As well as making the supply chain more flexible and responsive, adopting e-business methods allows a greater focus on core expertise and partnership
At Cisco we are moving away from traditional models, and focusing on applying technology to our manufacturing methods. We have taken all the paper transactions out of our supply and procurement process. We never see an invoice – both the request and payment are made electronically.
In Europe alone, 95% of our orders are placed electronically. We have a method called dynamic replenishment, which means the clients themselves monitor our inventory levels, and they replenish based upon the forecasted information given to them. We also have a new product introduction process, whereby both the research and development engineers and the manufacturers can participate in the design of a particular product.
There is a dramatic cost reduction in this process and a higher level of responsiveness, so the entire chain is more flexible, and has greater capacity. Because information is shared and transferred really dynamically, we are more able to accurately plan for sequential year-on-year growth. Quality is another area in which we benefit. We have a system called Autotest, which is run off our own systems but can be accessed from third-party sites, and is a quality control process for all our manufactured goods.
In terms of being more competitive, the first priority is our ability to meet market and customer requirements. The second is that we have the capability to invest more in our business models and service to our customers because we’re operating more efficiently.
E-business allows us to focus on key areas of the manufacturing process where we can add core expertise ourselves. Once the quality standards are in place through our Autotest procedure, and Cisco cannot add any additional value, it makes sense to set up a relationship with a mass-volume partner and leverage their capacity. We also try to leverage existing packaged software applications, because there is not necessarily an advantage in trying to develop your own. You can sometimes move much quicker and get the functionality you are looking for by buying a packaged application.
Third, we will frequently use consulting partners, to help us execute on a shorter timescale, and recognise business efficiencies earlier on. It is down to identifying complementary business strategies, and allowing people who have the expertise to use it while you implement your own strategy.
Biggest constraint: A skills shortage of people in the marketplace. Companies should invest in education and the creation of extended communities within educational institutions to build awareness of the job opportunities for people moving into the market.
Biggest push-factor: A rapidly changing market environment. No matter what industry you are in, technology has changed the threshold of how you need to run your business in order to be successful, and as you look at whatever market you’re in, that market will change.
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