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    Cisco Systems has an outsourced supply chain network. It outsources manufacturing to contract manufacturers and owns only 2 of its 40 facilities. It outsources product assembly, configuration, and distribution through suppliers, distributors, and partners. Cisco identified its core competency as product design. Outsourcing helped ensure quality while reducing costs. However, Cisco entered long-term contracts that led to a demand shortage, increased inventory levels, and a $2.2 billion inventory write-off. Cisco's reverse logistics process recovers products from customers and redeploys them, handling 30,000 units per week and recycling over 2 million pounds of material annually, contributing $100 million net annually.

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    Cisco Systems has an outsourced supply chain network. It outsources manufacturing to contract manufacturers and owns only 2 of its 40 facilities. It outsources product assembly, configuration, and distribution through suppliers, distributors, and partners. Cisco identified its core competency as product design. Outsourcing helped ensure quality while reducing costs. However, Cisco entered long-term contracts that led to a demand shortage, increased inventory levels, and a $2.2 billion inventory write-off. Cisco's reverse logistics process recovers products from customers and redeploys them, handling 30,000 units per week and recycling over 2 million pounds of material annually, contributing $100 million net annually.

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    5 views15 pages

    Cisco Systems-The Supply Chain Strategy

    Uploaded by

    Vikas Kumar Pandey
    Cisco Systems has an outsourced supply chain network. It outsources manufacturing to contract manufacturers and owns only 2 of its 40 facilities. It outsources product assembly, configuration, and distribution through suppliers, distributors, and partners. Cisco identified its core competency as product design. Outsourcing helped ensure quality while reducing costs. However, Cisco entered long-term contracts that led to a demand shortage, increased inventory levels, and a $2.2 billion inventory write-off. Cisco's reverse logistics process recovers products from customers and redeploys them, handling 30,000 units per week and recycling over 2 million pounds of material annually, contributing $100 million net annually.

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    of 15

    Cisco Systems- The Supply Chain Strategy

    BY: Aashish Pant B-64 Vikas Kumar B-54 Aditya Rathore B-70 Himank Bansal B-52 Anjani Mishra B-29

    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. customer credit.

    Receiving and disposition Manage discrepancy, Provide 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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