Is your supply chain prepared for eSIM?
Major smartphone makers will start rolling out eSIM by 2019, and total eSIM device shipments are expected to be almost a billion by 2021. Some of the questions that should be asked are: is your supply chain prepared? How will the flow of information be affected? What will be the new flow of finance? How will we get the billing right? What will the new flow of goods look like, and how will these goods be delivered? How will devices flow through a supply chain to the end customer and back again in an eSIM world?
Supply chain challenges
The impact of eSIM on supply chain is at both a strategic and operational level. Here are a couple of examples to help illustrate the challenges:
On a strategic level, eSIM technology could change the purpose and volume of the retail channel, as it would no longer be necessary to go to a store to get a SIM. It would actually be easier and more cost effective to have the phone delivered directly to the customer from the OEM (Original Equipment Manufacturer), without passing through the telco warehouse and supply chain. Taking into consideration what these changes could look like there will be a significant impact on warehousing and retail strategies.
If there are wider strategic challenges coming from eSIM, then there are equally quite a few thorny operational ones.
Everyone naturally thinks about the forward supply chain and disregards the reverse supply chain. In the past, if a customer had a fault with their device, he/she would take the device to a physical store, remove the SIM card, and could opt to receive a loan phone. With eSIM, when a customer takes their broken device to be repaired, the telco has to de-pair the service from the broken device and pair to a loan phone. Following the successful restoration of the phone, the telco has to de-pair the loan phone and re-pair to the fixed phone.
This means that, in an eSIM world, a telco would now be responsible for a total of four transactions in order to repair a phone, and any failure in this process results with a dissatisfied customer (whose other shared devices could very likely be disabled as well if they are using a universal eSIM). Furthermore, a survey of diagnostic tool suppliers shows that there is an absence of an eSIM disablement check in their products that could cause still active products to head back to the repair centre.
These are just a couple of examples that are indicative of an overall lack of attention to the detail that a well-run supply chain could encounter.
What needs to change?
The rise of eSIM requires a major back office IT transformation project that impacts the forward and reverse supply chain linking to billing and other systems. Of course this is not a project that can be completed overnight, or even in a few months. It is a project that requires a clear strategic direction including a back scheduled plan and significant regression testing in order to move forward, especially given the telco industry’s track record on delivering big projects.
Meanwhile, there are plenty of opportunities to improve the low touch logistics flows and develop alternative scenarios to allow a response to competitors or OEMs if they begin to change their models.
What you need to do now
eSIM is coming, and supply chains are not prepared for the disruption. Both Samsung and Apple have demonstrated that they are prepared to operate in an eSIM world, having already implemented the technology required to adopt eSIM. In the next few years, we are going to see the carriers begin to catch up and adopt this technology as well. Getting it right is very important. Failures at an operational level are an invitation to churn, and failure to grab the strategic benefits in the supply chain may lead operators to have a structural cost disadvantage. The telco’s responsibility is to ensure that, from a supply chain point of view, all parties are fully prepared to deal with the volume incurred.
When dealing with total supply chain overhauls at this magnitude, it is imperative that telcos fully align their eSIM strategies with their consumer strategies.
Successfully deploying an eSIM supply chain can put a telco ahead of the game. Is your supply chain ready for eSIM? Take a look at a few things below you can do to prepare.
- Ensure both your forward and reverse supply chains are fully represented when you create your eSIM project team
- Develop scenarios of what your supply chain configuration could look like
- Make sure your supplier base is prepared, including technology and logistics providers and repair companies
Want to find out more? Get in touch!