Founded in 1984 and headquartered in San Jose, California, Cisco
is a technology conglomerate that specializes in the provision of networking
solutions that connect people, computer networks, and computing devices. These
networking solutions allow individuals and institutions to freely transfer or
access information regardless of the distance, type of computer system they are
using and time differences that exist between them. Even though the company
began as a developer and seller of network nodes, it has grown over time to
increase its product portfolio to over 300. Moreover, the company today hosts
more than 85% of the world’s internet traffic on its systems (“Who is Cisco,”
n.d.). “How Cisco Transformed Its Supply Chain,” (2014) ascribes this tremendous
growth to numerous acquisitions that have been ongoing since its inception.

Cisco has for the longest time deployed the configure-to-order
(CTO) production model in its manufacturing endeavors. Under this approach,
consumers forward their orders to Cisco specifying the requirements that they
would wish to see on a product. The company then builds the product in
conformity with the buyer’s specifications. Productivity and supply chain under
this model are agile and only takes place at the reception of orders. But since
it began acquiring other companies, Cisco complicated its supply chain when it
chose to allow some of the newly-acquired firms to continue using their
processes and supply chains rather than integrating them into its core
operations even after the acquisition. A notable example was that of Scientific
Atlanta in 2005. Unlike Cisco, Scientific Atlanta used the build-to-stock (BTS)
production model whereby goods would be produced and held in inventory to meet
the demand in the market
as orders came in. Having Scientific Atlanta on
board meant using two different supply chains as CTO, and BTS production models
required raw materials supplied at different times.

Many acquisitions meant Cisco had to adopt different supply
chains to suit the various production models of the acquired firms. By 2014,
Cisco had more than 1000 suppliers and an incredible supply chain that involved
4 BTS sites, more than 25,000 product IDs (PIDs), 16 manufacturing sites using
the CTO model, and 8 strategic logistics center (“How Cisco Transformed Its
Supply Chain,” 2014). Additionally, the company had to make millions of
shipments every year. The management realized that the supply chain was
relatively long and complicated and wanted to simplify it and make it less
costly. This paper examines the challenge that a long supply chain posed to
Cisco and the issues that arose out of the transformation.

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Cisco’s continued acquisition and failure to integrate the
supply chains of the acquired firms into its core operations eventually led it
to the 11i version of Oracle e-Business Suite. The Oracle had over “2,500
customizations, 30,000 custom data objects, 250 custom applications, and 19
separate databases” (“How Cisco Transformed Its Supply Chain,” 2014). This
overly tailored and complicated supply chain proved costly at a critical moment
when the company wanted to enhance its agility and increase the scale of
operation. The enterprise IT, on the one hand, could not respond hastily to the
business requirements of the supply chain, leading to delays in the production
process. The business, on the other hand, could not react speedily to the
transitions in the market, leading to opportunity loss. Cisco customers’
experience consequently worsened, productivity was
substantially hampered, and scalability was close to being branded
impossibility. The supply chain definitely needed streamlining before the
thought of increasing the business’s scale of operation could become feasible.
It was for this reason that the company’s Chief Information Officer (CIO)
launched three strategic priorities in 2012.


and Recommendation


Cisco’s decision to acquire other networking firms without
integrating their supply chains into its core operations proved to be costly at
a time when it wanted to increase its agility and scalability. The many supply
chains of the various acquired firms had significantly lowered the response
time of IT and the business to the requirements and conditions in the market.
It became critical for the business to, first of all, optimize its supply chain
before it could enhance its business scale and agility. In early 2012, the
company’s CIO kick-started the supply chain transformation agenda by allocating
sufficient resources to three strategic priorities that entailed improving
country enablement, decommissioning the company’s San Jose data center and
integrating the Service Provider Video Group.

Cisco’s supply chain optimization endeavors were fruitful
because as early as 2014, the company had already started feeling the positive
effects of the transformation. San Jose’s data center was decommissioned fully
to a highly resilient Oracle R12 data center in Richardson, Texas.
Decommissioning protected data availability and uptime if one center broke
down. The company moved all the supply chain processes to this center. Also,
BTS and business-to-business models were integrated into one supply chain
management system – a move that substantially reduced the complexity of
operations and infrastructure. This streamlined supply chain significantly
shrunk the time of adding a new factory by three times from
18 to 6 months. It also reduced the marketing time from 30 to 50% (“How Cisco
Transformed Its Supply Chain,” 2014). Also, the new supply chain has made it
easy for Cisco to move into new and emerging world markets. Last but not least,
it has made the acquisition process more rapid, meaning Cisco can now grow at a
faster rate than it used to do in the previous years.

Even though Cisco has successfully managed to transform its
supply chain and enhance service delivery and customer experience, it is worth
pointing out that there is still enough room for it to further improve its
supply chain by embracing the Internet of Things (IoT). Rather than depend on
step-by-step processes, this technology conglomerate can rely entirely on data
to inform its production and inventory decisions. The IoT is advantageous over
the conventional supply chain optimization levers because it requires less
investment and costs and takes lesser time to bring results. The IoT will
notably transform Cisco’s inventory management.

Tracing inventory is still likely to cause Cisco problems
especially now that both BTS and CTO production models are in use. What appears
in records as far as stocking is concerned may fail to match with what is
physically available, and unless the discrepancy is noted and corrective
measure taken promptly, Cisco will never produce the right quantities to match
the demand in the market. Since the IoT has sensory capabilities, it will
always provide accurate data regarding inventory figures, thereby informing the
company’s production department. Also, the IoT will give exact numbers concerning
the demand for Cisco’s products in the market. The company can then compare this with the stock available and determine whether to manufacture
more or not. The company’s supply chain reaction to inventory changes will thus
be more real-time when the IoT is deployed than it is at the moment.
Additionally, it will satisfy the customers more as products will be available
always as and when they need them. Hence Cisco should consider integrating the
IoT in its supply chain.



















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