Streamlining Supply Chains: How Wholesale Cellphone Distributors Optimize Operations
|Cellphone distribution industry|
Their role is to order products in bulk from manufacturers/suppliers, hold inventory, and then distribute the product to retailers as demand requires. This system has multiple advantages for manufacturers and retailers, so each can specialize in their part of the value chain while offloading risk to the distributor.
The used or pre-owned cellphone industry is distinct in that its primary suppliers are not manufacturers, but rather large-scale purchasers of used devices, such as cellphone carriers, big box electronics retailers, and others who run device trade-in programs.
In the used device business, the wholesaler purchases in bulk from these suppliers performs some degree of device grading (and sometimes basic repairs), and then offers these devices for sale to other wholesalers and retailers.
New technology is transforming the operations of wholesale cellphone distributors, opening up new possibilities for workflow efficiencies and more fine-grained control of supply chains. Specialized software-as-a-service companies offer software programs that make it easier than ever for wholesalers to manage and sell their inventory, increasing efficiency in the supply chain.
When examining the wholesale cell phone business for potential efficiency improvements, look to warehouse operations for your largest gains. The warehouse embodies your receiving, storage, order fulfillment, and shipping processes. You should subject each aspect of that process to critical review:
● Where can steps be combined?
● Can you generate efficiency by grouping tasks together in the same space?
● Where are workers required to frequently switch tasks?
● Can you reorganize the procedures to promote single-focus work?
Many distribution warehouses have profited by adopting the "ABC" method of warehouse organization. The first step is to grade your stock into most valuable goods (A), average goods (B), and least valuable goods (C). Measure by profitability, if possible — the better you manage your most profitable sales, the better your margins will be.
Place your "A" goods closest to the shipping department in your warehouse: These are the goods you want to optimize the most. "B" goods get the next best real estate in your warehouse after "A" goods and should be organized for rapid access. "C" goods are relatively unimportant to your bottom line and should occupy the least valuable space in your warehouse and the least amount of your employees' time.
The next area of workflow operations optimization may come as a surprise: workplace ergonomics. Ergonomics means fitting the workplace environment to the worker rather than the other way around. Good ergonomics means investing in high-quality workstations, which can be made up of tables, desks, chairs, monitors, shelving, keyboards, mice, and more.
Conduct a survey of your workers, asking them to rate their daily tasks by how comfortable they are, then focus on addressing the pain points. One easy optimization is to raise the level of your shipping station work surface to waist height, allowing shipping workers to complete their work standing up. Solid workplace ergonomics reduce workplace injuries, promote employee efficiency, and raise morale and workplace satisfaction, reducing costly employee churn.
Customer acquisition is the machinery for making new customers. In practice, this is typically a mix of marketing and sales activities. One way to think about customer acquisition is in terms of marketing funnels and the customer journey. Marketing funnels are successive exposures to marketing pieces that carry a prospect towards a conversion event, such as buying a product, attending a live event, or some other valuable transaction. Similarly, the customer journey is all the steps a new customer takes to complete their first purchase with you. That might mean seeing your ad on social media, visiting your website, subscribing to your newsletter, and purchasing after the fourth newsletter.
The key to sound customer acquisition is to collect data on what’s working and what isn’t. Evaluate your marketing funnels for efficiency. Which sequence of marketing exposures generates the best conversion rate? Where is drop-off the worst? When you’re getting started, the metrics can be pretty basic. What’s your strongest marketing channel, and how can you invest more in it? Try to efficiently allocate your marketing dollars based on real sales data.
Two critical key performance indicators (KPIs) to understand are customer acquisition cost (CAC) and customer lifetime value (CLV). CAC is calculated by dividing your marketing cost by the new customers it generated. Different marketing campaigns will yield different CACs, and the goal is to find the most capital-efficient marketing spend. Next, determine your CLV — that’s your annual profit per customer times the number of years you retain them, minus the initial acquisition cost. While that might sound complicated, it’s simply measuring how profitable a new customer is. A common goal is to increase your CLV by increasing annual profit or holding onto the customer for additional years while reducing acquisition costs.
Demand Based on Geography
The used device market is international, encompassing nearly every country on earth. But while the market is global, demand varies considerably by region. In general, consumer preferences reflect the purchasing power of the area, with wealthier areas preferring higher grades of devices and lower-income areas focusing on more heavily used phones that are accessible at a low price point. There is also evidence for variation based on the repair expertise of the buyers, for instance, those in Hong Kong. Some large markets, such as the United States and Brazil, have heterogeneous preferences, with buyers purchasing every grade in high volume.
Wholesale device sellers can choose to specialize in particular regions, cultivating relationships with resellers who have similar demand profiles. That allows the wholesaler to optimize their supply chain for devices that are best sellers in the region. Because shipping patterns, import/export laws, and taxation vary by region, it’s necessary to develop regional expertise in how the business is conducted in your area of focus.
The wholesale cellphone distribution industry is undergoing rapid change. To stay ahead of the game, wholesalers need to use innovative technology, optimize their operations, and tailor their regional supply chains. By doing so, they can improve efficiency, profitability, and competitiveness.
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