Executive Thought Leadership

Collaboration and Communication Across Internet-B

Cisco eHub strategy harnesses the Internet for streamlined communication and dynamic collaboration.

The New Supply Chain

A tightly integrated supply chain has become a requirement for doing business in almost every industry. From retail giant Wal-Mart—which requires its suppliers to ship correct, complete orders as a condition for doing business, to Colgate-Palmolive—which must closely orchestrate manufacturing activities across three continents, supply-chain coordination is an increasingly rigorous and sophisticated process.

Indeed, the last two decades have shown us that adoption of leading-edge supply-chain technologies is a matter of survival. Consider the airline industry, in which virtually all of the companies that lagged in adopting new technologies for supply-chain management in the 1980s and 90s are now out of business. Increasingly, leading companies in every industry, from Wal-Mart to General Motors, require their supply- chain partners to tie into their own systems or meet standards for delivery and accuracy based on the new capabilities and requirements of these systems. The new supply chain allows for very small time and inventory margins by providing extremely tight integration that treats the outsourced supply chain as an integrated whole.

Technology-Enabled Collaboration

In recent years, the Internet has emerged as a viable platform for cross-company, cross-border supply-chain communication and, more importantly, as a means for meeting customer needs with greater precision. Companies of all kinds have implemented sophisticated commercial and custom technologies to help them cope with the complexity of managing supply versus demand, communicating with manufacturers and suppliers in outsourced supply chains, and monitoring conditions that could leave them with inventory liabilities. In the case of companies as diverse as computer maker Dell and Latin American cement giant Cemex, these technologies have allowed them to build systems that accommodate high levels of customization based on customer preferences and market-driven pricing.

In addition, communications technologies such as virtual private networks (VPNs) and content networking are enabling companies to build robust e-business platforms that allow integration of external supply-chain information with a host of marketing, planning, and e-commerce systems, giving rise to a new conversation about the integration of the supply chain with strategic marketing and sales activities.

Ironically, by giving companies new competitive tools, this new-world supply chain is also reshaping the competitive landscape, raising the bar for communication and integration across the supply chain, and for real-time responsiveness to customers and changing market conditions. Companies are realizing they must communicate more openly or die. As an open platform, the Internet provides the first practical means for sharing essential supply-chain information across diverse corporate, geographic, and technological boundaries. The emergence of Internet standards such as Java (a platform-independent programming language), Extensible Markup Language or XML, (a standard for describing data that allows Web pages to function like database records) and Dynamic HTML, or DHTML (an enhanced form of HTML that supports animation, interaction and dynamic updating, allowing for personalization of Web interactions) in supply-chain applications offers businesses the ability to provide direct, dynamic connections between customers, suppliers, and contract manufacturers across the Internet. Moreover, Internet standards make it easier for companies to aggregate data from a wide variety of systems into a single, comprehensive view of the supply chain, providing a consistent view and experience for every participant. As a result, the OEM, contract manufacturer, and supplier can easily operate from identical, consistent information that details capacity, inventory, production, sourcing, delivery, forecasting, and planning for the entire extended supply chain.

Cisco eHub

The Cisco eHub system offers a good example of how Internet technology, coupled with cooperation among supply-chain partners, can be used to provide higher levels of customer service and satisfaction. eHub allows Cisco and its ecosystem of manufacturing partners to focus on selling solutions to customers’ business problems by tracking the minutiae of supply and demand mismatches. EHub is a seamless, secure, end-to-end communication platform that connects Cisco with its customers, suppliers, and other partners. Leveraging the Internet and Cisco’s own communications technology, eHub lets Cisco’s ecosystem of supply-chain partners reduce costs, improve responsiveness to customers, and forge stronger, more productive relationships with each other. eHub currently connects Cisco’s top 20 suppliers and will include more than 200 business partners, eventually representing about 90% of Cisco’s direct spending for materials, components, and products. Available to all Cisco supply-chain partners, eHub’s goal is to provide complete visibility throughout the supply chain. The exchange currently handles more than 200,000 documents a day, including detailed manufacturing and forecasting data, and manages 14 different alerts (providing early warnings about changing business conditions), ad hoc reporting, and analysis.

Unlike purely transactional online exchanges—which focus primarily on purchasing efficiencies—eHub connects different operational systems across Cisco’s ecosystem of supply-chain partners to permit real-time information flow. By aggregating and analyzing the extracted data, eHub can warn users of supply-chain complications and suggest options for resolving problems. Such proactive problem solving gives Cisco and its partners a powerful lever for providing the highest levels of customer satisfaction, enabling them to ensure on-time delivery of high-quality products when and where customers need them. eHub is a key part of Cisco’s virtual manufacturing system, promising to make the complex processes of obtaining parts and building and shipping products work even better. eHub’s business benefits include:

• Dynamic configuration of products and services to meet customer needs
• Improved responsiveness to changing market conditions
• Strengthened customer focus
• Collaborative decision making
• More effective, efficient relationships among supply-chain partners
• Power to recognize and seize new business opportunities
• Employee empowerment through wide availability of information

Effective coordination of supply-chain activities is essential to achieve the business basics of productivity, profitability, and cash flow. Without these, no business can survive, let alone prosper. Businesses can use the example of Cisco and its ecosystem of partners to achieve tighter connections across their entire supply-chain ecosystem.

While eHub automates the flow of information through Cisco’s supply chain, its more important role is in providing a platform for solution-based selling and collaborative problem solving, and better performance from the supply chain as a whole. Those elements testify to the strength of Cisco’s relationships with its ecosystem partners, which are based on a high degree of trust and cooperation. With eHub, Cisco offers an attractive platform for partners looking for ways to improve production and customer relationships.