CASE STUDY: CISCO SYSTEM INC.

Cisco Systems, Inc. is a leading supplier of communications and computer networking products, systems, and services. It was founded in 1984 by Len Bosack and Sandy Lerner. The company's product line includes routers, switches, remote access devices, protocol translators, Internet services devices, and networking and network management software.

Cisco serves three main market segments: large organizations, including corporations, government entities, utilities, and educational institutions; service providers, including Internet service providers, telephone and cable companies, and providers of wireless communications; and small and medium-sized businesses whose needs include operating networks, connecting to the Internet, and connecting with business partners.

Increasingly, Cisco's products are appearing in the consumer marketplace. Cisco operates globally, deriving roughly 44 percent of its sales from overseas business.

Challenges and Risks Faced in NPI
1.Time-to-Market Pressure
Cisco had to launch the new product extremely quickly There is only one year for Cisco to launch the Viking product to market with low cost. Otherwise, the market share might loss. However, it is about 3 to 5 years for Cisco to launch a high-end product.

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To meet such tighten schedule, it is imperative for Cisco team to perform a very collaborative operation and concurrent engineering in whole supply chain and NPI phase

2.Cost Pressure
Bandwidth prices were constantly falling and customer expected continuous improvements in price-performance on their equipment. The competitor keeps intensive discount on price. Cisco had to implement most cost effective-supply chain at launch and product design.

3.Immense Technical Complexity
The product router contained about 300,000 components, about 30 times more than in a small business router.

How to successfully launch such a high complexity product in a low cost contract manufacturer like Foxconn requires Cisco monitor and cooperate with CM carefully.

4.Outsourcing Production of Complex Machines
In order to put all the pieces together with the highest quality, reliability and on-time performance required in the demanding service provider market. Cisco faced the challenges inherent to outsourcing production of such a complex machine, and therefore Cisco would have to work closely with the contractor to reduce production and supply chain risks.

5.Continuous Cost Down Pressure from Emerging Market
Cisco needed to ensure that router would be attractive to service providers worldwide. Emerging markets were the fastest-growing part of Cisco’s business, which needed lower cost, so keeping the router’s costs was important to its global success.