How to significantly reduce working capital requirements and order fulfilment lead times?
This challenge was solved by DSV for Ericsson.
When DSV started with the assembly of SKD units for base stations of mobile networks in Brazil, this outsourced manufacturing marked a pioneering step for both the logistics and telecoms industry. In what DSV calls Logistics Manufacturing Services (LMS), the company not only executed the final assembly, but took full ownership of the whole process – from planning to quality control. Since then, telecoms companies have entrusted DSV with more manufacturing work. DSV first offered LMS in São Paulo and Panama. Now Dubai has been added for Ericsson.
In 2015, Ericsson officially inaugurated its first telecom equipment hardware and software distribution center in the Middle East. The Ericsson Supply Center located in DSV's Dubai South facility is the company’s first distribution center globally that unites hardware assembly and software load under one roof.
DSV engineers and technicians pick SKD units, configure, assemble and test them with the latest software uploaded. DSV then inspects and packs the finished products on site before delivering them directly to Ericsson’s end customers in the region. “We can call off components, manufacture and ship in one day,” says Anthonie Verploegh, DSV's regional head of logistics for the Middle East, Africa and CIS (MEAC). The configure-to-order process customizes the product as late as possible in the supply chain. It allows materials to be allocated against orders only when required in the order fulfilment process. “With this postponed manufacturing approach, customers like Ericsson can significantly reduce working capital requirements and order fulfilment lead times,” adds Verploegh.
Ericsson’s customers, the mobile operators in the region, also benefit from more flexibility, shorter network roll-out times and, ultimately, a higher return on investment as they build their networks.
To be able to support Ericsson, DSV Dubai was required to obtain an assemblies trade license in addition to its logistics trade license. Prior to that, the new customs processes that would result from the manufacturing operations had to be vetted and approved by Dubai Customs. Since go-live of the operations, DSV has successfully completed various Ericsson process verification tests and is now accredited to fully assemble and test different cabinets.
The two companies have worked together in the United Arab Emirates since 2010. “Our partnership has evolved greatly over time. We started off with a spare parts operation and have now moved into manufacturing,” says Peter Triebel, DSV’s CEO for the MEAC region. “The journey is far from over. We see more opportunities where we can add value for Ericsson and grow together. We are already investing in resources and infrastructure to support this.”
Mike Wilson, DSV's global head of Logistics, adds: “This is a significant milestone for DSV. It is a perfect example of how we are executing on our highly successful LMS strategy."
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