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Interview with Johannes Giloth, Senior Vice-President, Global Operations, Nokia

July 04, 2017

Interview with Johannes Giloth, Senior V...

Over the years, Nokia has fine-tuned its operations strategy to strengthen its supply chain and deliver value to all its stakeholders. This has helped the company in driving continuous improvement in its supply chain management and procurement. Nokia’s Chennai factory is one of the largest facilities in the Indian telecom equipment manufacturing sector. Its operations are in line with Nokia’s global vision and practices. Going forward, the company  plans to invest in disruptive innovations, adopt internet of things (IoT) in its operations, and adopt concepts such as big data analytics and automated monitoring of key performance indicators through real-time access and remote management. In an interview with tele.net, Johannes Giloth, senior vice-president, global operations and chief procurement officer, Nokia, talks about the company’s operations strategy in India. Excerpts….

What challenges did the company face on the operations side during the merger with Alcatel Lucent?

Nokia has undergone several mergers in the past. So we have a fair experience in handling mergers and in incubating or integrating different supply chains. In this particular case, both partners have a strong legacy of mergers – Alcatel and Lucent, and Nokia and Siemens.So, we were able to use many best practices from our past experiences. During the integration of operations, we identified the differences, potential hurdles or pitfalls fairly quickly, and tried to avoid them through strong governance.

Time is the biggest enemy in integration and one of the major lessons learnt was that we need to make quick decisions and never leave discussions in vacuum. Second, communication is a key success factor. In a big merger like this, where the resultant company comprises more than 100,000 people, it becomes important to communicate the broader vision clearly.

It was a seamless integration,which had a lot to do with the fact that both companies, despite coming from different geographies, have had similar experiences being in the telecom market.

What are the factors driving the company’s supply value chain?

Our company has undergone significant change from 100 per cent manufacturing to outsourced manufacturing (which comprises a fairly big share now), wherein we are partnering with some of the biggest companies of the world in this domain. Maintaining the right balance between an external and an in-house manufacturing footprint is helping us develop innovation capabilities.

Suppliers form a key part of our value chain. The merger with Alcatel Lucent has added more suppliers to our value chain than we normally need. Supplier consolidation will take another one or two years to complete. It is not only the number of suppliers, but also the kind of interaction the company has with them. It is important to work in collaboration and innovate together.

Where does the Indian market figure in the manufacturing operations of Nokia? What has been the role of the Chennai facility?

The Chennai manufacturing facility, one of Nokia’s biggest, not only serves the domestic market but caters to the global demand as well. This also means that everything that is consumed here in India is not made in India. Each of our manufacturing market focuses on a different core competency and this is leveraged across other markets.

India is a very dynamic market and the fierce competition creates a kind of ecosystem that pushes us to be innovative. We have strong capabilities at our Chennai facility. It is not a kind of low-cost, low-complexity factory. In fact, it is quite the opposite.

India is no more seen as a place that offers cheap labour; instead, it is seen as a seedbed for innovation that can deliver leading-edge technology.

What is the level of product complexity at the Indian facility?

The Chennai factory has always kept global markets in vision.For example, in 2010, when auctions in India for 3G took place, Nokia was already manufacturing 3G equipment in Chennai. Back in 2011, we were already manufacturing 4G equipment in Chennai and exporting those worldwide. It was only after some years that India as a market started buying 4G products. So, we have always been ahead in our product portfolio.

Are you also looking at producing 5G equipment at the Indian facility?

Since 5G has not yet been announced commercially, we are working on a few product types at our Finland facility. That said, over a period of time, we will use our Indian factory too for producing 5G equipment.

How soon do you think would India be ready for 5G?

We follow our customers. As soon as they are ready, we will make sure that we are ready to supply. In India, currently, the focus is on 4G. I believe 2020 seems to be the closest for 5G to arrive.

How has been your experience with the Indian government on the manufacturing side?

First, local manufacturing rules are not unique to India. In each country, there is a separate kind of requisition. We need to have the knowledge in-house and I believe we have cooperated quite well with the government in the past couple of years.

As mentioned, in India, we are not manufacturing products that cater to the Indian market alone. The factory at Chennai is making the most complex products for the global market. Further, we take the responsibility of being the biggest manufacturer in the Indian telecom sector seriously. Nokia is part of a couple of committees, wherein we share with the government how it should look at different policies, for example, what kind of supply chain should be developed in India. One of the things that India lacks is a robust supply chain. So, most of the components cannot be sourced locally.

That said, we are moving in the right direction. Our factory at Chennai has been a kind of a lighthouse to the local manufacturing environment.

What are some of the innovations or emerging technologies that are being used in your supply chain to bring in operational efficiency?

For the past couple of years, we have been extremely focused on automation. Everything that we could automate in the manufacturing process or in processes that support the core process, and which made sense to be automated, has been automated. We are also focusing on robotics.

Another focus area is data management. We are spending a lot of time on how to analyse our data, not only retrospectively, but also by using advanced analytics. We are also looking at leveraging big data tools and artificial intelligence for understanding patterns.

We are also focusing on trainings across our facilities worldwide by using augmented reality. The trainer does not have to fly into Chennai and train people, instead the person can be anywhere in the world, and monitor the operations in Chennai and optimise them.

What role can IoT play in supply chain management?

We have adopted industrialised IoT at our Chennai factory. We connect the manufacturing and production equipment to our network via IoT. We call it industrialised IoT in private long term evolution cloud and it is one of the areas in which Nokia wants to grow as a new segment. India is basically our pilot in this case. We are flying in customers from Korea into India to let them see what we have done already.

What are the key trends in supply chain management?

Digitalisation is a key driver, which is disrupting supply chains across various sectors. Advanced operations planning is undergoing a major change as digitalisation is gaining traction. As a result, the traditional mode of supply chain operations,which relies on concepts such as kaizen, sixsigma, focus on 10 per cent productivity growth every year, bringing down costs and increasing reliability are now giving way to newer requirements such as 10 times more growth rather than 10 per cent, 10 times faster processes and 90 per cent less costs.

The other major trend in the value chain is the pace at which products, service and software are getting commoditised in a fast moving environment. Time to market, time to react, flexibility and agility are the key drivers.

What are your plans for the manufacturing unit at Chennai?

Chennai will be one of our major footprints in our global manufacturing and supply network. In order to do this, we will bring in new technologies  such as production and process automation. It will always be a facility where Nokia’s top leading products will be produced for the global world market. I hope that the supply ecosystem continues to grow in the country as that will make our lives easier when it comes to local manufacturing.


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