1© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Project DISTI Global Distribution

ProcessesRehman Mohammed

Project DISTI

Senior Manager, Cisco Systems, Inc.

David Demers

President, Avicon

Steven Moy

Director, Avicon

Shanghai, April 2004

Supply Chain Management Conference 2004

222© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Eight Key Facts

Population 1.29bn1.

China Overview

GDP/Capita: US$8702.

GDP/Capita PPP Adjusted: US$4,6803.

GDP growth (annually over last 5 yrs): 7.8%4.

Total telecom revenues 2002: US$53 B5.

Total telecom related capex 2003E: US$24 B6.

#1 steel consumer(25% of WW), #2 oil consumer7.

Global producer becoming global consumer8.Source: Goldman Sachs Oct 03, Gartner Dataquest, Intel

Supply Chain Management Conference 2004

333© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Cisco Mission

Shape the future of the Internetby creating unprecedented valueand opportunity for ourcustomers, employees, investors, and ecosystem partners.

Supply Chain Management Conference 2004

444© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Supply Chain Management Conference 2004

China Internet Users – #2 in the world

0

20

40

60

80

100

120

140

160

180

2001 2002 2003 2004 2005 2006

Millio

n

Gro

wth

Ra

te %

Source: CNNIC Dec 03

100 m

133 m

166 m

75.4%

25%35%

80m

59m

34m

30% 27%

555© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Supply Chain Management Conference 2004China Internet Penetration Lots of Room to Grow

0%

10%

20%

30%

40%

50%

60%

70%

80%

US

Sw

ed

en

Ko

rea

UK

Ja

pa

n

Ge

rma

ny

Sin

ga

po

re

Sp

ain

Ita

ly

Hu

ng

ary

Ch

ina

6%

Source: CNNIC and China Academy of Social Science Dec 03

666© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Supply Chain Management Conference 2004

Cisco Sales Process Re-engineering

777© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Supply Chain Management Conference 2004

China Supply Chain Challenges

• 60+ Direct partners and 3 Distributors

• 15+ Freight Forwarder

• 10+ Ports of Entry

• 20+ Importer

• 28 Warehouses in 12 cities owned by 3 Distributors

Partner routed

Port of Entry

Grey Marketing

Custom Compliance

Special Deal Leakage

Counterfeit Product

Lead-time

Inventory Effectiveness

Rebate/ Disti Cash Flow

888© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Inventory Management

Customer Lifecycle

Back Office Integration

Cisco Reseller End UserDistributor

Project DISTI Dimensions

Supply Chain Management Conference 2004

999© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Supply Chain Management Conference 2004Cisco and Distribution Partners -Sharing Challenges

Product Delivery

Response Time

Increase ROWC

Optimize

All Three Inventory

Days of

Supply

Revenue

& Margin

Distribution Supply Chain

101010© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Supply Chain Management Conference 2004

Approach to Problems

Capability Deployment &

Measurement

Time-Phased

Deployment

(Regional/Global)

Global

Rollout &

Extension

Detailed

Capability

Specification

P

I

C

O

New Capabilities

Process Information Cash Organization

Collaborative

Gaps Analysis

Distribution

Supply Chain

GoalsOptimize

Improve SC

Predictable

Inventory

Reduction

SC Costs

Reduction

Synchronized

Delivery Model

Capability Release

Configuration

111111© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Supply Chain Management Conference 2004

Flow Thru

Inbound Hub

Distribution

Hub

North America

Contract

ManufacturerEMEA

Contract

ManufacturerAPAC

Mfg Supplier

Regional

Configuration

Center

North America

Contract

ManufacturerEMEA

Contract

ManufacturerAPAC

Contract

Manufacturer

Customers

Resellers

Distributor

s

3PL

Network

Architecture

Synchronized

Delivery

Enhanced

Visibility

Extended Web

Experience

Optimized

Distribution

Network

Enhanced Visibility

• In-Transit Visibility

• Lead Time Accuracy

• Advanced Constraint Notification

• Event Management

• …

Extended Web Experience

• Real-time Product Configurator

• Real-time Pricing Engine

• Promotions Management

• Deal Management System

•…

Synchronized Supply

• Lead Time Performance

• Closed Loop Supply/ Demand Processes

• Continuity of Supply

• Regional Configuration Center

• ...

Optimized Distribution

Network

• Distributor Network Optimization

• Strategic Inventory Placement

• …

Synchronized

Supply

Synchronized Supply &

Delivery

Synchronized Delivery

• Distribution Hub

• Collaborative Forecasting and Planning

• Virtual Sourcing

• Enhanced Direct Shipment

• Secure Supply Chain

• …

Distribution Hub Capabilities

• Reduced total inventory

• Planned order replenishment

• Fast ship capability

• Direct ship option

• …

Solution to Problems: Future Distribution Operating Model

“Good is the Enemy of Great”

121212

Andy Wu

© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Supply Chain Management Conference 2004

131313© 2004 Cisco Systems, Inc. All rights reserved.Rehman Mohammed, David Demers, Steven Moy

Supply Chain Management Conference 2004