UScellular Revamps Its 5G Supply Chain

UScellular (NYSE: USM) is streamlining its 5G deployments by improving its supply chain capabilities. In a recent presentation to the Association for Supply Chain Management, the company outlined measures it is taking to increase the efficiency and lower the costs of equipment warehousing and delivery of materials needed for its 5G cell site build, Forbes reported.

Network Supply Chain Restructure

UScellular historically has operated on a regional basis to focus on its local markets. The company found, however, that its regional operations were creating duplications and inefficiencies that it believed a centralized approach can help mitigate. The company was established at its Chicago HQ in 2000, a centralized supply chain organization responsible for logistics and coordination with vendors. It added a supply chain planning function this year.

The company assessed supplier reliability, supply chain resilience, and agility to determine what changes were needed. After studying three key projects, the supply chain team found that 61 percent of components were internationally sourced, and most critical components are manufactured in Asia or Europe. Material lead times ranged from nine days to nine months. Proper planning was implemented to source and receive critical components upfront to assure their availability.

At the end of 2Q22, UScellular served 4.8 million postpaid and prepaid subscribers, mainly in small towns and rural communities across its 23-state operating area. In 2020, UScellular launched its 5G network build utilizing mid-band spectrum acquired in FCC auctions, Inside Towers reported. With Ericsson as its primary supplier, UScellular’s planned 2022 network investment is $700-800 million.

The Forbes report highlighted that a centralized procurement structure provides standardization and drives efficiencies through bulk purchasing, a broader understanding of materials requirements, and more effective shipping practices, ultimately better aligning with the company’s business goals.

UScellular utilizes 13 warehouses so that every cell site is within 500 miles of a warehouse. Questions were raised whether this was the most effective network for the company’s priorities. Under an initiative dubbed Project Network Enterprise Optimization (Project NEO), the supply chain team established criteria to scale and move quickly with a simpler process.

Project NEO Outcomes

In analyzing past builds, they first determined that one out of every seven cell sites built was a unique configuration. Adopting the 80/20 rule, they worked with the engineering team to determine site requirements and reduced 47 unique builds down to four standard configurations that would accomplish 80 percent of what they needed.

Next, to simplify cell site installations, the supply chain team developed parts kits on pallets delivered to the field so that installers can access materials in order of use, enabling efficiencies at the point of installation.

For small cell installations that required new poles, and to meet local jurisdiction criteria, the Project NEO team worked with a structural support supplier to create a “pole library.” This simplified the selection process to assure the structure meets requirements before they place the order, thereby reducing inventory mismatches.

Finally, they found that truck loadings and deliveries were going to the same area multiple times, without bulk shipments, uncovering a significant cost reduction opportunity through more efficient shipping. They also found they currently reach 95 percent of their sites in four hours or less drive time. But with half the number of warehouses, they could still reach 95 percent of sites in six hours, presenting a big opportunity to rationalize the warehouse network at some point.

UScellular’s work on optimizing its supply chain management continues. The company believes that future supply chain challenges, from plant shutdowns and supply chain disruptions, can be mitigated by upstream visibility. Moreover, hiring and retaining an engaged workforce is all the more important given the expected increase in demand for supply chain talent.

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