CISCO SYSTEMS, INC.:
Collaborating on New Product
In 2007, Cisco attempted to launch a new high-end router called Viking that would exceed the capabilities of their competition but was required to do so faster than the typical three to five years a complex new product normally takes, in order to meet projected market demand. To meet their one year goal, Cisco proposed to use a single contract manufacturer, Foxconn, who would oversee the majority of Viking’s manufacturing processes. Foxconn’s large single site in Shenzhen, China offered a low-cost benefit important for this cost-sensitive project and would allow Cisco to manage Viking manufacturing easier. Cisco was taking on substantial risk because Foxconn had never produced a product of Viking’s complexity before.
To accomplish these means, there are a few factors Cisco must address. They must establish oversight of the manufacturing process in China. They must keep costs low enough to develop an effective product price point. Cisco must assist Foxconn through the product development learning curve. They should keep diligent records of this new method of manufacturing, so that it may be replicated in the future. Finally, and most importantly, Cisco must keep excellent communication chains open with Foxconn, as well as the branches of their own company.
The major risks in any technology product coming to market are creating a desirable product needed by consumers and establishing a low enough products cost to establish a competitive price point.
Cisco’s Viking router was bringing along a new era in edge routers, providing six times the amount of bandwidth and speed as their competition. They had identified a hole in the market, but in order to fill it, it would require an aggressive one year launch cycle, from conception to delivery. The average product cycle ranged...