Cisco case
Cisco case
1. What are the challenges faced by Cisco in introducing a major product like Viking?
There are four main challenges encountered by Cisco:
Time-to-Market pressure: Cisco has only one year to launch Viking. Since the development of technology accelerates information exchange and boost customers’ demand, only companies that can catch the market transitions quickly can survive in the rapidly-changing society.
Cost pressure: Price competition in hi-tech market is rather fierce. E.g. bandwidth prices were constantly dropping while customers expected continuous improvement in price-performance on their equipment.
Immense technical complexity and concern on outsourcing production: For example, Viking contained some 300,000 components, which is 30 times more than in a small business router. So this requires a high ability for the contract manufacturer and a close cooperation between Cisco and the manufacturer.
Uncertainty in NPI’s effectiveness and efficiency: This newly introduced mechanism requires substantial global operation collaboration among far-flung teams, which contains considerable uncertainties.
2. In selecting Foxconn and involving it from the start, what were the potential risks and values to Cisco?
Risks:
Lack of experience in handling technical complexity: Foxconn has never made complex product like Viking before.
Excessive dependence on vertical integration: Overly depending on a single manufacturer will run a great risk of whatever financial and operational constraints it has. Meanwhile, Cisco may lose the opportunity to select the most appropriate suppliers.
Values:
Low cost: Selecting Foxconn can dramatically decrease the cost due to the cheaper labor force and materials from China and other Asian countries, as well as reduction in transition.
Efficient supply chain: A single site and its vertical integration create an agile structure, which promotes the efficiency greatly.
Long-term incentive to develop the contract
1. What are the challenges faced by Cisco in introducing a major product like Viking?
There are four main challenges encountered by Cisco:
Time-to-Market pressure: Cisco has only one year to launch Viking. Since the development of technology accelerates information exchange and boost customers’ demand, only companies that can catch the market transitions quickly can survive in the rapidly-changing society.
Cost pressure: Price competition in hi-tech market is rather fierce. E.g. bandwidth prices were constantly dropping while customers expected continuous improvement in price-performance on their equipment.
Immense technical complexity and concern on outsourcing production: For example, Viking contained some 300,000 components, which is 30 times more than in a small business router. So this requires a high ability for the contract manufacturer and a close cooperation between Cisco and the manufacturer.
Uncertainty in NPI’s effectiveness and efficiency: This newly introduced mechanism requires substantial global operation collaboration among far-flung teams, which contains considerable uncertainties.
2. In selecting Foxconn and involving it from the start, what were the potential risks and values to Cisco?
Risks:
Lack of experience in handling technical complexity: Foxconn has never made complex product like Viking before.
Excessive dependence on vertical integration: Overly depending on a single manufacturer will run a great risk of whatever financial and operational constraints it has. Meanwhile, Cisco may lose the opportunity to select the most appropriate suppliers.
Values:
Low cost: Selecting Foxconn can dramatically decrease the cost due to the cheaper labor force and materials from China and other Asian countries, as well as reduction in transition.
Efficient supply chain: A single site and its vertical integration create an agile structure, which promotes the efficiency greatly.
Long-term incentive to develop the contract