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Building the Value Chain of the Future: 10 Essential Principles

Posted 04-26-2010 at 12:08 AM by 95th Annual
Angel Mendez, senior vice president of value chain management for Cisco, began today's opening keynote session by contrasting the factory of 1915 (large, local and monolithic, with near-shore supply chains) with the factory of today: global, specialized, distributed and off-shore.

"What will people be talking about 95 years from now?" Mendez posed. "How will they be dealing with the risks and opportunities this profession represents?"

For his part, Mendez – inspired by the cities-on-the-water-type aircraft carriers all over San Diego Bay – said he envisions the possibility of mobile factories. Although he admitted it seems far-fetched right now, he has his reasons for thinking so.

“We could station them in different parts of the world,” he reasoned. “Then, before an earthquake or a hurricane [or other natural disaster] hits, we could just move the factory!”

Whether he’s 100-percent serious or not, his mobile factory concept speaks to his vision of the factory of 2105: instantly global, connected, mobile, integrated logistics, fast, green and labor-accessible.

10 ESSENTIAL PRINCIPLES

Mendez spent the majority of his session outlining the 10 essential principles which drive Cisco’s goal of value chain excellence.

1) “No Value, No Chain”

Under this principle, the customer value chain delivers an end-to-end customer experience, and metrics transition from an operational focus to a customer focus. “Customers care just as much about their experiences as customers as their goods being delivered on time,” he told attendees.

2) Love the Inventors, and Make Them Love You

For Mendez, matching the right suppliers with the right new product innovations is critical, as is maximizing the value of every product and service. “To make these things happen, we’d better love the inventors – and make the inventors love us back,” he advised.

3) Making the Ends Meet

“We must ask, ‘How can we go lean?’ and ask our suppliers to do the same,” Mendez explained, citing Cisco’s Lean Forward initiative, which reinvests the dollars it saves into the distribution network. “This grows our business AND theirs,” he added.

4) Be the Toughest – But Best – Customer

According to Mendez, this requires balancing a handful of dual focuses: on strategic partnering and market reality; on local and global; on innovation and market transition; on quality and customer; and on transactional/speed and collaboration, among others.

5) Know Where Everything Is … All the Time

Put simply, to enact this principle, Cisco is increasing visibility across the supply chain.

6) Gang Up On Your Customers

Cisco formed customer value teams, or CVTs, to put this principle into practice. “Our customers love it,” Mendez said. “And, our CVTs love it because they rarely get to talk to customers.”

7) Be In At Least Two Places At Once

Cisco uses video and Web 2.0 technologies extensively. For example, a recent event featuring 11 telepresence points and 20 WebEx sites supplanted a meeting process that ordinarily would have taken a few weeks. “And, afterward, people just went about their days,” Mendez pointed out.

8) Manage Your Nightmares

With regard to the ever-present challenge of risk management, Mendez recommended building a “risk engine” to foster business resiliency and decrease time-to-recovery. “The first thing people want to do after a supply chain disruption is get back to productivity,” he said. “If we’re not there yet, we can’t help anyone else get there either.”

9) Realize Your Dreams

Mendez believes supply management team members need to be “global athletes,” diverse, transformational, collaborative and influencing. “In other words, we need to be the people who are HAPPY about the volcano erupting last week!” he said. “Problems like that really give us a chance to demonstrate supply management’s value.”

10) Leave It Better Than You Found It

Mendez promoted sustainability in operations, products, architecture, and even in employees. “They must be inspired to care,” he said. “It’s easy to get people to comply; the real challenge is to lead and innovate in this realm.”
Mendez also recommended sharing sustainability ideas with one’s industry (including competitors), as well as with suppliers.
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