Supply Chain Management: the Business Network

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Supply Chain Management: the Business Network

By | May 2013
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1. Cisco Systems went from a “push” to a “pull” approach to its supply chain after the dot-com debacle. How are these two approaches different? Does it depend on the state of the economy which one should be used? Why? Before the dot-com debacle Cisco Systems used “push” approach – a lot of inventory was made, and it was based on best-guess forecasts. This approach was not bad when economy was strong and there was huge demand and there was no need to predict precisely the inventory. When during the recession of the economy Cisco Systems implemented “pull” approach, which rely on precisely planning of inventory. The second approach allows having free costs because of reducing inventory and also freeing up working capital.

2. What are the different elements that need to come together to bring supply chains to the optimal levels needed by these companies? What role does IT play? In order to bring supply chains to the optimal level company needs to coordinate supply chain operation system with IT technologies. Also, in order to work in appropriate manner system needs to get and adapt information from marketing, finance, sales and supply department. IT plays a very important role: its connect the whole system, coordinate it and adapt.

3. How are the approaches to inventory management taken by O’Reilly Auto Parts, on one hand, and Cisco Systems and Black & Decker, on the other, different? O’Reilly Auto Parts uses inventory as a competitive differentiator and try to increase customer service levels and replenish inventory on a nightly basis, while at the same time managing an increasing number of products. Also its strategy relies on partnership between the supply chain operation and IT. Black & Decker chose another strategy: they try to lower inventory levels to free up working capital.
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