Company execs talk strategy of communication manufacturing
Editor’s note: This is the eighth in a series of articles focused on supply chain shortages and delays and how they are impacting the local community. This report highlights feedback from Hamilton Telecommunications’ executives.
If there is one industry that did not have chance to slow down during the pandemic, it is the telecommunication industry. From Zoom meetings to working from home, the internet and phones became even more integral to everyday life.
But with so high of a demand comes a lack of supply in a world that is already feeling the crunch from a variety of factors. Fiber optic cable prices have gone up by 70 percent, according to Cru Group and as mentioned in the automobile supply chain story a few weeks back, the chips many computer and related products need to run have also been in short supply.
With Hamilton Telecommunications in the heart of Aurora, representatives of the company said the expected supply troubles reported by many local businesses have not hit them, even as they lay down 300,000 feet, or 58.6 miles, of fiber optic cable throughout central Nebraska.
“We were somewhere between good and lucky,” reported John Nelson, CEO of Hamilton Telecommunications. “We had anticipated a supply chain problem completely unrelated to the pandemic, which ended up being the same (one) for us. In most cases it has been very successful for us.”
Nelson did not know how lucky he would be at the beginning of the pandemic. Early on, there was a slowdown as the more than 700 employees had to adjust to working at home in a five to seven day period.
“It was a tough time for everybody,” said vice president at Hamilton Telecommunications Dan Molliconi. “But our coping mechanism is it felt like we were contributing to how everybody would handle it, (to) make their lives a little bit better.”
A saving grace was the plan to save up supply for the major “Fiber to Home” projects launched in 2018, resulting in an estimated 83 percent of current internet customers in the local service area using fiber optic cables.
“There is a tremendous inventory and supply requirement to get that done,” Nelson said. “Because that has been such a core part of our business for so long, we’ve had the philosophy of buying up when costs are low and manage costs through inventory management.”
The current strategy was and still is to buy supply at lower prices or just starting to rise in order to get a constant supply in storage. This, according to Nelson, was the predecessor to what should be a market-wide change in how companies view inventory.
“Another way to describe our approach to inventory is over the last 30 years there was a transition to ‘Just-in-time’ inventory and its starting to pivot to ‘Just-in-case’ inventory,” Nelson explained. “What you’re doing is moving your reserves closer to the point of deployment. You have them there, you have them secured and you have your pricing and availability locked in because it already exists.”
Planning and buying ahead did not anticipate every supply need, however. When Texas manufacturing shut down during the winter storm of 2021, resin used in the vaults that fiber optic wires run into was in short supply, causing brief delays.
Another issue that has been a problem involved the quality of components, which now require stress testing before installation.
“The QA process has been affected by COVID-19,” said Dereck Djernes, head of Hamilton Information Systems at Hamilton Telecommunications. “We have had a lot of equipment arrive dead on arrival. What we’ve done to minimize the risk is when we get equipment now, we test it then and there.”
There is also the danger of, to use a metaphor Nelson used, pulling a taught rope closer to yourself only to have supply chain go slack.
“When the slack in the supply chain worked its way out and materials became available again, one of the challenges was trying to find places to stage and store those material until we had the labor resources to put them in the ground,” he elaborated.
The risks are worth it to Nelson, as the supply chain is not as quick as it used to be. According to Djernes, replacing a server used to be a year in waiting and now takes 18 months. That is combined with a sense that the surprises in the supply chain are not over, according to Molliconi.
“We’re not just trying to deal with what we’ve seen since the pandemic, but there is all sorts of subsequent strange, unexpected ways of impact that rolls on through and we’re trying to do is look into the magic mirror and figure out what are the next things we should worry about,” Molliconi said. “We’ll hit a few and miss a few.”
This philosophy does apply to most of the company with similar results. The company’s landline phone service and infrastructure, text-to-speech for phones, data centers and cable TV have only run into slight delays.
“If we were trying to manage in a three-month world, we would have hit a real problem, but looking ahead is part of our DNA,” Molliconi explained.
“Doesn’t mean we don’t sweat about it or stay up worrying about it,” Nelson added.
The company also provided retail computer and phone hardware for both businesses and customers. Once again the most shocking crunch was after the COVID lockdown. Many businesses needed headsets and other phone items for work-at-home, which was helped by another local company, Fontel, which was described by Djernes as having come in to save the day.
“We again had to be proactive here, but we had a local vendor that really came through for us,” Djernes said. “They were trying to find supplies even (outside) of their own supply chain for us.”
Now on the retail side, the strategy of buying more when you can applies there as well, with a pre-order time of eight weeks to keep retail items in stock.
And keeping the inventory filled seemed to be the priority on the supply side of Hamilton management for the foreseeable future as they continue to connect central Nebraska and beyond.
Though many ports report that there is zero percent availability, “apparently there is a huge oversupply of stuff now which is really interesting,” Molliconi said. “This past couple of years reminds me about tidal waves, where the tide goes out and then an even bigger wave hits.”
For Nelson, he sees the supply chain issues as not just the changes of a tide but the sweeping change of a tsunami.
“The fun part about all this, because I always come to the fun part, is not just in Hamilton, but for a lot of our suppliers and vendors, this has triggered a new wave of innovation,” Nelson said listing employees solutions to supply chain problems and how suppliers have switched to modular approaches to design. “It feels like a new dawn in domestic manufacturing.”