During a recent call with the Director of Sustainability for a large global Telecom manufacturer, we mused the growing body of metrics employed by them to measure progress against corporate sustainability goals. As discussed and publicly documented in the company’s 2009 CSR, their sustainability efforts have focused in 3 areas:
Internal operations (supply chain, etc.)
Product/technologies
Corporate citizenship
Relative to the first, they have admittedly produced no large-scale monetization of carbon credits to date, but religiously conduct audits on $’s and kilowatts saved, and how their products are moved modally for example. (eg. air-to-alternative and carbon/ton-miles)
By way of introduction to these “modal" measurements, Carbonfund.org’s shipping calculator utilizes three user generated inputs to determine a unit called a ‘ton-mile’ (e.g. a ton of freight traveling 1 mile, or a half ton of freight traveling two miles, etc.):
Total number of shipments
Average Weight of Shipment (lbs)
Average Shipping Distance (mi)
From this information we determine the shipment(s) ‘ton-miles’. So if you have 50 shipments (A) of 100 lbs (B) each traveling an average distance of 500 miles(C), you multiply A*B*C, 50*100*500 to get 2,500,000 lbs-miles – to get to ton-miles, divide by 2204 to get 1,134.3 ton-miles. Once you have that figure, multiply it by the appropriate emissions factor depending on how you are shipping the package. So 1134.3 ton-miles being shipped by truck (0.3725 lbs CO2 per ton-mile) gives you a total emissions of 422.52 lbs CO2. Shipping Emissions Factors:*
Air cargo - 1.7739 lbs CO2 per Ton-Mile
Truck - 0.3725 lbs CO2 per Ton-Mile
Train - 0.2306 lbs CO2 per Ton-Mile
Sea freight - 0.0887 lbs CO2 per Ton-Mile
It always comes to down to math, but solving the equation requires unprecedented visibility into inventory data, such as product weights, and material flows from location to location. And ideally, you want choices. Such as the choice to ship a replacement/spare part from Amsterdam to Barcelona, instead of Dallas to Barcelona. Trade Wings offers this level of visibility, and we’re making a difference for our Telecom customers, including Ericsson and others who have been recognized year after year for their outstanding efforts to address issues of sustainability through asset intelligence.
As a result of his company's diligence, the Director of Sustainability of the aforementioned large, global Telecom OEM reported to us that they have reduced their carbon footprint by 13% (in carbon/ton-miles) year/year. He also left us with this observation: As customers become more sophisticated in their environmental commitment, business imperatives will drive innovation and 'sustainability' will become synonymous with 'strategy'...and those who don't get it will be left behind.
*The calculator provides an emissions metric for shipping by Zeppelin. I have omitted this from my list, but if prefer to know, give me a call on +1-603-766-7000.
France Telecom’s new CEO, Stephane Richard, was out in front of the press earlier this week detailing the carrier’s five-year strategic growth plan. It’s a big, bold and ambitious plan that by 2015 could see Orange the service provider of choice for 300 million people. By my calculation, that amounts to roughly 22% of the world’s population. How does France Telecom plan to go from 192 million to 300 million customers in five years? Upgrade existing networks and capitalize on the explosive growth in markets such as the Middle East and Africa. Making the most of new opportunities in emerging markets will almost certainly involve a few strategic acquisitions, which are en vogue across the industry (right now, the industry’s on pace to have its busiest year of M&A since 2005 when transactions topped $408 billion).
Any time there’s an acquisition in this industry, the price tag, expected revenue and customer growth will almost certainly grab all of the headlines. What you won’t hear much about though is how these companies plan to manage all of their newly acquired network assets for maximum profit. A seemingly minor detail to a large transaction? That’s a dangerous omission for firms looking to assuage investors of a multi-billion dollar deal. When you get right down to it, the financial models created to support an acquisition are predicated on metrics such as operational efficiency, integration of network infrastructure, and service delivery levels. If a company can’t answer fundamental questions about the location, condition, or value of those millions of network assets it just acquired, discharging those models will become daunting at best.
From my perspective, this excerpt from a recent (June 16) Reuters article offers a fascinating glimpse into Wall Street’s mindset regarding the impact of current network investments on long-term market cap:
"Investors could be surprised by capex plans over the coming years and for a sector still generally mistrusted to allocate capital optimally, this is likely to lead to volatility in the shares," said James Gautrey, telecommunications analyst at Schroders. "Until I see more concrete evidence that the companies will generate a decent return from their fiber/mobile investments, there are better opportunities elsewhere.”
We’ve all heard about the explosion of mobile data traffic and subsequent requirement for network expansion (Apple sold another 1.7 million iPhone’s over the weekend). Which is precisely why Wall Street’s radar is so attuned to capex ratios. Challenging Wall Street perceptions such as Mr. Gautrey’s will require carriers to find new and better ways to optimize equipment planning, sourcing and disposition, and extend the overall value of their network investments. At the end of the day, far too many assets are still left in the dust before they’ve even come close to reaching their full revenue potential.
Behind every great Telecom service provider is an executive with a new idea and a set of agile business processes. Yet getting a big idea off the ground takes more than just innovative thinking. Time, technology and resources are required. All too often, introducing new methods for cost-efficient network asset procurement, management and decommissioning can consume precious time -- with very little result.
Trade Wings’ innovative Re: Fast-Start Program provides select finance, operations, technology, planning, service and sustainability executives with the asset intelligence and agility required to fuel disruptive business models without significant up-front investment. Through complimentary access to the award-winning Re: solution, program participants can cut the costs of managing spares and repairs, ensure ongoing quality of service, and extend sustainability initiatives through profitable reuse strategies...guaranteed in the first 180 days!
When it comes to reuse in the carrier market, Trade Wings provides a unique differentiator over repair vendors, equipment brokers, de-installers, and third-party logistics partners. To find out why, call us at +1-603-766-7000 today and mention "Fast Start."
Ok, so maybe this question doesn’t elicit the same type of dread a parent may feel when asked by a child. As a parent at least you can buy some time with wild tales of storks. Unfortunately, Telecom executives can’t pull such a response out of their back pocket when it comes to getting their arms around the origin of their network equipment forecasts.
The problem – of course – is that Operations and Finance usually behave like politicians representing different sides of the isle. Both working for the common good but maintaining contrasting priorities and agendas. As one can imagine, bi-partisanship can be just as rare as it is in Washington.
Among the victims of this organizational schism is inventory/stock forecasting. Procurement wants to know when stock levels and spare capacity is running low. But, too often, they only learn of the shortage when it’s critical and they have to expedite the replacement – paying top dollar because they’re desperate.
Operations, on the other hand, is overworked and understaffed in their race to roll out new services and maintain existing infrastructure. After the initial product rollout, they are not accountable to Procurement. Consequently, they aren’t exactly rushing to provide finance with stock levels.
At most carriers, the standard reporting structure has Operations reporting up through the VP Ops/COO, while Procurement reports to the VP Finance/CFO. So the Operations and Procurement staff support each other, but don’t necessarily have accountability to one another. And therein lies the disconnect.
Can the gap by bridged? Call me an optimist if you like but I believe it can. Solving the situation doesn’t require shaking up the organizational chart, just a better lens into inventory levels. Better visibility will empower operations and procurement professionals to make more strategic business decisions regarding the acquisition and disposition of assets. Decisions that at the end of the day will generate significant value for the organization in the form of reduced CapEx, new revenue streams and networks running at optimal efficiency.
