Soon after acquiring home- and small-office networking equipment provider Linksys in 2003, executives at Cisco Systems had a bright idea: Wouldn't it be great, they thought, to transform Linksys from a company focused exclusively on North American markets into a global supplier of wireless and wired communication products? Make it so, they said.
There was just one small problem: Although Linksys relied on offshore contractors for most of its production, the company and its people had little, if any, experience operating a global supply network. They had no experience tailoring Linksys' products for markets outside North America. They had no experience working with distribution partners to generate demand for Linksys products. And they had no experience generating production plans that accurately responded to worldwide demand for and supply of Linksys' products.
"So when they got the order from Cisco to go global, they suddenly got a pretty glossy-eyed look," says Linksys Vice President for Worldwide Operations Mark Payne, who was one of the managers brought in to turn Linksys into a global operation.
Though Linksys was able to tap into some of Cisco's existing infrastructure for executing global transactions and physically getting product to market, the business immediately ran into big problems attempting to track global demand while balancing inventory and production schedules. Historically, Payne says, demand planning at Linksys was largely a manual process involving pencil, paper, e-mails, and phone calls. Though not the most efficient approach, it worked when the bulk of the business was flowing through a few large retailers, such as Staples and Wal-Mart.