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Logistics and Supply Chain Management
Notes The customer order is then built and shipped from one of five manufacturing sites and
invoiced from the Amsterdam server. All of these servers combined provide Cisco with
four benefits: increased reliability, reduced risk of server failure, enhanced flexibility and
scalability of the ERP system, and a reduction in lead times from 4 weeks to 1. Solvik states
that Cisco’s entire Internet commerce initiative is based on a simple truth: “customers
prefer self-service.” To achieve a higher degree of self-service, Cisco was the first company
to integrate its website with an Oracle Applications ERP infrastructure. The Cisco
Connection Online (CCO) Internet site offers customers and suppliers global
communications with 49 pages of country- or region-specific support services and product
and contact information translated into 14 different languages. It operates with dedicated
server links located in Australia, China, France, Hong Kong, Japan, the Netherlands, and
South Korea that support 200 offices in 54 countries around the world.
Within the CCO is the “internet Product Centre” where customers can configure and place
orders; look up pricing, lead times, and order status; and access invoicing information.
This has reduced order entry cycle time from 1 week to less than 3 days. It has also reduced
order acknowledgment cycle time from 12 hours to 2 hours, with the goal of achieving
real time acknowledgment in the next 6 months. Cisco has the unique ability to process
billing in multiple currencies and manage tax and regulatory issues in every country
where it conducts business, yet consolidate financial performance based upon U.S. currency.
“The CCO allows the salesperson to focus on the strategic aspect of the relationship,” says
Solvik, “and improves responsiveness to the customer through automation of mundane
tasks.”
Thanks to the capabilities of its Oracle ERP infrastructure, Cisco has been able to add
outsourced manufacturing to its operations over the last 4 years. “Over 50 percent of the
units shipped are untouched by a Cisco factory or a Cisco employee,” Solvik says. “We
run our worldwide outsource factory across almost 50 suppliers entirely on Oracle
Manufacturing Applications.”
Cisco has also extended its communications throughout the supply chain to about 100
suppliers. “Now our component suppliers can bid against each other on a new product
over the Internet,” says Solvik. Changes in Bills of Materials are broadcast to suppliers
through the CCO site. “We’ve reduced the engineering change order cycle time from 25 to
10 days within the last four years.
This improves quality significantly and reduces inventory write-offs,” says Solvik. Most
important, Solvik can appreciate the benefits of a good relationship in dollars and cents.
“By adding together the benefits of electronic commerce, electronic self-service,
manufacturing initiatives, and a few [benefits] offered by the Internet, the annual
contribution to the company amounts to over $550 million from these top areas alone.”
Question
Analyse the case and write down the case facts.
Source: http:llwww.oracle.com/customers/sia/cisco.html.
6.9 Summary
Supply Chain information is a critical component of a firm’s ability to respond rapidly to
the end consumer demand in today’s highly competitive marketplace.
The transaction system is characterized by formalized rules, inter-functional
communications, a large volume of transactions, and an operational day-to-day focus.
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