The Network Hub

Aug 16 2010   2:30PM GMT

Are you still feeling pain from the Cisco supply chain?

Shamus McGillicuddy Shamus McGillicuddy Profile: Shamus McGillicuddy

During his latest earnings call with Wall Street analysts, Cisco CEO John Chambers put a good spin on the supply chain issues that have plagued his company and many other IT vendors for more than a year as component manufacturers have struggled to meet demand. (On a side note, I’m still waiting for someone to explain to me why suppliers aren’t able to ramp up production to meet demands from Cisco and other vendors. Are they struggling to find raw materials? Are they afraid to expand capacity for fear of another downturn gutting demand and forcing them to make extraordinary cuts a second time since the recession began?)

Chambers said Cisco’s supply chain constraints are improving but remain challenging, with supplier lead times stabilized but still longer than ideal. He said Cisco has made significant progress with this and product lead times are now within a normal range for the majority of the company’s products.  Note that he said the majority of products are within normal lead times now, but not all. Chambers didn’t specify which products still have long lead times… whether or not they include the high volume products that networking pros have been griping about such as the Adaptive Security Appliance (ASA) 5000 series devices.

Chambers said the number of components that are scarce in Cisco’s supply chain has decreased. At the beginning of the last quarter Cisco was “chasing” 550 parts that were hard to acquire in its supply chain, he said. By the end of the quarter that number was down to around 300. Chambers noted that in normal times Cisco chases about 100 components in its supply chain.

Also, Cisco has clearly taken extraordinary steps to get products into the hands of its customers faster. Chambers admitted that profit margins have suffered as the company has spent money on speeding up its supply chain with more use of airfreight and other unspecified methods.

Despite chasing parts and trying to grease the wheels of supply chain, customers still have gripes. As we reported recently, some networking pros have turned to Cisco competitors rather than wait for Cisco to deliver. They aren’t willing to leave Cisco behind, but for some parts of the network they are willing to try a new vendor. Of course, if they like what they see from these new vendors, their use of Cisco alternatives could increase if the supply chain issues get worse again.

So are customers seeing improvement? It’s not just Chambers saying this. I’ve heard from networking pros who say the delays aren’t as bad as they were on many products.

If you’re still feeling the pinch, let us know in the comments section.

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  • Greg Ferro
    No, most products are still on long lead times. Especially everyday products such as Nexus 7K and 3560-X. Lunacy.
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