Cisco Systems - The Supply Chain Story

Cisco – The Networked Supply Chain Contd...

While earlier prototyping³ used to take weeks, Cisco engineers were now able to do the same within a matter of days. This was because prototyping could take place at the manufacturer's site itself. After manufacturing, the product was connected to one of Cisco's 700 servers worldwide. For a faulty product, the system would not print a shipping label. This prevented an invoice from being generated and consequently blocked payment.

Because of rapid sharing of demand information across the supply chain, customers could receive products faster. To sum up, this networked supply chain:

• Ensured shorter engineering-to-production cycle times in order to increase market share.
• Ensured flexibility in designing, revamping and retiring products in response to market demand.
• Ensured product quality though major portions of the fulfillment process were outsourced.

Even though Cisco dealt with technically complex products like routers, it did not hesitate to hand over the manufacturing to a set of contract manufacturers.

In order to ensure the quality of its products, Cisco relied on automatic testing. The company developed test cells on supplier lines and ensured that the test cells automatically configured test procedures when an order arrived. Cisco defined its core competence as product designing and delegated the rest - manufacturing, assembly, product configuration, and distribution – to its partners. In August 1996, Cisco launched transactional facilities like product configuration and online order placement. These facilities were connected to its ERP systems. In the same year, Cisco upgraded its network infrastructure to better handle the increasing number of transactions. In mid-1997, it introduced dial-in access from desktop computers that allowed customers to place orders without accessing the Internet.

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3] The prototyping model is a systems development method in which a prototype (an early approximation of a final system or product) is built, tested, and then reworked as necessary until an acceptable prototype is finally achieved from which the complete system or product can now be developed. This model works best when not all project requirements are known in detail ahead of time. It is an iterative, trial-and-error process that takes place between the developers and the users.

Case Details

Case Code : ITSY001
Themes: EVA Financial concepts
Case Length : 5 Pages
Period : 1997-2001
Organization : L&T
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Construction - Building Materials & Equipment, Financial Services

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