The Importance of Accurate Supply Chain Information
In the summer of 2000, with its order book overflowing but its assembly lines sputtering from lack of parts, Cisco Systems decided to crank up its supply line. It committed to buying components months before they were needed; it also lent the manufacturers who build most of their Internet switching gear $600 million interest-free to buy parts on Cisco's behalf. As it turned out, Cisco made a bad business decision. On Monday April 16, 2001, with both its sales and the value of its surplus components shrinking, Cisco announced that it would write off $2.5 billion of its bloated inventory. People were in shock. Cisco was the darling of Wall Street; it had ...
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