PROVIDING ADDED VALUE FOR CELLSTAR

We begin with a case involving Yantra, as a provider of software for systems
integration, and CellStar, a provider of value-adding logistics and distribution
services for the wireless communication industry, headquartered in Dallas, Texas.
CellStar was once a part of Motorola, responsible for the packaging and delivery
of handheld telephones to a wide variety of industrial and consumer markets.
At the time of this case, the firm was independent and competing for business
in the U.S. wireless market. This market was typified by a leveling of the





handset growth curve and had become an industry increasingly viewed as offering
a commoditized set of products.
CellStar, as a major provider of packaging and distribution services for such
products, found itself in a situation in 2002 where it was competing to be a highvalue
strategic partner in a business environment characterized as a race for
competitive advantage. CellStar�s financial position was not robust, and the firm
was finding it very difficult to generate cash in this business environment, where
it was competing with other distributors such as Ingram Micro and Avnet;
contract manufacturers like Flextronics and Solectron; with transportation service
providers UPS, FedEx, and USPS; and third-party logistics providers Menlo
and Innotrac.
The company had an ERP system, but it had an inherent problem that limited
CellStar in its market ambitions, which included expansion of its customer base.
The problem revolved around its ERP system having been designed as a �system
of record� for a single enterprise process. As such, the firm was unable to
compete for business where real-time order, inventory, and shipment visibility
across the logistics service network was a requirement. XML messaging could
be used to extend its ERP reach, but only for one-to-one processes between
customer and provider. This condition created a reconciliation nightmare for
inventory tracking and offered no support for processes that extended beyond
arm�s reach. As a result, the company had a high cost structure to support any
many-to-many processes. Coordination of orders for product, service, installation,
provisioning, and delivery was a serious challenge. The firm was simply
not able to meet core requirements of new opportunities or respond adequately
to new business opportunities beyond wireless applications.
The business situation, which brought these conditions to a point needing
resolution and led to the resultant improvement, occurred when CellStar faced
an opportunity to provide Alltel, Cingular, and Sprint PCS with outsourced call
center, fulfillment and returns services. The initial offering was to cover upgrade
and replacement fulfillment of all equipment requests. Typical of today�s
complex delivery environment, the basic requirement was to support a virtual
and extended enterprise business model, from carrier stores and individual
customers through call centers, fulfillment sites, repair sites, and final product
disposition. The chosen provider, CellStar was told, would need to deal with
complex process rules, based on customer preferences and product availability
in multiple inventories. Time to market was a key metric that had to be reduced
or the company would lose the opportunity.