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by Hallie Forcinio, Contributing Editor Posted on Friday, November 03, 2006 3:10:08 PM   | Abstract: | Redback Networks outsources service parts and return logistics to cut costs and improve visibility. |
Abrahim Abbasi, senior vice president of operations, information technology and customer service at Redback Networks Inc., has a simple philosophy: "If an activity changes or modifies the buying behavior of a customer, it should be handled in-house. If not, it should be outsourced," says Abbasi. "I'm a firm believer in a total leveraged model, where partners share rewards and risks and, more importantly, share information." This philosophy has transformed the company's operations, particularly logistics and supply chain functions. By deploying Web-based software and outsourcing shipping, receiving and outbound logistics, Redback (San Jose, CA) has cut overall logistics costs by 25%. Founded in 1996, Redback Networks is a $115 million provider of broadband networking equipment, which enables carriers and service providers to build smart broadband networks that can deliver simplified, personalized, portable subscriber services to consumers and businesses. Redback Networks products already run the majority of the broadband DSL lines in the United States, and its next-generation of equipment provides even higher bandwidth for integrated video, voice and data networks. With operations on three continents and dozens of countries, the company has a complex supply chain. OUTDATED METHODS
As recently as a couple of years ago, Redback Networks handled logistics and supply chain activities -- including those related to its service operation -- with a lot of manual systems, an early version of customer relationship management software from Siebel Systems Inc. (San Mateo, CA) and a legacy system that generated alerts and e-mails to account managers advising that a repair ticket had been opened or a return authorization had been requested. "It was not truly visible or real time," recalls Abbasi. The service operation consisted of approximately 50 warehouse "depot" locations worldwide, which maintained inventories of replacement parts to ensure the company could meet stringent service level agreement requirements it had with some customers, which call for the replacement of failed components in as little as four hours. Without real-time visibility into service parts inventory, however, Redback Networks was forced to maintain significant levels of "safety" stock to ensure it could deliver parts to customers in a timely fashion. When a service order was placed, Redback Networks staff would make phone calls to depots to locate parts and arrange shipments. The siloed system also made it virtually impossible for Redback Networks to easily determine the cost of goods deployed, verify service-level agreement eligibility or analyze shipment activity. It also was difficult to track parts returned for repair. That meant Redback Networks often ended up shipping the customer a new part instead of a repaired part because the returned item couldn't be located quickly enough. Clearly, something had to change. "We wanted to minimize cash burn for the company and cut costs," says Abbasi. CAUTION! CHANGE AHEAD
But Redback was wary of deploying a new enterprise application to solve its service parts logistics problems, particularly considering the expensive and complex servers and other technologies that would have to be deployed. "At the same time, we wanted an efficient, visible, flexible system, and we were looking for a collaborative effort. We didn't want to simply transfer costs to someone else. We made a conscious decision to select a few partners and integrate the overall system into a network-to-network model," says Abbasi. To transform its service supply chain, Redback Networks considered several technology options and, ultimately, partnered with D.W. Morgan Co. (Pleasanton, CA), using its ChainLinq supply chain software. Founded in 1990, D.W. Morgan serves high-tech, medical, defense and industrial customers such as HP (Palo Alto, CA), BFGoodrich (Greenville, SC) and Royal Philips Electronics N.V. (Eindhoven, Netherlands). Page : 1 2 3 ... NEXT |