Pick & Pack

By Khali Henderson

One of the largest pain points for mobile virtual network operators - even those experienced in the network services business - is handset fulfillment. One company that specializes in logistics for the wireless industry offers a solution that’s tailor- made for wireless resellers that may be using multiple underlying networks, multiple handset vendors or customized packaging or applications.

“Globally, most of the MVNOs focus their time, energy and resources on branding their network and acquiring new customers and they outsource this piece of the puzzle to someone like Brightpoint,” says its CEO Robert Laikin.

Brightpoint Inc., which calls itself the “last mile in wireless distribution,” moved more than 20 million handsets from manufacturers like Nokia and Motorola to consumers last year. Half of those went through the company’s logistic services, which it provides to mobile operators and MVNOs like TracFone Wireless Inc. and Virgin Mobile USA LLC. “We’re taking their products into our facilities, we’re warehousing them and then we’re shipping them to their customers, their agents [and mass retailers].”

When Brightpoint sends phones direct to consumers and enterprises, it takes care of “end-to-end serialization,” or what Laikin describes as tracking the phone’s serial and telephone numbers from warehouse to subscriber. “So, we’re tracking all of the information and serial numbers within a phone from the time that its manufactured to the time it’s turned on and all the people that it touches in between,” he says.

Laikin says Brightpoint ships products to agents. In the case of Virgin Mobile USA, the phones are shipped to the agents along with a bill and Brightpoint manages the receivables for Virgin. “We’re taking their orders, we’re shipping the product out, we’re collecting the money for them, and we’re the back office in the whole management of the indirect channel for them and putting product into the channel.”

Orders come through a Web site or call center into the warehouse. At that point, an order or orders also can be customized with branded packaged or special software from the handset maker. Laikin says in Europe Brightpoint also is working with smart devices and loading custom applications for device-makers and VARs. This capability has been working in Europe for a year and now is being implemented in the United States.

Laikin sees converged devices as a significant growth area for the industry and for Brightpoint’s services since migration to such devices drives the replacement cycle that accounts for a significant portion of the company’s business.

Another coordination function Brightpoint offers is carrier management. The MVNO has to figure out how to activate phones within each carrier’s systems, says Laikin. “We’ve been doing that since the early ’90s,” he says. “It’s our core competency.”

Brightpoint charges from $2 to $20 per phone depending on the level of services provided - with warehousing on the low end and customization on the high end. Laikin adds per-unit pricing is scalable; a growing operator can ramp up to its projections. “We give them the flexibility so that a fixed cost [of warehousing and inventory] becomes a variable cost.”

Tim Evans, vice president of supply chain logistics for Virgin Mobile USA, says the company decided to outsource fulfillment from the beginning due in part to the scalability and variable cost model. Other factors included the provider’s planned nationwide launch in less than a year’s time, which he says did not afford the company the ability to build the logistics infrastructure at the same time it was delivering the service.

The company sent RFPs to six vendors and chose Brightpoint for forward (kit, pick, pack and ship) and reverse (returns/repairs) logistics. However, Evans says the integration between the companies is tight. “Brightpoint is our warehouse. They see our POs as if they had cut them themselves,” he says, citing linkages into Virgin Mobile’s financial systems as one example of the close working relationship.

“We had consciously decided to be the best, and we wanted to do that with the supply chain as well,” says Evans. He notes that since launching in fall 2001, the company has received awards from major retailers based on the services provided by Brightpoint.