2005 Supply & Demand Chain 100 Case Study  Redback Networks / D.W. Morgan Company

Profiles in Supply Chain Enablement: Broadband equipment provider gains inventory visibility, reduces stocks in the field and ensures SLAs are met

Profiles in Supply Chain Enablement: Broadband equipment provider gains inventory visibility, reduces stocks in the field and ensures SLAs are met

Company: Redback Networks (San Jose, CA)
Company Size: Medium
Company Sector: Computer/Electronics
Area(s) of Enablement: Order/Demand Capture, Sourcing, Procurement, Fulfillment/Logistics, Payment, Customer Relationship Management, Product Lifecycle Management, Supply Chain Integration & Infrastructure, Decision Support
Enabler: D.W. Morgan Company (Pleasanton, CA)

SDCE 100 2005Case Study: San Jose, Calif.-based Redback Networks is a provider of broadband networking equipment that enables carriers and service providers to build third-generation broadband networks to deliver services to consumers and businesses. Founded in 1996 and now a public company, Redback has about 500 employees and reported net revenues of $115.6 million for its 2004 fiscal year.

The Challenge

Redback invented the concept of broadband subscriber management, creating the ability for service providers to manage individual broadband subscribers in a scalable way. But when it came to managing its parts inventory in the field, the company found that it lacked critical visibility.

A key initiative at Redback has been creating an online, real-time environment for the company's service division. Redback maintained approximately 50 warehouse "depot" locations at which parts were stored for field replacement. Redback's customers have very stringent service level agreements (SLAs), which require replacement of failed components in as few as four hours.

The existing system required an extensive global network of depots. Because inventory was not visible on a real-time basis, Redback had to deploy significant "safety" inventory to ensure that customer needs could be met. When an SLA order was placed, Redback staff would make phone calls to the depots to locate parts and arrange shipments. The system also did not allow Redback to see cost-of-goods deployed, to verify SLA eligibility or analyze shipment activity.

The Solution

D.W. Morgan Company, a consulting, logistics outsourcing and transportation management firm based in Pleasanton, Calif., worked with Redback to design an online, collaborative environment to fully realize cost and time efficiencies. Morgan said it helps companies optimize supply networks for the new, collaborative global business environment, creating efficiencies and competitive advantages.

With the solution that Morgan put in place for Redback during a 60-day implementation, all inventory worldwide is continuously visible. This eliminates overstocking and reduces the total cost of goods in the field. Further, the total number of depots needed to serve Redback's customers has been cut from 50 to 21, resulting in lower overhead costs.

In addition, Morgan has helped Redback reduce fulfillment time because the company's staff can order immediate replacements online. Real-time information can be shared between depots, and SLA eligibility can now be established, eliminating warranty replacements for non-covered customers and creating new sales opportunities.

The Payback

Elsewhere, the D.W. Morgan solution allows Redback's finance department to create a real-time cost of goods analysis on demand to better manage the value of deployed goods, and spreadsheets and graphical charts now can be created dynamically and downloaded at any time for on-the-fly analysis.

Within a month of implementation the company was saving between $150,000-300,000 each month. In all, Morgan said its use of online technologies and integration with Redback IT systems has created savings for Redback Networks of 30-50 percent over the previous structure.

 For a look at how D.W. Morgan has helped robot manufacturer Adept improve its supply chain operations while boosting customer service, read the profile "Adept Reduces Costs, Increases Efficiency with Supply Chain Visibility," an SDCExec.com exclusive.

For more stories of successful supply chain implementations, read the "2005 Supply & Demand Chain Executive 100" article in the June/July 2005 issue of the magazine. Also watch the Today's Headlines section of SDCExec.com every Tuesday and Thursday for more in depth best practices drawn from this year's Supply & Demand Chain Executive 100.