In the business of broadband
Liberty Global was founded in 2005 and operates through brands that will be much better known however, brands like Virgin Media in the UK and Ireland, UPC in Poland, Ziggo in the Netherlands, Unitymedia in Germany and many more. In ten of its European markets, including the UK and Ireland, Liberty Global is the largest cable operator. But despite its growth and success, it remains very much an insurgent, challenging the incumbent telcos in each of its markets. It is predominantly a triple play operator, providing broadband as its core offering, adding fixed line voice and TV, and in some markets venturing into quad play as a mobile operator. Mobile for example is a strong part of the Virgin Media business.
A group that has been formed out of existing companies invariably has to face issues around synergy and disparity. Each constituent company has its own suite of equipment, its own processes and its own structures, and all that presents an interesting challenge in the sphere of supply chain management. Steve Rounsley and Willem Vesters are challenged to deal with this situation and turning it to the advantage of the business. As they see it, logistics optimisation is one of the biggest vehicles through which Liberty Global can keep its cost down and deliver the service that its customers expect. It’s a road paved with opportunities.
Rounsley is Vice President for VP Global Logistics and Vesters for Global Supply Chain Planning. The former looks after the warehousing and movement of goods while the latter leads the planning, streamlining and restructuring of these processes: needless to say they work very closely together. The hardware in the chain falls into two broad categories, says Rounsley, customer-premised equipment or CPE, and network equipment, which covers everything required to lay fibre optic cables and connect them to the end user. “CPE includes set top boxes, broadband routers, and of course mobile phones. The logistics function we manage supports all twelve European countries in the consumer and B2B market. It includes all product categories, fixed line to broadband, TV and mobile, in all countries, in all consumer and B2B markets.
E pluribus unum
On the planning side, Vesters explains, it is essential to work with vendors on future requirements: “Lead times vary from a couple of weeks to 16 or 18 weeks so the planning function works out what we will need, where we need it and when.” Gathering all of this equipment into distribution centres and dispersing it to the national businesses based on customer and consumer demand calls for liaison with the sales and marketing departments on campaign activity, he adds. “We do this on both the CPE and the network equipment side of things.” Each of these has its own particular set of problems. Both Steve and Willem are looking after a large number of different countries which have their own legacy systems in place, all at different stages of development. For example, he says, network planning in the UK is somewhat ahead of the other European markets. “The challenge is to get them all to the same level so that we can talk at a holistic level to our vendors to assure the supply of material across the board.”
Beyond the exacting job of stitching together twelve separate supply chains across Europe Liberty Global has stepped up to the challenge of extending the fibre network in a number of European economies. In the UK for example this is the first time major step in the 20 years since the UK government fudged the roll-out of a national cable network in the 1990s. An investment of £3 billion announced by Liberty Global in February will redraw the competition map in the UK where Liberty Global’s brand Virgin Media faces competition notably from BT.
The investment marketed as Project Lightning will bring ultrafast broadband to a total of 17 million homes by 2020, reaching four million more than at present. Virgin Media also calculates the project will generate 6,000 jobs and 1,000 apprenticeships, with an overall benefit to the economy of £8 billion. Not surprisingly this commitment goes down well at government level, with UK Prime Minister David Cameron commenting: “Together with this government’s rollout of superfast broadband which has now reached more than two million UK homes and businesses, this additional private investment will create more opportunities for people and businesses, further boosting our digital economy and helping secure a brighter future for Britain.”
The investment illustrates a change in Liberty Global’s strategy as it matures from rapid M&A driven growth to a more sustainable, organic model, and doing this will demand different approaches to supply chain management. “Much of what Willem and I are doing is looking at the opportunity of synergy and consolidation,” says Rounsley, “but we are also creating a planning and logistics infrastructure to support significant new network build in several European countries. That is an exciting and I’d even say unique part of what we are doing.”
Less is more, in the supply chain
Consolidating the supply chain model around best-of-breed partners will be essential to this vision. “We are evolving onto on a journey that sees us partnering with genuine global logistics providers and repair partners,” he continues. This will bring in us the scale and the level of innovation that we need to look after our existing business, and we are designing physical infrastructure to support the new opportunities like Operation Lightning.”
For Willem Vesters this means stretching the planning perspective progressively. “It’s meeting the challenge of Liberty Global’s transition from a company that buys and sells operating companies go to one that commits to being in the communications space for much. The UK is the most concrete and tangible example right now, however our wider ambition is to extend superfast broadband to 10 million homes throughout Europe.”
So instead of focusing on the company wide requirements for the next quarter he needs to now planning at least two years ahead. “My ambition is to arrive at a ROI conversation and operationally manage that before we invest in specific European areas. Return on investment should be factored in at the very earliest point, as we begin to extend our horizon and work with a larger project funnel, and a wider innovation funnel.” In order to develop this kind of capabilities we use knowledge partners like EY to get there.
A leaner logistics operation will play its part here, suggests Steve Rounsley. “Our vision is to become intensively partnering so that a small team of Liberty Global people will set the tone and direction, and manage the relationships with a small number of key strategic outsourcing partners.” He does not need to run warehousing, product customisation or transportation, things better done by specialist logistics service providers, distributors and repair partners.
There are two concurrent dynamics at work here, he points out. “On the one hand we are consolidating and using our skill to work with a smaller number of suppliers to advance the strategic goals of the business. On the other, there’s convergence within the supply chain itself; the number of true global or EU scale logistics providers is shrinking. As their clients we will pick the best global players to achieve the economics of scale.” And to work with a global company such as Liberty Global it is no longer enough to have a wide but patchy presence – they need to be strong in all territories.
The consumer the final judge
Perhaps its most important benefit is that the evolving model helps maintain focus on the customer, whose expectations and desires are higher than ever. Over-the-top content must be delivered seamlessly, wherever, whenever and on whatever device the customer chooses. “Everything we do must be reliable and predictable, especially in the mobile arena: people’s mobiles are their best friend! Our job is to ensure their equipment and devices, can be upgraded or changed, kept going and repaired.” Liberty Global’s ‘halo product’ is broadband, he says, just as important to the household as gas or electricity. Ensuring the network is up and running is a minimum expectation.
Another expectation is that they can choose the level of service they are comfortable. Across Liberty Global customers are able to choose single to quad-play services. Increasingly, the self-install model is being chosen, people receiving equipment like modems and set top boxes through the post (to the home, a pick-up point a Liberty Global store, or to a workplace) and installing it themselves by following simple instruction. Others prefer to have them installed by a professional. All the complexity is at the back end. “We have to be able to cater for all those different needs. The days of ‘one size fits all’ belong in the past!” The final expectation is that the product (or service) will be delivered fast, and that it will work.
While developing a more standardised product suite is inevitable, and can be achieved as equipment is replaced, with post production customisation addressing local variants, to call in everything in a single operation would be a mistake, even if that would simplify the supply chain.
“We are in the happy position that our technology is continuously evolving to keep up with technology that evolves according to Moore’s Law!” Willem Vesters concludes. “Todays’ high speed broadband is tomorrow’s low speed, and speed is the lever that moves the market on to the next generation of products. Legacy thinking can be an existential threat these days, however great the legacy offering,” he says.
It’s easy for a company growing this fast to overlook its societal impact but Liberty Global is too dependent on its communities for that. Apart from its headline mission of Promoting A Digital Society, which can be seen as part of the day job, and which it fulfils by supporting initiatives like the European Commission’s Grand Coalition for Digital Jobs, it buts sustainability at the heart of it operations, not least the supply chain. “Take just one example,” says Rounsley. “The recovery, reuse and disposal cycle used to be a cost to the business. Now we work with innovative partners to extract value at every stage. The programme has not only become self-funding, it is a revenue stream for the business – and we have achieved zero landfill in the UK. I am very proud of that.”