Spreading risks

Manufacturing
Cell phone features change fast, and keeping track of the latest and greatest ones can be a challenge for retailers — a challenge that presented an opportunity for Claure.

He convinced manufacturers such as Motorola to allow his company to become the last step in the manufacturing process. As a result, Brightstar can provide the latest features, customize products and deliver them more quickly to retailers in Latin America.

“We figured out as we talked to the customers, their main complaint was the time cycle it took from the time they placed the purchase order until they actually got the product delivered was 60 to 90 days,” Claure says.

With today’s got-to-have-it-now mentality, consumers aren’t going to wait three months for the phone they want to arrive. Brightstar utilized a software-forecasting tool and a physical presence in the local market to put the products in the hands of retailers quicker than before.

“Our manufacturing partners have given us the capability to do all the necessary customization for that customer,” he says. “So,it allows us to have a pool of inventory that is going to be programmed and deployed according to the operators’ needs.

“That is what allows us to avoid getting into inventory troubles, when you can have one product that serves many different customers that allow us to be constantly balancing our inventory.”

Brightstar keeps more than $300 million of inventory strategically placed in its main distribution centers.

“If we have the ability to customize the inventory according to the customers’ needs, we’re going to win market share,” he says. “We figured out that by us keeping inventory — vanilla or generic inventory — we have the ability to have the inventory, customize it to the needs of the customer and be able to ship it within the next 48 hours to 20 countries in Latin America.

“If we didn’t have inventory, if it was a traditional model, the customer would be able place an order to the manufacturer, and it would take six to eight weeks for that order to get there.”

The premise that Claure initially built his distributorship on — a commitment to a local presence — has paid off as part of the manufacturing strategy as well.

“In order to be successful in this business, you’ve got to add value to the chain,” he says. “How do you add value? The first strategy is you have to be close to your customers.”

Latin America was an underpenetrated market — some U.S. and European companies provided service, but they did so from a distance.

“We thought we could change the paradigm of distribution by opening up sales and distribution offices in those countries,” Claure says. “That gave us an edge over our competitors by basically knowing on a first-hand basis, and faster than anybody else, what their needs were and being able to react much faster by being close to them.”

Claure says Brightstar can stay 15 to 30 days ahead of changes in demand and match inventory as needed.

“We continue to replicate that throughout the world,” he says. “It’s not only having inventory. The key is having the right inventory at the right place at the right time. That is easier said than done.”

Being local gave Brightstar advantages in other ways, as well.

“We have made it extremely easy for our customers to procure products through us — we have the capacity to take the product directly to their countries, deliver directly to the point of sale, invoice them in the local currency and (offer financing for) their business,” he says.

That approach has helped prevent Claure’s customers from buying direct. Because of the convenience and the services the company offers, not only have retailers that have procured products through Brightstar in the past continued to do so, others that were buying directly from the manufacturer have made the switch, as well.

“When they had a choice to buy direct from the manufacturer or buy from a distributing company that was offering all those differentiating factors, most of our customers, over time, have changed,” Claure says. “They prefer to buy from the local branch in Latin America.”

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