Initially, Cisco Systems controlled its inventory utilizing the push system. In addition, at the time, the economy was doing great, therefore, using the push system to stock pile inventory was acceptable. However, during the dot-com bust of the 2000’s, its sales and the demand for its products greatly decreased. Unfortunately, during this time, Cisco discovered that it possessed an abundance of inventory, and, wrote off more than $1 billion in inventory. Consequently, the company learned that acquiring inventory in anticipation of market demand, and not factoring in the human element of its business increased its risks of failure. Obviously, Cisco wanted to meet its customer’s d...
... middle of paper ...
...pdates every night to its distribution centers. Thus, the company could immediately fulfill request, while freeing up over $50 million by reducing its inventory levels (O 'Brien, & Marakas, 2011).
In conclusion, these cases, have shown us that companies must be able to quickly respond to customer demands and the economy, without storing an abundance of excess inventory. Furthermore, utilizing an effective inventory management system can be beneficial for a business. Additionally, a management system can reduce inventory to increase capital, and, can provide a better view of the supply chain. Research has shown us that Cisco evolved from push to pull. Black & Decker, established an integrated inventory system, and, O’Reilly’s uses a replenishment system. Consequently, each company had to discover which system was the most efficient for the business and implement it.
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