Sheldon Tsen Luke Cascone James Yardley Nik Zheleznikov Saika Akhtar Case Study Group 8 The Importance of Lead time Cisco systems Inc. and Electro-coatings ltd

Cisco Systems ltd Overview of the case study: Cisco designs, manufactures, and sells networking equipment Founded in 1985 and in 2000 was the most valuable company on the planet In May 2001 Cisco Systems had to write off $2.2 billion in inventory and dismiss 8500 people. Cisco blame it on maintaining relationships with supply chain partners and falls in technology spending In reality it was due to artificially inflated demand projections.

Cisco Systems Supply chain Initially had revered supply chain – ‘Networked Strategy’ –Used internet to create interactive relationships, linking the SC. –Manufacturers began to produce product within 15 minutes of order. –Led to reduction in inventories, labour and shipping costs saving $12m per year –This is beneficial only when it is accurate information communicated. P-time = Total production time D-time = Time customer is willing to wait

Real World Problems Initially component shortages led to long term contracts with suppliers. Communication and forecasting problems in the SC were recognised. Dec: Projected 50% annual growth June: Component shortages due to booming market Introduction of ‘Cisco Connection Online’ Introduction of ‘Integrated Commerce Solution’

CISCO - The Problem Years Component shortages Delayed delivery by up to 4 weeks P time > D time

Cisco: Failed Recovery Strategies Long term Contractual agreements with suppliers of scare components. Backflow of information through supply chain is of poor quality. An increase in Cisco’s inventory cycle by ~63%. e-Hub… too little, too late? $2.2Bn write down of inventory

Cisco: Wrapping up We have learned form Cisco that… communication is vital! How important will lead time reduction be in this supply chain in the near future?

Electro-Coating Ltd Electroplates parts for automotive industry In recent times, customer has become more demanding Internal reviews identified 12 key processes Goods In Book Jobs in Job Set up Degrease Etch Plate Heat Treat Polish Inspect Book Out Pack Dispatch

Electro-Coating Ltd Before Time Based Processed Mapping

Electro-Coating Ltd After

Electro-Coating Ltd

Goods In Give goods a work order number Write out route card Book Job In Give job a job card Put route card in progress rack Job Set Up Plan who will do job Sign off job card DegreaseEtchPlate Heat Treat Wait for oven to become available Wait to cool down Polish Wait for polish Inspection Wait for inspection Book Out Pack Note packaging job on whiteboard Dispatch Fill in TNT documentation Enter TNT number into system Non-Value Adding Activities

Not-so Fun Fact Thanks for listening!