IntroductionCisco Systems Inc. is a company based in SanJose, California at the center of Silicon Valley and deals with thedevelopment, manufacturing, and selling of different hardware used innetworking, telecommunication, and other technological gadgets. They provideboth services and goods to their customers as their mode of providingtechnological solutions to their large customer base which comprises of Americaas well as other parts of the world. The company’s supply chain is complex,highly diverse and extensive owing to its broad customer base as well as manytypes of products that it produces. With over 300 families of products beingsold all over the world, the company has one of the most complex supply chainsin the world.
The supply chain of Cisco entails over 1000 suppliers who workhand in hand with several manufacturing partners and other logistics providers(Sáenz & Revilla, 2014). When broken down, the supply chain of CiscoSystems Inc. involves the following:• Eight strategic logistic centers• 4 Base Trans-Receiver Stations• Over 25,000 orderable products with one quarter of them beingassemble-to-order in nature while, the rest are spares.• Millions of annual shipments sent to customers as per order withan example being 22 million cartons shipped in 2016Most of the products from Cisco Company use aConfigure-to-order form of a model as they are made on the basis of the ordersconfirmed by the company’s customers. Due to the above-discussed factors andcharacteristics of Cisco Company, the company has been under immense pressureto revolutionize its supply chain in order to increase its business scale andagility. The changes which will be discussed in this report include thesimplification and consolidation of supply chain business processes as well asthe company’s Enterprise Resource Plan System, (ERP) to ensure the creation ofend-to-end workflow which has the desirable standardization andautomation.
Through a well-set project which involved planning andexecution, all the supply chain stakeholder, as well as Cisco Systems Inc.,have changed the company’s supply chain systems in order to reach the company’sbroad spectrum customers who have vastly different expectations and servicerequirements. Executive Summary As part of the academic requirement of doingan analysis on the implementation of supply chain systems in an organization,this report looks at the different ways through which the implementation of newsystems at Cisco Systems Company worked. The problem as highlighted in thereport was on the challenges that Cisco Systems encountered after its number ofcustomers had increased without a substantial investment in a more elaboratesupply chain.
Furthermore, the company’s nature of diverse products range wasanother issue which made the company encounter high numbers of customercomplaints. Moreover, the lead-time of many of the orders placed in the companyincreased a lot during that period. This then called for drastic measures toaddress the issue promptly.The solutions adopted to solve the problemwere divergent since they were supposed to address a wide range ofissues. Firstly, the company adopted a global structure in addressing theproduction, transportation, and the supply of its products. Further, theapproach of localization was critical in reducing the inventory time for itscustomers. Moreover, the improvement and integration of the company’s systemswas another major change adopted by the organization. There are a number of benefits that the organization ripped fromthe adoption of the new system.
For instance, the customer retention rate wenthigher as orders would be delivered within the stipulated time. Further, thecompany’s revenues went high as shipments were delivered at proper time.Moreover, the company got to a better position in relationships and alignmentswith its partners as its competitiveness in the market became better.The other area addressed by the report is on the challengeswhich came with the change in the supply chain of Cisco Systems Company. As explained, the company had to address the costs of change. Furthermore,change management was another great challenge as the organization had todedicate resources to factors such as skills improvement among others. Moreover, the new change had an effect on the organization’s structure andtherefore, it took dedication and strive for the company to ensure that thechange was positive ProblemThe nature and dynamism of the supply chainwithin the global market coupled with the vast number of Cisco Companycustomers it had been the main contributors of the challenges that the companyhad been facing in its supply chain.
There were occurrences if backorders, with mothcustomers complaining about how their orders were being delayed past thecommunicated datesOffice1 . Some customers complained of products backlogs which at timeswould go up to 150 days when they made direct purchases from Cisco. Moreover,other customers had turned other networking gear vendors while the concerns ofwait times being rampant on products such as ASA firewalls and Catalyst 2960switches. During the fiscal quarters of 2010, CiscoCompany highly attributed their challenges is supply chain to growth the ineconomy as well as the labor constraints experienced by the Cisco supply chain.According to a report given by Channel Insider, Cisco was struggling to provideits orders on the core networking products due to a slum in the supply of rawmaterials and especially the ones which were needed to make some of thecompany’s key products such as semiconductors used in making network switchesand routers (Sáenz & Revilla, 2014).
During this hiccup, the transactions betweensuppliers and manufacturers were not streamlined as there were sometimes delaysin the delivery of products as well as the payments for products. Therefore,this provided a very big chance for errors to occur. Moreover, the suppliers ofCisco were faced with relatively long order-to-pay cycles. During the sametime, the company faced a very high shortage of some of its key raw materialsand production components.As a result, the customers were adverselyaffected as their revenues took a dip due to delayed supply. In addition tothat, the company which had for a long time prided itself on a goodrelationship it had created with its customers was being faced with customerwrangles.
More costs and inconveniences were incurred as compensations SolutionsThere were several process and steps taken byCisco Company which aimed at solving its challenges in the supply chain. Thiswas after the company’s inventory cycle had changed from 53.9 days to 88.4 daysand the supply chain had shown signs of becoming unmanageable.
The company’slong-term contracts with suppliers were also on the check as it had caused itto have inventory pile-ups (ABT Leads, 2016). Therefore, crafting asolution to these problems needed a quick response since other customers hadeven resulted in ordering the same products from its competitors in order toclose their deals with the quick deliverers.Since the traditional systems could not workin solving the supply chain challenges, the company had to first change itsmodel and upgraded from a work order to a purchase order model as a way ofreducing the obsolescence of products as well as that of technology.
Furthermore, the company’s Enterprise Resource Planning (ERP) system wentthrough a significant upgrading as a way of making part of the company’s supplychain management, foundational technology highly adaptive to the proposedbusiness models. Moreover, the implementation of the entire intervention wasaimed at enhancing the capabilities of the company as well as widening itsscope in the market through components such as Build to Stock (BTS) (Laudon& Laudon, 2013).The global design was one approach adopted by the Cisco Systemsin order to solve its supply chain woes/ in this approach, the supply chain wassupposed to follow a global system and have a common process. Further, thecompany was supposed to embrace the standardization of its supply chain andfocus on the adoption of best practices. Further, the application oflocalization was critical as the company redirected purchases of goods tosuppliers who were within the same geographical area to a similar point whichwas close to where these products were being needed. Through this method, thecompany ensured that there was no bloated lead-time and that the cost of supplychain relatively lower than before (Laudon & Laudon, 2013).Partner enablement was another criticalapproach taken by Cisco Company in finding a solution to its supply chainproblems. Firstly, the company facilitated a proper change management to ensurethat the systems adopted to ensure partner enablement were effective and highlyattainable.
Further, lane enablement was facilitated through a properlyplanned program management to ensure that the partner enablement was achieved.Moreover, Cisco ensured that shipments were done at the correct time and that theService Level Agreements between the company and its customers were measured.Through the SLA measurement, it was easier for the company to gauge its abilityto satisfy customers (Hua & Willems, 2016).In addition to that, Cisco had learned theimportance of monitoring its performance levels, in the supply chain as a wayof gathering the necessary data required in improving its operations. Further,the monitoring was a critical step in promoting customer satisfaction as wellas providing management with the requisite information needed in making keysupply chain decisions. For instance, data generated through monitoring of theprogram was critical in evaluating the effectiveness, efficiency,sustainability, and relevance of the interventions carried out in the company’ssupply chain.
Pre-built industry processes were anotherapproach taken by the company to salvage its supply chain. For instance, theapplication of some customized business flows, as well as the use of templatesand questionnaires, were highly critical. Moreover, Cisco Company found asolution in integrating its framework and which in the long run helped thecompany to integrate different products. E2open application, as well as EDI,provided better solutions for the company as they offered an avenue ofintegrating the company’s supply chain with that of its partners (Hua &Willems, 2016). In the new Cisco information starts with the company’s supplychain, a customer order goes to the Cisco ERP database before linking throughthe intendant to the TLP and through the VPN to contract manufacturers. Fromthere, the suppliers’ production schedule is arrived at. Moreover, the companyhas also embraced outsourcing of activities where things like production havebeen handed over to some manufacturers on a contractual basis. Activities thein assembly, as well as distribution and product configuration, have also beenoutsourced from the company hence reducing its weight and load the in supplychain (Lee, 2016).
BenefitsThrough the implementation of contingency plansby the Cisco Systems Company with the aim of saving its supply chain, therewere several benefits which the company realized. For instance, the companyrealized some nimble expansion and was able to win new as well as emergingmarkets. Through reduced lead-time and inventory durations, the company wasable to acquire new customers on top of regaining its trust from the initialcustomers (Laudon & Laudon, 2013). Further, the company had the relativelyshorter time needed for the marketing of its new products as well as offerssince the supply chain had become more flexible. Therefore, it would not takelong for customers to receive the goods which they had ordered. Throughlocalization of the supply chain, the shipment would take lesser time forproducts which are used within the same geographical location (Lee, 2016). Freight costswere also saved by the implementation of rapid changes within the company’ssupply chain and therefore, the company improved its competitive advantage inits market as well as ensuring that its products have a good price.
Moreover,the improvement of the customer and partner experience was another benefitwhich was realized from the improvement of processes within the company’s(Supply Chain Connection, 2017). In a nutshell, there were many advantages ofthe improvements done by Cisco Company on its supply chain and apart fromsalvaging the dwindling company’s image, this process also helped the companyto realize other major opportunities such as growth, competitiveness andgeneral profitability. ChallengesTo come up and implement these new changeswithin Cisco’s supply chain, there were different issues which made the processtough to implement. Firstly, change management was a tough process for the company.With the new systems in high demand to implement, the company had to undertakesome critical changes in the different departments. To make these changeseffective, change management had to be put place, hence proofing to beexpensive and highly involving the organization (Laudon & Laudon, 2013). Processharmonization and integration into the company’s systems was another challengeexperienced by Cisco Company while bringing up the changes. The process ofintegrating systems within an organization strains its resources onorganizational components such as human resource, finances, and raw materials.
Therefore, this was one issue which brought a challenge to the company in theprocess of changing its supply chain.Training the employees within the organizationon how to apply the new systems was another challenge which was brought up bythe introduction of a new set of systems and equipment. Therefore, thisrequired the company to bridge the technology-skill gap by training most of itsemployees on how to use the new systems. Moreover, the lack of technical skillswithin the company’s workforce was a major challenge which held back thecompany in implementing the new supply chain programs, hence reducing the speedof change implementation (Lee, 2016). Conclusion andRecommendationIn a nutshell, planning and implementation ofnew supply chain systems by Cisco Systems Inc. was a way of ensuring that thecompany kept up with the global demands in the supply chain as well as makingtheir customer experience better. This was after the company had had a seriesof complaints from consumers and suppliers concerning the faults within thecompany’s supply chain. Due to these faults, many customers had witnesseddelays and this caused a threat to the company’s revenue.
Due to theimplementation of the new system, the set of skills required to make iteffectively changed and the company staff together with the customers andsuppliers had to familiarize themselves with the new skills required. From thenew changes, the company had to deal with some system security. There were timeswhen data security was a delicate issue, the system developers had to considerthe degree of data security at that time as well as the means of preventingunwarranted access to the systems through hacking or other cyber securitymethods.Through the implementation of new programs inthe company’s supply chain, the company salvage its dwindling revenues andmanaged to improve its performance and revenues. Furthermore, Cisco alsorekindled its competitive advantage and consumer retention ability.
By adoptingthe localization approach, Cisco Company made the prices of its products loweras well reducing the lead-time taken before customers received their orders.From the entire report, it is clear that the supply chain of any organizationplays a major role in determining the ease at which an organization achievesits goals and objectives. Therefore, the effectiveness of a supply chain maydetermine the level of a company’s customer retention, competitiveness,expansion, and growth of revenue. Office1Checkthe Sentence