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“We build products and we use the supply chain to get them to and from the customer.” So the company uses the 4pl (fourth-party logistics provider) business model as the basis of its supply chain management – that is utilising a company that holds no physical logistics assets, but which coordinates the supply chain on behalf of Cisco Services through its access to data monitoring and IT processes.


Deciding the strategy Regional supply chain leaders such as Hofstee in the EMEA (Europe, Middle East and Africa) region, and his counterparts in the Americas and the Far East co-decide on strategy and tactical plans for execution before these are put in place. “Globally, we try to be consistent,” he noted. “The job of the 4pl is to dictate how


we ship things from A to B,” Hofstee said. “We work with global contracts having regional variations. I don’t want Cisco people to be looking one-by-one at matters involving the supply chain, that’s when it becomes the problem of the 4pl. The buying power of your 4pl is another major factor to take into


consideration. It does the same things for others as well. With the quantities of scale involved, it’s an arrangement that is working for us.” Speed is of the essence in the


logistics procedures that he oversees, Hofstee observes. “We label this as business-critical logistics and we have to use air freight, because sea freight just would not work in the time parameters available. We utilise next-flight-out procedures for onboard courier business on a case-by-case basis. If the problem is bigger, we utilise project air freight procedures to get the equipment to and from the repair lines.” Next to the integrators, Cisco Services


uses domestic short-haul air services in its EMEA division for speed, and it utilises the capabilities of the freight forwarder to meet import and export compliance regulations. US-built high- tech telecom equipment needs to follow strict export compliance rules to some of its destination countries, and Hofstee noted that this is where the experience of the freight forwarder is invaluable. Long-haul air freight services are


utilised to ship to and from the Cisco repair lines in China, Asia Pacific and the


United States. “We cannot wait until full TEU (20ft equivalent unit) shipping containers are ready to be shipped by ocean freight, so our 4pl uses air freight forwarders to get our equipment to and from the repair lines,” Hofstee said. Outsourcing responsibility for the


supply chain to the 4pl means Cisco does not need another internal department to handle the work, he explained: “It’s not the business of my department to be expert on all the trade lanes: that’s the 4pl’s business, it knows the market and it can assess who can best handle the business and who can play their role in this process to satisfy our requirements. I believe that there are very few people in the marketplace who can handle this role to our complete satisfaction on a global basis … it’s not a service you can just buy ‘off the shelf’.


Preferred providers “Operating underneath the 4pl we have third-party logistics service providers (3pls). That would be the freight forwarder, which books the freight with the airline (the 2pl). We do have a list of preferred providers. Cisco works with the 4pl in the formation of the preferred


AIR LOGISTICS MANAGEMENT 7


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