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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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