales ebb and flow, he said. For example, the Georgia market sold more phones in June than it did during the Christmas season because of the programs and promotions.

Over-ordering a certain phone that turns out to be yesterday's model can be a costly mistake. Most customers want the latest and greatest, so carriers should avoid cutting deals with vendors that seem too good to be true. They may be getting a great deal on the phone, but what's the point of having a warehouse full of phones if customers won't buy them?

"Well, a month down the road, if those aren't phones that can be sold, it does you no good," Battcher said. "You try to plan because you know it's Christmas and you need to order lots of phones, but besides that, other things just happen as well."

Although Mother Nature often squares off against the wireless industry, she sometimes serves up weather that actually benefits carriers. Merkel-Liberatore said that last year's terrible ice storm created significant wireless business in central New York, especially the Watertown market. After the ice storm, many people were without landline service for four to six weeks, and in many instances, the wireless phone was their only source of communications.

A dearth of popular phones can be just as bad for carriers as an excess of "duds." Hot new phones can be difficult to keep in stock, and when customers are clamoring for a particular model, it is not in a carrier's best interest to have to ask them to wait.

Sometimes, however, keeping phones in stock is out of the carrier's control. Manufacturers can pull only so many phones off the assembly line each day, and if a phone is hot, they may have trouble keeping up with the demand. In such cases, having good relationships with the vendors makes a world of difference. Merkel-Liberatore said that in the case of the Nokia 6120, the shipments were based on the phone's availability more than what Cellular One wanted.

"We had to wait for the equipment to come off the line," Merkel-Liberatore said, but she added that Cellular One realizes inventory management takes a team approach.

"If we get to a point where we are launching a new product, and we really need higher levels than what we ordered, because of the good working relationships we have had, it really has never been that much of a problem to get inventory in stock," Merkel-Liberatore said.

She said with the Nokia 6120, Cellular One sent out a pre-order mailing to high-revenue customers telling them about the new phone. Those customers were allowed to place early orders, so the carrier knew about 45 days before shipment how many phones current customers were going to buy. It then bumped that number up to cover new customers.

Inventory Tracking Evaluating the effectiveness of various promotions also is an important aspect of inventory management. This often means dealing with multiple departments within the company. Tom Lehr, Airadigm controller, said he tracks multiple issues so he can respond to various questions from marketing, customer care, sales and the executive team. He said that although he is in the process of consolidating, right now inventory is controlled in several parts, which are not fully integrated. The billing software can handle some components; the point-of-sale system has some inventory capability on it; and the accounting system also has some inventory-control elements. Although Lehr does not always have a single source, he sets up certain elements in his point-of-sale system for tracking promotions.

"There are certain fields you can populate in the billing and accounting systems to track promotions," Lehr said. "And you really have to coordinate all three so that you can plot a comprehensive picture."

He said you have to be able to answer multiple types of questions:

"How many customers are still on board who signed up during a promotion that we ran three months ago?"

"What is our retention?"

"What uses are they making of the service?"

"Have any customers who started at the low end moved up to the high end?"

* "Have they retained their original rate plans or switched to new rate plans?"

Delicate Balance Inventory management is a balancing act, and despite all of the planning and forethought, there are close calls. Lehr told of one instance where he was down to a 1-day supply on Sunday, and the next shipment was due on Monday.

"We were able to pull phones from the trunks of salesmen's cars and scrounge phones out of the office and company stores," Lehr said.

He said that the run on the phones was due to a promotion with the tag line, "The ultimate in cordless power tools." The combination of the ad and the price, which broke the $100 barrier at $99, caused sales to quadruple overnight.

"Stores that were formerly selling 15 phones a day went to 60 phones the next day across the entire distribution chain," Lehr said. "It taxed the entire organization. But that's good. That's what we're here for -- to sell product."