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© 2006 Cisco Systems, Inc. All rights reserved. 1
Reverse Logistics Transformation -Case Study at Cisco
Mudit Agarwal, Solution Architect,
Reverse Logistics, Cisco
© 2006 Cisco Systems, Inc. All rights reserved.
Focus Area
Introduction
Agenda Approach
Results
Closing
© 2006 Cisco Systems, Inc. All rights reserved.
Introduction: Presenter
12 Years of Industry Experience, last 3 and half years at Cisco
Worked in different companies from small start-up to top fortune 100 companies
Currently working as Solution Architect, World-Wide Reverse Logistics, Cisco
© 2006 Cisco Systems, Inc. All rights reserved.
Introduction: Company
San Jose, CA
Herndon, VA
Boxborough, MA
Ottawa, Canada
Raleigh, NCRichardson, TX
LondonAmsterdam
Tel Aviv
Bangalore
Shanghai
Singapore
Dubai
Sydney
67,000 employees in 140 countries
300+ office locations
Headquarters:
1/3 Engineering/IT, 1/3 Sales, 1/6 Service, 1/6 Others
© 2008 Cisco Systems, Inc. All rights reserved. Cisco PublicEBC 4
© 2006 Cisco Systems, Inc. All rights reserved.
Cisco at a Glance
Worldwide leader in networking
for the Internet
Founded in 1984
$110B Market Cap (Jan „09)
$29 B cash and investments
More than $5 B/year in R&D
10 consecutive years on Fortune Magazine‟s
“Best Companies to Work For” list
130+ acquisitions
85+% of Cisco Systems products are
distributed via channels
Business Week valued Cisco‟s brand at
US$19.1 billion and ranked in top 20 WW
Vision: Changing the way we work, live, play and learn
© 2006 Cisco Systems, Inc. All rights reserved.
Source: AMR Research, 2007
AMR Research—Top 25 Supply Chains2007 Ranking:
Johnson & Johnson
Pepsi
Johnson Controls
Texas Instruments
Nike
Lowes
Glaxo Smith Kline
Hewlett-Packard
Lockheed Martin
Publix Super Markets
Paccar
Astra Zeneca
1
41
51
61
7
1
92
02
12
22
32
42
5
1
8
1
3
1
2
3
4
5
6
7
8
9
1
0
1
2
1
8Cisco
2005 2007
Nokia
Apple
Proctor & Gamble
IBM
Toyota
Walmart
Anheuser Busch
Tesco
Best Buy
Samsung
Cisco
Motorola
Coke
1111 Cisco
1
41
51
61
71
81
92
02
12
22
32
42
5
Texas Instruments
Source: AMR Research, 2005
1
3
1
2
3
4
5
6
7
8
9
1
0
11
1
2
The Home Depot
Motorola
PepsiCo
Best Buy
Cisco
Lowe's
Nike
L’Oreal
Publix Super Markets
Sysco
Coca-Cola
1
8Cisco
2005
Dell
Procter and Gamble
IBM
Nokia
Toyota
Johnson & Johnson
Samsung
Wal-Mart
Tesco
Johnson Controls
Intel
Anheuser-Busch
Woolworths
© 2006 Cisco Systems, Inc. All rights reserved.
AMR Research—Top 25 Supply Chains2008 Ranking:
Apple
Nokia
Dell
Proctor & Gamble
IBM
Wal-Mart
Toyota
Cisco
Samsung
Anheuser Busch
PepsiCo
Tesco
Coke
Source: AMR Research, 2008
Best Buy
Nike
SonyEricsson
Walt Disney
Hewlett-Packard
Johnson & Johnson
Schlumberger
Texas Instruments
Lockheed Martin
Johnson Controls
Royal Ahold
Publix Super Markets
1
41
51
61
7
1
92
02
12
22
32
42
5
1
8
2008 2007
1
2
3
4
5
6
7
8
11
1
3
1
2
9
1
0
8 Cisco
11
9
1
0
Cisco
Astra Zeneca
Paccar
Publix Super Markets
Lockheed Martin
Hewlett-Packard
Glaxo Smith Kline
Lowes
Nike
Texas Instruments
Johnson Controls
Pepsi
Johnson & Johnson1
41
51
61
7
1
92
02
12
22
32
42
5
1
8
1
3
1
2
3
4
5
6
7
8
9
1
0
1
2
Coke
Motorola
Cisco
Samsung
Best Buy
Tesco
Anheuser Busch
Walmart
Toyota
IBM
Proctor & Gamble
Apple
Nokia
1111 Cisco
2005 2007
© 2006 Cisco Systems, Inc. All rights reserved.
AMR Research—Top 25 Supply Chains2009 Ranking:
Coke
Johnson & Johnson
Schlumberger
Toyota
PepsiCo
Samsung
Wal-Mart
Nokia
Cisco
IBM
Proctor & Gamble
Dell
Apple
Source: AMR Research, 2009
Intel
SonyEricsson
Publix Super Markets
Unilever
Best Buy
Colgate-Palmolive
Lockheed Martin
Texas Instruments
Hewlett-Packard
Walt Disney
Tesco
Nike1
41
51
61
7
1
92
02
12
22
32
42
5
1
8
2008 2009
1
2
3
4
5
6
7
8
11
1
3
1
2
9
1
0
5 Cisco
8
6
7
Cisco
Coke
Tesco
PepsiCo
Anheuser Busch
Samsung
Cisco
Toyota
Wal-Mart
IBM
Proctor & Gamble
Dell
Nokia
Apple
Source: AMR Research, 2008
Publix Super Markets
Royal Ahold
Johnson Controls
Lockheed Martin
Texas Instruments
Schlumberger
Johnson & Johnson
Hewlett-Packard
Walt Disney
SonyEricsson
Nike
Best Buy1
41
51
61
7
1
92
02
12
22
32
42
5
1
8
2008 2007
1
2
3
4
5
6
7
8
11
1
3
1
2
9
1
0
8 Cisco
© 2006 Cisco Systems, Inc. All rights reserved.
© 2006 Cisco Systems, Inc. All rights reserved.
Focus Area
Introduction
Agenda Approach
Results
Closing
© 2006 Cisco Systems, Inc. All rights reserved.
What is Reverse Logistics
Recovering Cisco‟s products back from Customer/ Distributor, and redeploying them in the way that brings the best value to Cisco
Create a consistent, scalable, global end-to-end process and system for inbound logistics and receiving through disposition and fulfillment
© 2006 Cisco Systems, Inc. All rights reserved.
Reverse Logistics Vision
“Deliver a globally consistent, scalable, world class,
end-to-end business solution by unlocking value from
Product Returns aiming to Optimize net cash
contribution, Reduce transaction cost, Improve
customer satisfaction, and Promote corporate
citizenship”.
© 2006 Cisco Systems, Inc. All rights reserved.
Drivers
Lower Product Return Rate after booking
Brand Protection / Gray Market Risk
Value Recovery Opportunities
Building new Customer Base
© 2006 Cisco Systems, Inc. All rights reserved.
Cisco’s Complex Supply Chain
Hybrid Production Model(95% Outsourced)
Most Products Are Configured to Order
Wide range of Products
Breadth of Customers
Acquisition Integration(131 to date)
© 2006 Cisco Systems, Inc. All rights reserved.
Focus Area
Introduction
Agenda Approach
Results
Closing
© 2006 Cisco Systems, Inc. All rights reserved.
Approach: Scale
Note: These numbers exclude products from consumer acquisitions‟ like Linksys
Volume: 30,000 Units received each week
Social Responsibility: 22,000,000 Lbs of material recycled annually
Value Recovery: $100,000,000 Net Contribution annually
© 2006 Cisco Systems, Inc. All rights reserved.
Approach: Process Verticals
Inbound Logistics
Customer Product Returns Management, Management of product returns in transit to receiving location – Inbound
Receiving &
Disposition
On-dock receipt to put away as per disposition
instructions
Express
Screening &
Testing
Repair order management, Express Test NPIprocess, Shop floor control set up, DGI to FGIconversion
Inventory
Management
Managing DGI/ FGI inventory, Management of
Purge/Scrap process
Order
ManagementPoint of receipt of order to point of report pick
Order
FulfillmentReport pick to actual ship confirm
Outbound
Logistics
Management of refurbished product shipment from the supplier location in transit to customer location -Outbound
© 2006 Cisco Systems, Inc. All rights reserved.
Approach: Reverse Supply ChainManufacturing
Distributor Reseller End Customer
Service
Provider
Cisco Reverse
Logistics Partner
RepairService
Cis
co
RemarketingRecycle
© 2006 Cisco Systems, Inc. All rights reserved.
Approach: Architecture Direction
ERP System
RMA PickList
Other Services
Cis
co
RMA
Source
System
Pa
rtn
er
Product Data
Like Part
New Partner
(Acquisition
Integration)
Receive product
Ship product
Recycle
Other Capabilities
Master Data
(PID,SN etc.)
Inventory
Management
Disposition
Alt Part
RMA Cancel
SN Data
Open RMA Sync
Return to „A‟ Stock
New Acquisition
X-Dock Part List
Service Gateway
© 2006 Cisco Systems, Inc. All rights reserved.
Approach: Reverse Logistics Interactions
RMA /
Return tool
Reverse
Logistics
Partner
Customer
Cisco
(Oracle ERP)
Cisco Internal Customers
Receipt (2)
Sh
ip (
3)
© 2006 Cisco Systems, Inc. All rights reserved.
Approach: Challenges/ Gaps
Implementation Challenges
1. Short Time To Market
2. Evolving Business Model
3. Unavailability of Out Of Box Functionality in Oracle modules
4. New Reverse Logistics Partner On-boarding
Gaps in Oracle functionality
1. Like Part Processing
2. Pro-Active Asset Recovery Functionality
3. Business Rules Driven Supply Demand match engine
© 2006 Cisco Systems, Inc. All rights reserved.
Focus Area
Introduction
Agenda Approach
Results
Closing
© 2006 Cisco Systems, Inc. All rights reserved.
Solution Benefits
Bring new customer into Cisco
Recycling – Green Initiative
Improved Process Efficiency
Reduced Transaction Cost By ~ 30%
Enhanced Customer Experience
Improved Process for Product Reuse
© 2006 Cisco Systems, Inc. All rights reserved.
Reward: OpEx and Re-use
Increased Re-use of returned
product.
Decreased Operating Expenses
(as a percentage of value
recovered).
10
20
30
40
50
60
2005 2006 2007 2008
Product Re-use
20
40
60
80
100
120
2005 2006 2007 2008
Operating Expenses
119%
<5%
44%
39%
© 2006 Cisco Systems, Inc. All rights reserved.
Reward: Cost Center to Profit Center
$100 million net
contribution for FY’08
$8 million
cost center 2005 2006 2007 2008
10
20
30
40
50
60
70
80
90
100
© 2006 Cisco Systems, Inc. All rights reserved.
© 2006 Cisco Systems, Inc. All rights reserved.
Focus Area
Introduction
Agenda Approach
Results
Closing
© 2006 Cisco Systems, Inc. All rights reserved.
Closing: Recap
Took about 18 months to complete this project
Built end to end Cisco‟s Reverse Logistics Supply Chain
On-boarded new partner
Services based Architecture
Converted Cost Center to a Profit Center