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Cisco Systems-The Supply Chain Strategy

Cisco primarily outsources its manufacturing to contract manufacturers in order to focus on product design as its core competency. It owned only 2 of 40 manufacturing facilities by 2000. Cisco aimed to ensure quality while outsourcing major portions of the process to reduce costs. However, Cisco's forecasters failed to anticipate a demand shortage, leading inventory levels to rise and Cisco writing off $2.2 billion in inventory in 2001. Cisco's reverse logistics process recovers products from customers and redistributes them, handling 30,000 units and 220,000 pounds of materials recycled per week to generate $100 million annually.

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Aashish Pant
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200 views15 pages

Cisco Systems-The Supply Chain Strategy

Cisco primarily outsources its manufacturing to contract manufacturers in order to focus on product design as its core competency. It owned only 2 of 40 manufacturing facilities by 2000. Cisco aimed to ensure quality while outsourcing major portions of the process to reduce costs. However, Cisco's forecasters failed to anticipate a demand shortage, leading inventory levels to rise and Cisco writing off $2.2 billion in inventory in 2001. Cisco's reverse logistics process recovers products from customers and redistributes them, handling 30,000 units and 220,000 pounds of materials recycled per week to generate $100 million annually.

Uploaded by

Aashish Pant
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Cisco Systems- The supply chain strategy

Supply Chain Network

Outsourced activities of Cisco


Manufacturing by contract manufacturers.
It owned only 2 of its 40 manufacturing facilities by 2000. Assembly Product Configuration. Distribution system- Through the network of suppliers,

distributors, partners, resellers and customers

Why Outsourcing
Cisco identified its core competency as Product

Designing.
Ensure quality product though major portions of the

process were outsourced.


To Reduce manpower cost. To reduce cost of wages.

Problems
Cisco entered in a long term

contract with suppliers.


Ciscos forecasters failed to

notice the demand shortage.


This led to inventory cycle from 53.9 days to around

88.3 days.
Write off inventory worth $2.2 billion in May 2001

Reverse Logistics
Recovering Ciscos product back from its customers/

distributors and redeploying them in a way that brings best value to Cisco.
Create a consistent, scalable, global end to end process

and system for inbound logistics.

Ciscos complex supply chain


Hybrid production model , 95% outsourced.
Wide range of products. Most products are configured to order. Acquisition Integration (131 till date).

Approach for reverse supply chain


30,000 units received each week.

2,20,00,000 Lbs of material recycled annually.


$100,000,000 net contribution annually.

Process Verticals
Inbound logistics Follow up with customers, Pick up materials from

customer location. credit.

Receiving and disposition Manage discrepancy, Provide customer Screening and testing of the products. Inventory management- Synchronization, decrement stock through

scrap and recycling.

Order management- Picking and packing Outbound logistics- select transport provider, ship the product.

Thank you

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