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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


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


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


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


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


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


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



Apple

Nokia

Dell

Proctor & Gamble

IBM

Wal-Mart

Toyota

Cisco

Samsung

Anheuser Busch

PepsiCo

Tesco

Coke


Best Buy

Nike

SonyEricsson

Walt Disney

Hewlett-Packard

Johnson & Johnson

Schlumberger

Texas Instruments

Lockheed Martin

Johnson Controls

Royal Ahold


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


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



Coke

Johnson & Johnson

Schlumberger

Toyota

PepsiCo

Samsung

Wal-Mart

Nokia

Cisco

IBM

Proctor & Gamble

Dell

Apple


Intel

SonyEricsson


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



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


Focus Area

Introduction

Agenda Approach

Results

Closing


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


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”.


Drivers

Lower Product Return Rate after booking

Brand Protection / Gray Market Risk

Value Recovery Opportunities

Building new Customer Base


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)


Focus Area

Introduction

Agenda Approach

Results

Closing


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


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


Approach: Reverse Supply ChainManufacturing

Distributor Reseller End Customer

Service

Provider

Cisco Reverse

Logistics Partner

RepairService

Cis

co

RemarketingRecycle


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


Approach: Reverse Logistics Interactions

RMA /

Return tool

Reverse

Logistics

Partner

Customer

Cisco

(Oracle ERP)

Cisco Internal Customers

Receipt (2)

Sh

ip (

3)


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


Focus Area

Introduction

Agenda Approach

Results

Closing


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


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%


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


Focus Area

Introduction

Agenda Approach

Results

Closing


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


Q & A

Mudit Agarwal

Email: [email protected]

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