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304 Chapter 11 • Supply Chain Management

3. Customer service: for after-sales nontechnical support and information.
4. Technical assistance and software library: to help IT staff and network administra-
tors in installation and maintenance.

MCO COMPONENTS
1. Access agent: real-time manufacturing information, including data on demand fore-
casts, inventory, and purchase orders.
2. Monitoring agent: customer orders and ship product, without them actually touch-
ing an order.
3. Payment agent: collects payments for the parts used by Cisco.

When taken together, these initiatives have had an immense impact on value creation. Cisco
estimates that its extended supply chain generated a total of $695 million in cost savings.
Cisco’s supply chain model has also provided scalability and agility that allow the company
to grow with incredible speed. In the intensely competitive market spaces occupied by Cisco
(i.e., where the timelines for new product introduction are counted in weeks rather than
months or years) the company’s ecosystem has become as great a core strategic capability as
its strengths in product design and marketing. In 2005, Cisco announced the demand-driven
supply chain (DDSC) solution, which links business applications throughout the supply
chain over Internet protocol (IP). The second solution of the Cisco intelligent networked
manufacturing strategy, the DDSC solution, enables customers better to integrate informa-
tion and processes spanning the entire manufacturing workflow. By providing a highly
secure visibility into the supply chain, customers can build in the flexibility needed in
today’s manufacturing world, meet expectations more efficiently, operate more profitably,
and respond to market dynamics and mandates. Cisco is currently launching, in a staged
approach, a manufacturing-focused product compliance review to be implemented through-
out its supply chain. According to V. P. Darendinger, Cisco vice president, “SCM includes
strategy development, business reviews, and scorecards, continuous improvement programs
and ongoing supply base classification processes.”
What do you think of Cisco’s e-Business and supply chain management (e-SCM)
strategy, and why has Cisco remained successful in its e-SCM strategy?

PREVIEW
As brick-and-mortar enterprises increase their Web-enabling processes, there is one area where
more attention is necessary: the firm’s supply chain. A good supply chain management (SCM)
system can act as a digital nerve center for the entire business and save the company millions of
dollars in costs in order fulfillment and other back-end support processes.
Cisco’s implementation of their SCM was an optimal combination of technology and
business processes that optimized the delivery of goods, services, and information from the
supplier to the consumer in an organized and efficient way. SCM gives companies involved in
developing, manufacturing, distributing, and retailing of products access to all of the critical
information they need to plan their operations in an efficient way—whatever and wherever they
need it. A complete supply chain management solution also includes customers, service providers,
and partners. SCM is a large, dynamic network of complex but well-defined relationships with