Introduction
The case deals with the problems faced in the electronics industry by Cisco, the risks of supply chain and the ways to manage them. Customers require that he should get the product he wants as soon as possible without the quality of the product is compromised. Cisco has the target to respond to customer requirements as soon as possible.Due to the globalization and outsourcing model of Ciscos’ supply chain, it has faced supply chain risks which they have tried to solve.
Various supply chain concepts have been applied by Cisco such as Cisco Lean and the Just in Time manufacturing.The Cisco Lean method allows a company to develop customer products on order. However, it requires a company to maintain low inventory levels, fewer supplier and the development of customers’ customized orders through the utilization of standard components.
Finally, the internal and external risks of supply chain are discussed. Internal risks refer to the internal supply chain risk which a can be solved through process orientation, prevention, monitoring supply chain key nodes and visibility. External risks arise from the organization's exposure to the external environment such as natural hazards, foreign exchange risks, and adverse tax consequences and so on.
Initially, the incidents used to happen and then actions were taken to encounter them. However, nowadays companies are taking a proactive approach to resolve the problems.
Case Study Summary
Cisco is the company which supplies different range of electronic products and provides IT services. It invests highly in Research and development to develop new products and technologies. It has also made joint agreements with companies to collaborate on different projects. It has also acquired companies all over the world approximately 160 companies in 10 years.
The supply chain of Cisco is affected by outsourcing and the globalization. Therefore, they have tried it best to structure in a way that would boost efficiency. Cisco Lean and Just in Time are two approaches taken by the company. They required Cisco to reduce inventory, reduce lead times and manage customer requirements related to quality of products and services and their delivery to customers.
Cisco has threats to its supply chain through internal and external sources. Internal sources include contingencies inside the supply chain while external sources include adverse foreign exchange movement, adverse tax affects and natural disasters.
Initially, the approach to supply chain risk management includes reactive approach. This strategy involves taking action after the incident has happened that is risk mitigation. It includes collecting information about the impacts of disasters such as earthquake after it has taken place.Another approach involves proactive approach to solve problems before it takes place. Both these approaches were inadequate to resolve challenges faced by Cisco, therefore they adopted “resilience management innovation” approach. This approach is a combination of reactive and proactive approach to solve problems.
Japan has been affected by 9.0 magnitude earthquake and the management of Cisco is concerned about its effects on the supply chain systems. It was decided that immediate action should be taken to counter its affects. The objectives were to guarantee the continuity of supply chain, the lowest impact on supply chain as well as the financial performance.
“Resilient management approach” was taken to minimize the impact of earthquake on Cisco. In 12 hours, the impact of the events in all of our suppliers from tier-1 to raw materials were identified. The information about the sequence of the incident was collected. Due to the efforts of building proactive resiliency, they were able to provide visibility of sub-tier risk. Customer value teams were positioned to liaise with customers, assessing the customer footprints. This resulted in 118 inquiries each managed with 24 hour response time. Overall result was the conclusion that there would be no negative affect on revenue.
Has the supply chain risk management implemented after the tsunami in Japan resulted in positive outcomes? What worked and what did not? Why?
The incident of Tsunami affected the operations of Cisco adversely. In order to encounter the supply chain management problems resulted from an earthquake in Japan, they followed the strategy of “resiliency management program”. Due to the efforts they madeit, they were able to identify all the suppliers in the region which was impacted. They were able to determine the ways the suppliers were affected and initiated plans to solve their issues such as the capacity of manufacturers, raw material providers and suppliers. The proactive approach enabled them toact properly and within the time so that their customers can be satisfied..................
Cisco Systems IncSupply chain risk management system Case Solution
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