Chinese Telecommunications corporation ZTE is currently in the middle of a game-changing transformation. Already market leaders in terms of technology and products, the company was in need of a complete modernisation of its supply chain process according to Assistant CEO Anders Karlborg, who was brought in to do the job. Business Review Asia speaks to him at length to learn how he has achieved the changes he set out to make and what challenges have been overcome.
Founded in 1985 ZTE has always set out to be a global leader in telecommunications and information technology. A thriving business 30 years on, the company offers wireless, access & bearer and ICT solutions for enterprises and government agencies. It also produces a series of smartphones and mobile devices. ZTE has a turnover of £12 billion and more than 60,000 staff providing mobile tech solutions for both the Chinese and overseas markets.
Transforming the supply chain
Anders has been working in China for 15 years. Originally from Sweden , he has worked in Beijing, Nanjing and Dubai. When he first took on the mammoth task of revamping the supply chain a year ago he quickly saw the weaker links. “When I came in here it was a very hard working supply chain with hard working people, but it was a lot of manual, labour intensive work.
“They were working very hard but maybe not getting the results we wanted. I would never say it was bad but it needed improvement,” he says.
“We had a big workshop with the management team and discussed what should be done at ZTE. This led to the creation of a big corporate transformation project with 16 different sub- projects.
Ye Weimin, Senior Vice President for ZTE Group said that the transformation project is very important for ZTE future success to be a complete ICT solution provider.
“Some of the projects include automated integrated planning, E-commerce integration, configuration solutions, global supply network, and a customer/account collaboration model. We have a whole supplier relationship module that is very important for us and have set up a very clear model on how to collaborate, with quarterly and yearly business review meetings.”
Reflecting on the first of a three-year plan, Anders says it has been imperative to keep channels of communication open.
“After being here for six months we decided that the organisation needed some changes to drive us forward so we implemented a new supply chain organisation. This meant some positions became redundant and also some new positions were established. This was a tough job, but necessary.
“We believe it will take another two years before we are on the level we want to be, but we get great support from the company and the staff. Of course, not everybody welcomes change, but most do.
“We send out monthly newsletters on each sub-project to help staff understand. We also do bi-weekly reporting within our own management team in the supply chain and we report to the top-level management team monthly. We have an open-door policy. Our strategy is worth nothing if you don't communicate it well.”
Anders adds: “It’s also very important to have a cross functional team. So even if it is a supply chain project, we are integrated with service people, R&D, sales, HR and finance. We’re moving away from silo-oriented thinking into process-oriented thinking.
Supply chain digitalisation
The implementation of new technology has played an important part in this journey. According to Anders, taking ZTE’s supply chain into the digital age means achieving a customer-centric platform that maximises real time data that, in turn, enables demand stimulation, matching, and management. It has done so well in the last year that the company was recently invited to write a white paper together with the Centre for Global Enterprise (CGE).
“There was no clear definition of digital supply chain before. It was talked about but not very clearly. We are very proud that it will be used as an education document,” Anders said.
“Every company needs to be more efficient and with digitalization of your supply chain you can save up to 10 percent of your purchase cost. We have many sub projects related to digitalisation such as E-commerce, customer collaboration, integrated planning with technology to understand what customers want. Also, big data and analytics to understand behaviour and for scenario planning. There are so many different technologies to be used but nobody can do it in one year, so we are still exploring each one step-by-step.”
Anders says he understands the anxieties that his staff have. “When we are communicating change we never talk about reducing people. We know that people think about that so we communicate that change is needed for a good future and that may have implications for some people who don’t have enough competence. To rectify this problem we are training people to be good.”
But what does an overhaul of supply chain mean for the wider culture and ethos of ZTE? Jeff Chen, HR President for the ZTE Group, told us that being a majority Chinese company, having Swedish Anders leading the transformation was not without initial concern.
“Anders is the only non-Chinese person in the senior-level management and at the beginning I was a little bit worried about the communication and cooperation, but so far it’s good because he is familiar with Chinese management culture as well as Western culture and management so he can understand both sides. He can communicate with everyone very well and he has rich experience in the industry which gave me more confidence about having an overseas manager.”
Taking on fresh young talent from universities in China and now the US has injected diversity into ZTE. Anders insists flexibility and maintaining a positive, cultural harmony is key to predicting where they will be in five years.
“I have a different culture compared to the ZTE staff and we need to show respect to each other regardless of who we are and where we come from. I have four idioms in the way I manage - lead by example, contribute every day, know your numbers and, finally, show respect to each other’s culture. I know my thing and they probably know other things and together we can be strong.”