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Cisco Systems Case Study

926 words - 4 pages

Cisco Systems, Inc.
Cisco’s networking hardware is a fundamental part of business, education, government and home communications. They have transformed how people communicate and collaborate over the Internet. An unexpected surge in demand for essential network products caught Cisco and its manufacturing partners off guard. Backorders and shortfalls abounded as sales attempted rebound, resulting in the new light of virtual inventory management.

The Evolution of Cisco
Cisco Systems – Company History

1984 – Cisco Systems is founded by computer scientists Len Bosack and Sandy Lerner.
1985 – Corporate logo developed and first system, Massbus-Ethernet is shipped.
1986 – Cisco launched ...view middle of the document...

However, the sales projections were inflated when companies placed orders for components from several companies at once when they only intended to actually purchase from one company. Additionally, a flaw in Cisco’s supply chain management system sent out manufacturing requests incorrectly, often duplicating or tripling the request for component manufacturing. If Cisco projected a need for 100,000 routers, it transmitted the manufacturing request to three manufacturers instead of just one, therefore initiating orders for 300,000 inadvertently.

These issues could have been avoided had Cisco’s supply chain management system communicated properly and effectively and if one supplier rather than many would have been used. This mismanagement resulted in the write of $2.2 billion in inventory – the raw materials had to be sold off virtually as scrap.

The Solution
Cisco’s answer became eHub. A system that connects all stages of the supply chain, making information transparent and available for all participants at all levels. eHub uses the internet to tie disparate systems together across the supply chain, providing flexibility, scalability and eliminating delays in information and in inventory shortfalls, production black-outs and other mishaps before or as fast as they occur. eHub’s efficient system of securing supply availability and on-time shipments to customers helps drive down costs and inventory levels while increasing supply chain productivity.

How It Works
eHub is a data-sharing network, extracting information from Cisco’s supply chain partners’ operational systems, and provides a transparent view of inter-enterprise supply chain planning and execution processes. Using the internet, relational databases, and advance planning tools, eHub connects different systems to provide real time information flow. By aggregating and analyzing this extracted data, it gives users early warnings on supply chain issues , flexible on-demand report generation and analysis of supply chain activities. eHub uses alerts and escalation mechanisms via email or...

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