The changes
in the telecommunications industry offer exciting opportunities for Network
Equipment providers such as Cisco, Huawei and others. NEPs can offer additional
services. With it, however, comes also the need to improve their supply chains.
Cisco drove
a major transformation initiative in 2014 that provides good learnings for
other NEPs to do likewise. Here, I summarize key Cisco methodology and best
practices:
Cisco, with
more than 300 product families provides a wide range of products to a wide
spectrum of customers with vastly different expectations and fulfillment
requirements. Further, Cisco needs to integrate a steady flow of new acquisitions
– all coming with their own operations, supply chain requirements and
processes.
Most Cisco
products use a configure-to-order (CTO) production model, but also
build-to-stock (BTS) production model.
Cisco’s
challenge has been integrate separate supply chain processes and enterprise resource
planning (ERP) systems.
Cisco
supply chain at that time encompassed 16 CTO manufacturing, 4 BTS sites and 8
strategic logistics centers. Cisco had 25,000 plus orderable product IDs and
PIDs (25 % assemble-to-order and 75 percent spares) with about 9 million
cartons shipped in six months ending March 2014.
Cisco
wanted to increase the business scale and agility of its supply chain. It had
to improve country enablement (ability to set up subsidiaries or branches to
enable scale of products, services, and solutions at competitive prices).
Further it had to decommission Cisco data center and integrate the Service
Provider Video Technology Group.
From the
beginning Cisco focused on business results, focusing on business requirements
and capabilities needed to support them. Business and IT worked side by side
physically.
Cisco
deployed the BOST reference framework, a methodology that brings business and
technology architecture together, which helped understanding business processes
(such as delivery and shipping) and transferring those to the supply chain. The
BOST Framework provides a superstructure for enterprise models, their elements
and relationships. It key areas are as follow:
Cisco
assessed major end-to-end supply chain (from demand & supply planning to
scheduling, managing order backlogs, communicating with partners and delivering
products to customers) against existing outsources manufacturing and logistics
processes.
After three
months, the team had crafted a set of business processes at a high level, scope
of the program, transformation plan and changes required.
Cisco IT
re-engineered and automated several processes and new capabilities throughout
the supply chain and consolidated to a single global ERP. Cisco aligned all
IT-Enabled Capabilities with the business requirements.
Cisco’s
Supply Chain program composed of IT, business stakeholders and subject-matter
experts throughout the supply chain organization. The executive steering
committee set the strategic direction, reviewed and approved the portfolio roadmap
and managed resources. The operating committee maintained the consolidated
roadmap, escalated funding recommendations and developed operational scenarios.
The program management office maintained planned-versus-actual results,
governed projects and resolved issues.
The
training team used several communication methods to prepare the organization
for each set of release and corresponding functionality. Different methods
included instructor-led training (to communicate complex process changes), Web-based
training for large, regionally dispersed groups (used for content not likely to
change), short centrally stored reference guides (to describe low-impact,
system-specific changes) and video-on-demand recordings of instructor-led
sessions or SME training.
Specific
results achieved:
- Time to add a new factory shrunk from 18 to 6 months
- 30 to 50 percent reduction in time to market
- Up to 73 percent reduction in order cycle times
- About 25 percent reduction in manual product touches
- 30 to 50 percent reduction in support costs
- 12 percent target reduction in cost-to-serve ratio
Overall
improvements:
- Rapidly set up legal entities in new markets
- End-to-end business capabilities and processes
- Local regulations and practices compliances
- Flexibility in offering commerce models, sourcing and delivery options, ability to handle whole offer
- Rapid acquisition integration (leverage BTS and CTO) production models
- Efficient B2B model with Cisco manufacturing partners with simplified fulfillment processes and infrastructure
- Flexibility to ship directly from manufacturing site to customer; freight savings
- Intelligent scheduling: Ability to see material availability at a detailed assembly level across the whole supply network
- Improved customer and partner experience.
- For customers: Visibility of status throughout order cycles; better lead times due to node reductions; shorter time to delivery; better synchronization of demand and supply; order and invoice accuracy.
- For partners:
- Smooth integration of partners through Cisco Commerce Workspace
- Improved collaboration, product life cycle management services with flexible deployment options
Summary: Transferrable learnings and advice for
other Network Equipment Providers.
- Secure executive support, focus and commitment upfront and explain benefits, change impacts and risks with senior management clearly and early.
- Seek cross-organizational sponsorship to help overcome roadmap hurdles and customer concerns.
- Establish dedicated program team to reduce employee burnout. Leverage subject-matter experts from functional groups as needed.
- Nurture strong partnerships with suppliers, manufacturers and logistical partners.
- Use collaboration technology such as synchronous and asynchronous video.
Last, but
not least, it is important that Network Equipment Providers think win-win and
build develop/ implement their programs in a sustainable way.
+++
To share your own thoughts or other best practices about this topic, please email me directly to alexwsteinberg (@) gmail.com.
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