Founded in 1984, Cisco Systems Inc. 's main product is the “router”, a combination hard and software that performs like a traffic cop on complex TCP/IP networks which comprise the Internet.
Through the popularity of the Internet and its accompanying technologies, demand for Cisco products escalated making the company the most dominant influence in its market. Soon, Cisco created (i) a customer support site wherein customers downloaded software over a File Transfer Protocol, (ii) built a support center, (iii) installed a database reporting bugs, and (iv) built a customer support system on its Web site.Cisco's customers' orders were stored in its Enterprise Resource Planning database. Customers have to fully comprehend what ERP is befor using the system. The key to ERP implementation is speed. The faster it is implemented the quicker and better the results.
IT managers who oversee the ERP implementation of their companies consider their ERP systems as the most “strategic computing platform. ” However, despite its “strategic importance”, ERP projects have an extraordinarily high failure rate, and Cisco is an ideal example.Cisco's ERP implementation provided benefits: it ensured briefer engineering to production cycle periods thus enhancing market share; ensured designing and revamping products as a response to market demand; and ensured high product quality through outsourcing. Analysts believe that the flaws in Cisco's system contributed significantly to its crash. After a decade of operations, Cisco had its products made only by contracted manufacturers, with the company shipping fully-assembled machines directly, from the factory to its buyers.
This created problems later on. CMR The same analysts say that Cisco's supply chain was built like a pyramid. The central point was the company, the second tier was made up of the contract manufacturers responsible for final assembly, that in turn had their own contractors, scattered internationally. Cisco amassed huge quantities of supplies to prevent shortage, which eventually led to an inventory pile up.
Its sales forecast became falsely inflated because of overlapping orders customers made with Cisco's competitors.Because Cisco was bound to honor its transactions and commitments, it soon got entangled with a cycle of falsely inflated high demand for components, high costs and a worsening communication gap in its supply chain. 8 The analysts conclude that Cisco's ERP implementation failed to make a contingency plan in case “growth” was taken out of its forecasts. The analysts said that if only Cisco attempted to “run modest declining demand models”, then it could have foreseen the consequences of storing up too much inventory.
Cisco should never have assumed that “growth” would be constant.Bibliographyhttp://www.icmrindia.org/free%20resources/casestudies/cisco-supply-chain-3.htm
