Cisco Lean Systems Case Study
Cisco was able to drastically cut costs by reducing their number of contract manufacturers and vendors in its extended supply network. This made it less costly and simpler to manage suppliers which resulted in major cost saving on components.
Cisco also utilized information networks to collaborate with customers, contract manufacturers, and suppliers in the areas of demand management/ planning, product quality Improvement, and lean manufacturing. In 2006, Cisco took their cost focus further by Implementing a manufacturing model called Cisco Lean. This process was Intended to boost efficiency and flexibility. Cisco
Lean was a ‘pull model’ which means the product is not built until the customer has places the order. This reduced Coco’s inventory, increased predictability in lead times and on-time shipments, and simplified their processes.
2. Cisco manages to mitigate the conflicting objectives which arise from traditional supply chain management through integrated coordination efforts within Cisco, and with customers and supply chain partners. New product Introduction requires technical expertise as well as effective management to understand the market, translate the market’s needs into a product, and bring the product to the market In a imply manner.
Cisco manages to address these concerns through their NIP process which Involves three major stages: strategy and planning, execution, and deployment. This NIP process includes a series of checkpoints between each stage. The first checkpoint was ‘concept commit’, which ensures that a cross-functional team has approved a ‘product requirement document; and business plan to ensure sufficient resources for the product design specifications.
The second checkpoint was the ‘execute commit’ which ensures that the cross-functional team agrees on the design specifications.
Once design specifications have been agreed upon, the project begins the execution phase. During this phase, engineers develop prototypes; ‘design for manipulability Is the key to successful execution. The proposed prototypes endure a technical review readiness’ (TRY) which establishes manufacturing yields and quality metrics. Following the execution phase Is the ‘readability checkpoint which allows Cisco to ensure they’ll hit the targeted slipping date, meet demand expectations, and give suppliers enough foresight to meet production schedules.
The project now enters the deployment stage which includes first customer shipment’ Tallow Dye ten time to quality Ana volume’ component to analyze production yelled and costs. Cisco also ensures six-sigma quality during this checkpoint. The final stage of their NIP is the ‘post-production assessment’ to discuss lessons learned from the project. This multi-stage integration process which Cisco enacts during any new product introduction effectively addresses any possible risks that may arise during the roll of a new, complex project. . Cisco had to choose whether they would take the technical risk, resulting in the Viking lacking in the realm of technological complexity, or the cost risk, and tangentially find themselves stuck with costly suppliers and manufacturers.
Option A would have posed the potential risks of higher costs. Westchester made the argument that low-cost manufacturing required certain fundamental disciplines that were hard to teach. However, the benefits associated with Option A were the well- known technological capabilities.
The Viking Job required technological complexity of the highest quality and Option A was the best bet on this front. Cisco qualifies their suppliers under a three level system: level 1 indicates the simplest products and manufacturing processes, level 2 indicates a middle ground, ND level 3 indicates the most complex products and processes. Their previously contracted manufacturers, Flexibilities, Cabal, and Celestial, which would have been employed under ‘Option A’, all qualified as level 3 manufacturers.
4. Foxing offered many benefits to the production of the Viking.
Their manufacturing site offered a high degree of vertical integration; the entire Viking production would take place within a two hour radius. This higher degree of vertical integration makes manufacturing more flexible, responsive and efficient, resulting in lower costs, easier logistics, shorter lead times, simpler information flow, and easier ordination. Cisco would also be able to react quicker to fluctuations in customer orders through shorter lead times. The proximity of the manufacturing sites sharply cut transportation costs and saves days in shipping time.
It also reduced inventory needs, further saving them money that would otherwise be tied up in inventory. In the long-run, Cisco could benefit through utilizing Foxing by developing a lasting relationship. Foxhound’s success with the Viking would provide Cisco flexibility in the future in its choice of contract manufacturers for its high-end products. However, this option also came with risks. Cisco was putting all of their eggs in one basket with Foxing, and ran the risk of overconfidence on a single supplier.
If something were to happen to the Foxing site, their entire supply chain would have been drastically affected.
Another risk was the potential to miss out on the chance to use other suppliers that might have been more efficient or skilled than Foxing in certain steps of the manufacturing process. 5. Cisco began addressing potential risks associated with Foxing before they even partnered with them for the manufacturing began. Prior to awarding Foxing with the Viking contract, Cisco did a technical assessment f Foxing by asking them to build and run dozens of test circuit boards through their soldering, assemble, and other key processes. Once proving themselves technologically capable, Foxing realize teeny Ana equal interest in the success of the Viking project.
Success with the Viking router would set Foxing apart in their technological capabilities, solidifying their production facilities as a high-tech manufacturing site. Cisco and Foxing also engaged in contractual provisions and built-in processes to help manage their relationship risks on both sides. These contracts established cost targets, quality goals, pricing, materials argues, and timeliness.
Cisco went further to mitigate the risks associated with the Viking by getting supply chain partners involved early on to help simplify product design and manufacturing processes. Cisco contacted suppliers to seek feedback for designing a successful prototype. They called this ‘design for manipulability.
‘ Cisco also got Foxing closely involved early in development to help debug prototypes in the early stages of development. Cisco and Foxing followed a strict development schedule and sought to reduce any potential technological failure.