Ciscois a company based in California. The computer networking company wasstarted in the year 1984 by a group of computer scientists. Since itsinception, the company had never posted a loss until the year 2001.This forced the company to lay off 8500 workers and sell inventoryworth $ 2.2 billion.
Thecompany designed the router that allows computers to share data. Thisdevice made the company one of the most successful company’s in theInternet world. In order to widen its market share, the companyintroduced applications that would allow its customers to orderproducts directly from its website. The information would then betransferred to third party companies (via the ERP system) that hadbeen hired by Cisco to manufacture their products. This helped thecompany to save $ 12 million annually.
Oneof the major issues that led to the downfall of the company is that,out of 40 facilities that were manufactured its products the companyonly owned two of them. In order to control the manufacturingprocess, the company would have invested in their own manufacturingfacilities. Owning at least half of the manufacturing facilitieswould have helped the company control the manufacturing process. Thecompany would also make sure it had representatives in thosemanufacturing facilities to make sure the company’s interests wereprotected. Another alternative would have been set strict standardsthat their manufacturing companies would meet.
Thedistribution system is always important to any company. In this case,Cisco had no control over the distribution of its products to thefinal consumer. The company should have looked at ways to work withthe distributing company to ensure that goods reached their consumerson time. Taking into consideration that the company was making hugeprofits, the company should have channeled some its profits todevelop their distribution system. Another alternative would haveinvolved at least half of the distribution system.
Thecompanies that Cisco had contracted to assemble their products,relied on other subcontractors who in turn relied on othersubcontractors scattered all over the world. The company should havetried to eliminate the second tier of subcontractors by purchasingthe components and supplying them to their subcontractors. Anotheralternative would have been to create a network system that wouldallow the first and second tier subcontractors to work together.Another alternative would have involved taking over the entiremanufacturing process and start manufacturing their products.
Thecompany should have made sure that it owned about half of themanufacturing facilities. This would have enabled them to control themanufacturing process instead of relying on third party manufacturesentirely. This would have helped reduce the backlog of customerrequests that the company had been experiencing (Shah,2009).
Thecompany should have been having representatives working closely withthe companies that were charged with the task of distributingproducts to their customers. This would have helped the companynotice any, arising issues and address them while at their earlystages to avoid disaster. This would also have gone way to reduce thebacklog that the company experienced.
Ciscoshould have eliminated the second tier subcontractors. They shouldhave taken their initiative and purchased these components for theirmanufactures. This would have helped reduce the amount of time ittook to assemble customer products (Coyle,2009).
Inorder to implement the above alternatives, the company should set abudget to support the new structures. The company would also beforced to carry out education forums to help their employeesunderstand the new system.
Inorder to evaluate whether the new systems were working, the companywould be forced to do an audit of the whole system. This would helpthem know whether the new systems are working and if not, whatchanges should be done to the initial suggestions(Boyer& Verma, 2010).
Boyer,K. K., & Verma, R. (2010). Operations& supply chain management for the 21st century (Student ed.). Mason, OH: South-Western.
Coyle,J. J. (2009). Supplychain management: a logistics perspective(8e [ed.] ed.). Mason, OH: South-Western Cengage Learning.
Shah,J. (2009). Supplychain management: text and cases.Upper Saddle River, N.J.: Pearson Education.