Cisco s Digital Transformation Supply Chain for the Digital Age The Cisco Supply Chain: Global, Complex, and Diverse Cisco s global supply chain extends across 13 countries and more than 25 locations. This highly complex system includes more than 20,000 virtual teams, 700 suppliers, 3200 orders, and 220,000 items shipped daily. It is also is also very diverse, with more than 30,000 orderable items and 60,000 components. Each product is customized and configured to fit specific customer needs. Cisco s end-to-end supply chain consists of two major steps: development and fulfillment. Throughout the development phase, we innovate, plan, and source. Activities in this part of the supply chain include product operations, global planning and development, and global supplier management. In the fulfillment phase we make, ensure quality, and deliver our products. This step encompasses of manufacturing operations, technology and quality, and logistics operations. Security plays a key role across every process of our supply chain.
2 Cisco s Digital Transformation - Supply Chain for the Digital Age Why a Digital Supply Chain To optimize our supply chain, Cisco launched a digitization initiative. Cisco was seeking to: Improve productivity: After exhausting productivity gains from traditional methods such LEAN, Six Sigma and other efficiency inititatives, Cisco wanted to find new ways to break away from these nominal gains. Company transformation: As Cisco s focus moved from hardware sales to software sales, our supply chain needed to evolve to support this transformation. Enhance agility and scalability: As the pace of change accelerated in markets, government regulations, customer needs and industry disruptions, the scale of our supply chain needed to adapt quickly to meet these shifts. Agility became essential to our operations. Rapidly extend a global reach: As Cisco s supply chain became more global, enabling collaboration between different players became even more essential. Meet changing customer expectations: Cisco customers moved from viewing us as a supplier of hardware to a partner who provides solutions. To keep pace with these changing expectations, Cisco needed to redouble its focus on delivering the highest customer satisfaction. Support new innovation: Cisco had to strategize to support new innovation across a wide range of new technologies. Click for more
3 Cisco s Digital Transformation - Supply Chain for the Digital Age Cisco s Supply Chain Digitization Journey Cisco began its supply chain digitization initiative seven years ago. For the first three years, we focused on our systems and processes foundation. We upgraded our enterprise resource planning (ERP) and product data management (PDM) systems. Cisco also combined multiple processes and systems into a single system. During the three years that followed, we focused on our data and analytics foundation. We used technology such as collaboration, IoT, mobility, Big Data and cloud to provide real time visibility and predictive, prescriptive analytics. Cisco continues to focus on orchestration as well, using machine learning and automated decision making.
4 Cisco s Digital Transformation - Supply Chain for the Digital Age Enabling New Use Cases Technology enabled Cisco to fully digitize our supply chain, and set the stage for a variety of new use cases. 3D Printing Prototypes can cost thousands of dollars, but Cisco is sidestepping many of these costs using 3D printing. 3D printers make three-dimensional objects out of a variety of materials (including chocolate, metal, and all sorts of plastics) by adding layers of material until the desired object is finished. It does so in only a few hours, instead of two to four weeks required by traditional methods. With 3D printing, Cisco can create product prototypes in half the time, at one-third the cost of prior methods. The technology dramatically enhances Cisco s innovation potential, and our ability to improve our products and services. Prototype Portal Sharing information and collaborating on prototype builds was challenging under Cisco s past processes. Developers employed a mixture of web tools, emails, and spreadsheet files. Without a single platform for communication, it was hard to track progress and difficult to extract correct information rapidly. As part of its new initiative, Cisco has created a single portal for product teams to communicate about prototype planning, material sourcing, and building. The portal eliminates the need for email and spreadsheet-based status reporting, and provides real-time visibility that helps Cisco get products to market faster. Supplier Collaboration Platform Cisco lacked a single platform to manage global suppliers, which impaired visibility into supply and demand. To increase collaboration among multiple suppliers and partners across our global supply chain, Cisco created a cloud-based supplier collaboration platform. It provides an integrated view of all supply network data in a single platform with clear, role-based access to users. The platform emables quick identification and proactive issue resolution, while improving visibility into inventory movement and excesses and shortages. Cisco s supplier collaboration platform has led to a seven percent improvement in product lead time, and has mitigated 70 percent of shortage issues. Business Award Analytics and Optimization Cisco s previous component quoting process was slow, serial, and static. Quotes were manually launched, negotiations occurred offline, and responses were uploaded. To renegotiate after award, an entirely new quote needed to be manually launched, and the process started all over again. The system offered no visibility to quote status or in-flight spend and savings. Cisco created a negotiation platform that leverages a rules-based engine, predictive analytics, and cutting edge IT technology to improve savings for a portfolio that consists of over 100,000 parts and 700 suppliers. The platform supports automatic negotiation that can be configured, enabling dynamic and collaborative negotiation cycles. The platform also provides continuously updated dashboards for visibility of in-flight negotiations metrics. Users can employ a variety of filters to effectively sort, isolate, and respond to negotiations. Suppliers can manage their portfolios more effectively with access to historical data and key performance indicators. The new platform reduces data entry, and offers intelligent quote response capabilities that identify errors and suggest corrections.
5 Cisco s Digital Transformation - Supply Chain for the Digital Age Cisco Energy Management Like many of today s environmentally-conscious organizations, Cisco wanted better oversight of carbon emission output, improved visibility into energy use, and more control over energy costs. Its energy management solution helps Cisco monitor energy usage, gain greater insight, and better manage factory power consumption. It also monitors the energy usage for these panels and sends real-time alerts in the event of unusual activity. The solution is saving Cisco millions in annual power costs and has reduced power consumption by 30 percent. It also helps reduce greenhouse gas emissions. Remote Experts Remote experts in manufacturing are different than those in other industries like banking and retail. In those industries, multiple locations call into a single location where a pool of experts are aggregated like a call center. Manufacturers employ the opposite approach, with a centralized facility with experts distributed across buildings, states, companies, and even countries. Manufacturing employees are not desk-bound, and they need to be able to reach experts quickly to understand issues at the shop floor and resolve production issues fast. With Cisco s remote expert solution enables distributed teams to address issues in real-time and makes it easy to apply that knowledge to resolve future issues. The solution also reduces the need for on-site support. Adaptive Testing To improve quality, Cisco wanted to reduce test equipment costs and tailor product tests. Cisco created adaptive testing technology that uses predictive and prescriptive analytics to track historical product and component test quality data. This helped indicate which tests should be increased, reduced, or eliminated. It also helped enabled Cisco and suppliers to tailor tests to customer needs and adapt in real time. Adaptive testing has helped Cisco reduce test times by five to 19 percent, save $17 million in capital cost savings, and enhance continuous quality improvement. Connected Quality Cockpit Cisco wanted to create a single platform that provided overall information about quality. So, Cisco created a connected quality cockpit where all quality data was brought together into a single cockpit view. This helped reduce customer-found defects and customer escalations. Together, this helped reduce returns by 11 percent and saved $3.6 million in avoidable RMAs. It also helps reduce hardware customer escalations by 30 percent. Universal Order Visibility Cisco wanted to reduce unwanted time spent trying to identify issue holding up an order. Universal order visibility tracks orders in real timer and creates near real-time order visibility dashboard views across supply chain for faster root cause analysis. It provides single source of truth for all users by getting all the data together in one place for PCs and mobile. It reduced manually scheduled orders by 20 percent, improved order schedule time to less than two days and helped reduce backlog by 33 percent.
6 Cisco s Digital Transformation - Supply Chain for the Digital Age Hyperlocation Cisco introduced Hyperlocation, which provides the ability to track the location, status, and condition of mobile assets, people, and inventory. This capability enables process re-engineering to increase efficiency and better protect people and equipment. It also helps lower inventory costs and reduces cycle time. Pervasive Video Cisco has installed pervasive video throughout its factories to track material moving from one place to another. It secures restricted areas by providing access through facial recognition. It provides overall surveillance across the factory and warehouse, and notifies about any hazards or danger. Pervasive video enhances employee safety and security and helps Cisco realign resources to improve utilization. It also helps enhance continuous quality improvements. Securing Cisco s Supply Chain Security is at the forefront of everything we do in supply chain operations. Verified conformity to Cisco s security requirements by all manufacturing, logistic partners and suppliers of custom components helps prevent breaches or loss of IP. Cisco strives to balance risk and protection with operational agility and financial considerations. Our digitization initiative has created an environment where supply chain operations personnel and our partners possess operating knowledge of their responsibilities to protect Cisco IP. Teams are trained and empowered to drive security culture, adherence to standards, and identify threats. Operational Framework Cisco has enhanced its operational framework to dramatically improve comformity, balance, and knowledge of security across the supply chain. Global policy and requirements: Cisco performs annual audits and refresh of partner security requirements to ensure ongoing relevancy. New policy requirements also focus on simplification of content (mandatory vs. recommended standards) and delivery. Analytics and compliance visibility: Real time analysis capabilities identify critical risk areas by partners, regions, and sites to help drive project focus. Dashboards are translated to scorecards, and Cisco has introduced a documented escalation path of repercussions for non-compliance. Holistic controls process: Cisco incorporates a risk-based approach to our annual audit selections and rotates subsets of security questions in our quarterly audits. We leverage online audits and self assessments to touch every site.
7 Cisco s Digital Transformation - Supply Chain for the Digital Age Benefits of Supply Chain Digitization Digitization has enabled Cisco s supply chain to become more efficient and aligned, while improving visibility. Together, our efforts have increased productivity by 35 percent, and saved 40 percent on capital expenditures. Cisco has enhanced visibility to our material supplies from once a week to four times a week. As a result, we ve improved our ability to meet customer delivery commitments by five to ten percent in terms of scheduled lead time. Cisco Can Help You Transform Your Supply Chain Cisco has accomplished much on its digital business journey, and is continuing to build new capabilities every day. We re ready to apply the lessons we have learned to help our customers transform their own organizations. No matter where you are in your digital transformation journey, Cisco can help you build a digital-ready infrastructure that is intuitive, contextual, automated, and secure. Let Cisco help you reimagine your business and accelerate your organization s digital transformation. Visit www.cisco.com/go/digital to learn more.