Not Mine

Part 5

Integration Issues

Case 24 Case 25 Case 26 Case 27 Case 28 Case 29 Cisco Systems: The Supply Chain Story Deutsche Post World Net: Leveraging Procurement Savings with Performance Measures Genexis and the Brazilian Pharmaceutical Industry The Peanutty Food & Co. Supply Chain Siemens Logistics and Assembly Systems: Implementing a Supply Risk Management System Managing Supply Chain Complexity in a Tea Manufacturing Company

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C i s c o Sy s t e m s : The Supply Chain Story1

A Company in Trouble

In August 2001, the San Jose, California-based, computer-networking company Cisco Systems Inc. surprised industry observers by announcing its first ever negative earnings in more than a decade. In the third quarter of fiscal 2001, the company’s sales had decreased by 30%. Cisco had to write off inventory worth U.S. $2.2 billion and lay off 8,500 people. By the end of 2001, the market capitalization of the company was down to U.S. $154 billion and per employee profit was U.S. $240,000 (down from U.S. $700,000 in 2000). This was in sharp contrast to the situation in early 2000, when Cisco was one of the most successful companies in the Internet world with a market capitalization of U.S. $579 billion.

Cisco—The Networked Supply Chain

Cisco was founded in 1984 by a group of computer scientists at Stanford. They designed an operating software called IOS (Internet Operating System) that could route streams of data from one computer to another. The software was loaded into a box containing microprocessors specially designed for routing. This was the router, a machine that made Cisco a hugely successful venture over the next two decades. In 1985, the company started a customer support site through which customers could download software and also upgrade the downloaded software. It also provided technical support through e-mail to its customers. By 1991, Cisco’s support center was receiving around 3,000 calls a month. This figure increased to 12,000 by...