Cisco Systems, Inc.

:
Collaborating on New
Product Introduction
Supply Chain Strategy
2014

| Fall

Chiyul Song, 2014-4076

Christine Barrera, 20144282
Matthieu Lebigre, 20146471

I. Company Background

1984

2000

Len Bosack & Sandy Lerner invented

the multi-protocol router
worlds most valuable company
$500 billion dollar market capitalization

2002-2008
Routers; 25%
Advanced Technologies; 29%
Switches; 45%

13.1% revenue increase annually

Fully global operating in 120 countries with

61,535 employees and 40 business units
Overlapping circles organized both
vertically and horizontally
Collaborative, cross functional organization
Collaborative Leadership
Collaborative Technologies
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II. Supply Chain and New Product Introduction

Supply Chain

Globally networked and adaptive

Outsource all manufacturing and
focus on product design and
development
Partners have increased
responsibility
Reduction of contract manufacturers
MX-Initiative
Major aspirational improvements
rather than incremental changes
Cisco Lean
pull product is built only after
customer ordered it
Auto-test System
Real-time data of facilities from
contract manufacturers

New Product Introduction

Concept Commit
Execute Commit

Phase 1:
Strategy and
Planning

Prototyping

Final Technical Readiness

Review

Phase 2:
Execution

Pilot Build

Orderability Review
First Customer Shipment
Time to Quality and Volume

Phase 3:
Deployment

Post-Project Assessment
3

III. Viking Project

Demand for product that can handle the demands of video, which used more
bandwidth than other type of data

New Product Introduction

ASR 9000
Edge router platform for the next 10-15
years

High speed
High capacity
Compact
Footprint
Power efficiency
Low costs per connection
Ability to scale up routers capacity

Challenges
1.
2.
3.
4.

Accelerated Schedule
Low Cost Pressure
Handling of Technical Complexity by Contract Manufacturer
New Product Introduction Expertise
4

Q1. What are the challenges and risks faced by technology companies in new
product development?

Uniqueness
Product should have features that other existing
products doesnt have
Technological Innovations
Risk of investing in a form of technology that might be
obsolete soon
Market Potential
Demand for this product should exist
Time
Product should be introduced at a time when there is a
need for this product.
Competition
Awareness of similar products developed by competitors
Production
How to make the product prototyping/testing
Pricing
Right pricing against competitors products
Promotion
Determine the best promotion techniques for greater
longevity in the market
5

Q2. What were the risks and benefits of using Chinese contract manufacturing
from the start?

Cost Pressure

Chinese
contract
manufacturing

Demand for a fully advanced but

cost-effective product
Emerging markets were the fastest
growing part of Ciscos business

Risks

Unable to handle the routers

technical complexity
Fall short on quality, reliability and ontime delivery

Benefits

>> No room for error for carrier-class

products

Low-cost Production
Avoiding transition to another
manufacturing site saves time,
money and effort
Long-term possibility of using China
as manufacturing base.

Q3. In selecting Foxconn and expanding its role in the supply chain, what were
the potential risks and values to Cisco?
Selecting Foxconn is a high-risk high-reward decision.

Strengths

High-Level of Vertical Integration

Deep experience in procuring
components
Extended supply chain concentrated
in Asia

Weaknesses

Lack of Experience
Might be unable to handle
complexity
Just passed Level 3
Qualification

Q3. In selecting Foxconn and expanding its role in the supply chain, what were
the potential risks and values to Cisco?

Benefits

Vertical Integration benefits

Flexible, responsive, efficient
Lower costs
Reduced inventory
Eliminate price markups
Easier logistics (save shipping
time)
Ability to react more quickly to
market demand shifts (shorter
lead time)
Simpler information flow
Easier coordination

Flexibility in Ciscos choice of

contract manufacturers in the future

Risks

Dependency on a single supplier

Miss out the chance to work with
suppliers which might be more
efficient
More devastating impact in case
of natural disaster, catastrophe
or poor performance

Q4. What should Cisco do to mitigate these risks and ensure successful
development and launch of the Viking router?
Risk-Mitigating Measures

design for manufacturability

Engaging supply chain partners
Early involvement of Foxconn in the development process
Cisco and Foxconn engineers collaboration
Transferring of knowledge
Movement of prototype making closer to manufacturing site
Production of more prototypes
Following strict schedule to produce more prototypes

Use of Technology

Ciscos WebEx webconferencing and TelePresence Teleconferencing System

NPI Metrics (web-based tool view of timelines and tasks)
Utilization of different time zones
Meetings 3 times a day
wiki site
Technology links
Logging in for testing and diagnostics

Effective Marketing

Pricing that would not disrupt 7600 router

Unique Promotions (blog, videos, games, articles)
9

Thank you!

10