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Running a supply chain management system for a company as large and complex as Verizon Wireless is no easy task. The company spends enormous amounts of money annually, as it needs to procure and ship millions of parts and products.
The job has become even more challenging as Verizon has stepped up its efforts to develop and install 5G network technology. In order to better manage the supply chain, Verizon is consolidating different ERP systems and other integrated business applications, including SAP Ariba, into one SAP-based supply chain management system.
In this Q&A, John Vazquez, Verizon's chief procurement officer, talks about what it takes to run a supply chain management system of such scope and complexity.
What's the scope of Verizon's supply chain and procurement organization?
John Vazquez: We see about $80 billion of spend float through the supply chain across the company -- it's a $135 billion revenue company. And from a supply chain perspective, we're managing about $50 billion of that spend. Broken down, that includes all of the handsets, devices, the networking equipment, all of the capital spend, all of the products that we buy and all of our technology spend.
Everything in Verizon -- holistically and globally -- flows through one supply chain organization. It's a group of 1,500 professionals in the supply chain organization. And we do more than just supply chain; we also have sourcing, logistics and inventory management. We ship to our 100 million-plus customers directly, with over 130 million items delivered each year. It's a significant operation.
What supply chain management systems and applications do you run?
Vazquez: We use several SAP systems, whether it's workforce management or Concur for travel and expenses, [or] finance systems. A lot of these programs that we have are SAP products, and that's where we tie those together as we build the one ERP platform with SAP.
We are very closely aligned on the supply chain side to the finance group; we work together in terms of managing and documenting all of the spend.
Why are you moving everything to one ERP platform?
Vazquez: The longer you work in a system that has different ERP systems and different accounting systems, you find ways to have a swivel-chair operation -- you find ways to manage through legacy operations. But that will no longer serve us well as we enter the world of 5G, specifically because it requires a more aggressive type of network build, and it will also require delivery not just of phones and accessories, but also of 5G home fixed wireless, as well as managing the installation of those in their homes.
We want to build the inventory management systems so we can look across businesses and manage inventory holistically within its own vertical. If you want to bring those systems together, you need to get the financial reporting and accountability in one place. We do that today, but we go to multiple sources to make that happen. It's really about improving the efficiency of how you keep track of everything.
What's your strategy to make this happen?
Vazquez: First of all, our approach has been that the supply chain needs to be aligned with the finance organization and it has to be both ways. The finance organization also sees what the issues are and how we're managing spend. When you look at the dollar volume that flows through our processes, it's obvious that there's a natural alignment across the finance and supply chain organizations.
It's also critical to be aligned with the IT organization that's supporting that so they understand what's happening. One of the key factors is the concept of change management and talking to people about how the way that you work changes and showing what the advantages are going forward.
Where are some of the ways the supply chain and procurement organizations can take advantage of next-generation technologies?
Vazquez: One of the big things that we've done is to also create a business and analytics function within our organization. It's more than 60 people who constantly look at the data from a procurement perspective -- how we spend, what we have spent, how we will spend, and [how we will] work on demand forecasting as opposed to just documenting what happened. So it's become more predictive.
Once people understand the power of the predictive nature of AI and business intelligence, they clearly understand we have to integrate our systems because, otherwise, it will take forever to get to the data that we're looking for. So that compelling case of blockchain implementation or robotic procurement based on demand that's coming cannot happen in the current environment.
It actually becomes very exciting to everyone involved when they look at it from this perspective, and here's the vision of what can be. It becomes a much simpler sell internally and you can get people organized around it.
Have supply chain and procurement become more strategic in the business organization?
Vazquez: We consider ourselves part of the business and we're integrated with it. We're part of the strategic planning sessions and we're part of standing weekly meetings with senior management. Verizon has taken a very proactive approach to integrating a lot of what could be considered part of corporate service or functions into the business operations.
How has the transformation of the ERP environment helped with this business alignment?
Vazquez: We've had that business engagement for several years. But when you start to think about how you can add more value, you realize that if you can't access the data quick enough, you can't help the business formulate opinions on this or even to help yourself.
That's when you recognize that because now people are asking for information, you need to get the answers more quickly. But, more importantly, you need to be the one asking the questions because when you ask the questions, you can now provide the solutions instead of just being an order-taker or purchase order-fulfiller.