sheldon tsen luke cascone james yardley nik zheleznikov saika akhtar case study group 8 the...
TRANSCRIPT
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 ltdOverview 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
DispatchPack
Book OutInspectPolish
Heat TreatEtch and Plate
DegreaseJob Setup
Book Jobs InGoods In
0 10 20 30 40 50 60 70 80
Series 1Wasted Time/hours
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
DegreaseEtch
PlateHeat Treat
• Wait for oven to become available
• Wait to cool down
Polish• Wait for
polish
Inspection• Wait for
inspectionBook 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!