In an effort to learn from the leaders, EBN is sitting down with supply chain executives at leading OEMs to ask for their perspective about today's supply chain challenges and strategies.
John Kern, senior vice president,
supply chain operations, Cisco
This time, we are talking to John Kern, senior vice president, supply chain operations at Cisco. Cisco works with more than 1,000 suppliers, including manufacturing partners and logistics providers, to manufacture more than 300 product families. In the past couple of years, the company has made a concerted effort to adopt leading edge practices in its supply chain. The result has been a supply chain that is recognized for its leadership.
EBN: From a strategic perspective, where should an organization's leadership focus its attention in terms of supply chain management?
Kern: Now more than ever, it's critical that a supply chain's agenda be focused on enabling the success of the company strategy. Many industries, including ours, are undergoing massive transitions, and supply chains have to be about more than productivity and scale. Our customers want outcomes, as well as flexibility in consumption. They are shifting from CapEx to OpEx, and they want solutions. This shift is requiring Cisco to change. Our supply chain team is focused on enabling these transitions, which is requiring us to fundamentally behave in different ways.
EBN: What are the biggest supply chain challenges you see in today's electronics supply chain?
Kern: One big challenge is the increasing trend for country-of-origin and local manufacturing requirements. There are increasing requirements to do business in many countries, and this puts pressure on the traditional model of driving scale and productivity. As a result, we are working with the same productivity pressures, while moving toward a much more distributed manufacturing model.
Another challenge is significant consolidations that are occurring, especially in the semiconductor space with recent examples like Global Foundries/IBM, Avago/Broadcom, and Intel/Altera. These companies are all critical players that enable our industry and these moves cause us to rethink roadmaps, investment strategies and supply base strategies.
EBN: What best practices do you see as critical in today's supply chain? How has that changed in the past five years?
Kern: The transition between what is considered a best practice and differentiator versus what is a foundational requirement moves pretty quickly. In the recent past, risk management, sustainability, sales and operation planning (S&OP) and demand-driven supply chains were best practices, and now they are definitely foundational. Today, critical investment areas are the digitization of the supply chain, the concept of Internet of Everything (IoE), and how you apply cloud, analytics, automation and collaboration technologies to drive step-function value and productivity. The supply chains that understand the potential, and make those investments now, will be the future supply chain leaders.
EBN: What are the main operational and compliance-related challenges you see in supply chain management?
Kern: One of our key operational challenges is connecting what we've traditionally focused on with evolving and increasing customer demands. As our industry shifts and customer needs change, we've had to rethink our operational focus, and enhance the way we capture customer requirements and expectations. We are directly engaging with customers and partners—cultivating those relationships, listening to their needs and concerns—and then as a result, adapting where we invest in operational capabilities.
In terms of compliance, the big challenge has been managing the cost of eliminating certain materials and substances from our products. With a complex, multi-tier supply chain, this requires working with and validating products from thousands of companies. As different countries drive new requirements, we've had to invest in our approach to address them in a scalable and efficient way.
EBN: In light of the increasing gap between demand and supply in terms of supply chain talent, what strategies is your organization using to attract and retain supply chain professionals?
Kern: We've built a robust, multi-year workforce strategy to attract new talent, as well as enable and develop our existing team. The way we approached talent previously was more of a tactical reaction to what was needed in a particular fiscal year. We knew that had to change, so we defined our “landing zone” and determined what our supply chain needed to look like three years out. We defined our future state in terms of location, critical skills, generational mix, diversity, new roles, leadership, and so on. Then we created strategies that would get us there.
The landing zone changed our recruiting approach from where we recruited to the skills that we interviewed for. We changed our intern and university programs, our learning and development programs, how and where we developed future leaders, and the types of programs we invested in. Based on our workforce strategy and the landing zone, we track progress to these objectives with clear metrics and adjust accordingly.
EBN: What have been the key developments in your supply chain strategy and operations over the last year and what changes are you planning to make in 2015/2016?
Kern: The supply chain industry is rapidly changing and our evolving strategy is centered on enabling adaptability, innovation and scalability. We are investing heavily in the concept of an IoE-enabled supply chain, as we believe this can drive significant breakthrough value.
We have shifted from a predominantly hardware-focused supply chain to a solutions- and software-based supply chain that enables Cisco to deliver what our customers want: outcomes. We have also made significant investments in our customer engagement, including how we can better collect customer requirements and be more responsive to their needs. Underpinning all of this is our strategic focus on employees and workforce strategy, because it's the foundation that makes everything else happen.
EBN: How has the role of technology (big data, analytics, etc.) evolved in your supply chain organization? How do you see that changing?
Kern: Technology plays a huge role, and will define the future leaders and laggards in the supply chain industry. The Internet of Everything (IoE) has the potential to revolutionize the supply chain industry. Connecting people, processes, data and things will drive breakthrough value in the supply chain and will greatly enhance the customer experience. Cloud, analytics, mobility, collaboration, automation and sensor technology will enable greater visibility and real-time decisions that will connect the supply chain ecosystem in ways we've never been able to achieve before.
The use cases are endless, but it requires the right business and technology architecture to build from. It requires a tight partnership with IT, and bulletproof security architecture.
EBN: What has your supply chain organization done to ensure that supply chain management is seen as a strategic advantage to the company?
Kern: We stay focused on how the supply chain enables Cisco's overarching business strategy. People sometimes get caught up in supply chain as the profession, and how you get a seat at the table and stay relevant. In my view, our relevancy is a function of the value that we bring.
Our supply chain agenda is directly mapped to what makes Cisco's strategy successful. We have a customer intimacy program that keeps us in step with the sales team to better understand and address customer needs. For engineering, it's the work we do around sourcing, quality and new product development. We are viewed as critical to the launch of every new product – hardware and software.
— Hailey Lynne McKeefry, Editor in Chief, EBN