As one of the leading satellite television providers in the United States and Latin America, DirecTV can be found in more than 35.5 million homes and businesses. Those tens of millions of subscribers also means many more of the company’s satellite dishes and receivers need to find their way from DirecTV’s stock to its customers’ hands, and managing all of those interactions is a complicated task.
Fortunately for DirecTV and its subscribers, Vice President of Supply Chain Operations Thomas McGeorge has a wealth of experience dealing with such complex operations. A veteran of supply chain operations for more than 30 years, McGeorge managed supply chains for major firms like Mitsubishi and Apple before joining DirecTV. Those years of experience have given him the ability to see a supply chain in a macro perspective, which he says comes in handy considering how DirecTV’s supply chain is organized.
McGeorge says DirecTV operates on a supply chain model that relies on the cooperation of numerous third-party contractors to fulfill the company’s needs. The majority of the company’s supply chain operations are provided through third parties, McGeorge says, which means it is crucial to have a strong central presence within the company to keep them all on the same page. “We’re very outsourced as a company here,” he says. “We really don’t manage or own any of our supply chain activities.”
Of course, that does not mean that DirecTV takes a hands-off approach to those activities, and McGeorge says it is dedicated to ensuring that it gives its third-party partners all the tools they need to succeed. Through greater integration and the use of advanced software platforms, DirecTV continues to find new ways to revise and streamline its supply chain processes to ensure greater success and better customer service in the future.
The core of DirecTV’s supply chain success is the partnerships the company has created with its third-party service providers, McGeorge says. The company’s ability to choose and work with some of the best and brightest providers in the industry goes a long way toward ensuring the overall success of its supply chain.
“We’re actually pretty good at selecting and utilizing some of the best third-party suppliers in the industry,” McGeorge explains. “How we manage those partners really allows us to be great at each part of the supply chain.”
Along with selecting and working with the right people, McGeorge says DirecTV’s internal capabilities give it another strong link in its supply chain operations. “I think the other aspect that works well is that we’re very attached to the engineering piece of our business – what I call the front end of our business where we work very closely with the engineering function to ensure that not only are we paying the right costs for the product, but we’re sourcing the product from the suite of providers that we have selected,” he says.
McGeorge explains that the company’s engineering expertise means that it understands exactly what it needs from its suppliers exactly when it needs it. This results in smoother, faster response to customers’ needs.
The third pillar of DirecTV’s supply chain excellence is the systems it has in place to ensure accuracy and precision when working with its third-party partners. McGeorge explains that the company works closely with many of its partners to develop software tools for visibility and other aspects of the supply chain. For example, the company has collaborated with its warehousing and inbound freight partner to develop a set of visibility tools that allow DirecTV to track products from manufacturing all the way to warehousing.
DirecTV continues to work on ways to refine and improve these systems, as well. McGeorge says the company is in the process of implementing new information modules from SAP AG that he says will improve communication significantly between DirecTV and its suppliers. “We’ve implemented these modules and they allow us to be a lot more accurate and much quicker,” he says.
Along with the modules from SAP, DirecTV also recently implemented a front-end tool that allows its salespeople to aggregate consumer demand into real-time data. This data can then be used by the company to more accurately predict and plan around demand. “That has allowed us to take a look at the information on a more automated basis,” McGeorge says. “It allows us to look for any significant changes either up or down in demand that we can reply to from a supply chain perspective.”
DirecTV has experienced some significant growth in its Latin American business in the past few years, and McGeorge says the company is working to make its supply chain operations in that corner of the world as effective as they are in the United States. The company’s goal, he says, is to ensure that it is leveraging its purchasing dollars globally to the greatest effect. “In the past, a lot of our supply chain activities – namely the purchasing and the procurement spend – have been kind of separated between the United States and Latin America, and we are bringing that together,” McGeorge says.
Overall, McGeorge says the company’s focus for the future will be on improving how it and its partners utilize data. Over the next year, the company will be working to implement the final portion of its new SAP suite that will consolidate its warehouse management systems into a single cohesive tool, and the company is training its employees to use that system. “We really have to transform our employees to work and to be much more knowledgeable to use SAP,” McGeorge says.
“Our mantra here for the next couple of years is really to work on the flow of data and the flow of information and making sure we get the information as accurate as we can possibly get it, and [the new system] really allows us to better move inventory through the supply chain,” McGeorge adds. “I think our task here is really the refinement of the demand data and making sure that we’re getting the right product to the right place at the right time.”