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Arista Networks' growth has outmatched its archaic supply chain management processes.
To modernize, Arista has embraced the digital supply chain world by implementing SAP Integrated Business Planning (IBP).
Arista, based in Santa Clara, Calif., and founded in 2004, makes networking equipment such as internet switches. It has grown significantly in the past few years, going from a reported $584 million in 2014 to $4.4 billion in 2022, according to public filings.
The company has about 2,600 employees and operates sales and distribution centers across North America, as well as in Europe and Asia. Most of its manufacturing is done by four contract manufacturers (CMs) at seven sites in Asia, including Malaysia and Vietnam in Southeast Asia, and in Mexico.
Far beyond spreadsheets
Arista's previous supply chain operations relied primarily on two traditional but disconnected tools -- spreadsheets and email, according to Ken Fischer, manufacturing project engineer at Arista Networks.
This was workable when Arista was a $500 million company, but had become an impediment as Arista grew past the $1 billion mark.
"It was becoming burdensome on our employees to get [the work done]," Fischer said. "The number of spreadsheets [was becoming unworkable]. Every CM site had its own spreadsheet, and to get a total view, we had to spend hours every week adding and combining spreadsheets."
Each facility involved in planning had its own data, resulting in inconsistencies in the data and arguments between various groups about who had the real numbers and what the accepted facts were, he said.
Without consistent data, Arista was unable to plan adequately, which led to problems with purchasing too many goods during the growth period, according to Fischer.
"We were growing so fast and we were buying everything we could buy -- components, power supplies, chips, cables -- and it was all on spreadsheets," he said. "There was no real long-term view of what we were doing, and as things have slowed down a little bit, we're starting to see some of the excesses that were built up because of the aggressiveness of some buyers."
A digital supply chain planning application would allow Arista to anticipate its procurement demand properly months ahead, saving it from having to deal with excess inventory, Fischer said.
Looking for a single source of truth
Two years ago, Arista started to search for a system that would help it establish a common data repository across the organization and be flexible enough for future planning as the company continues to grow.
The company eventually chose SAP IBP after a selection process that involved procurement and supply chain management applications from Coupa, SourceDay, Ivalua and Oracle. Arista is currently running Oracle NetSuite for its ERP system, but SAP IBP fit its current and future requirements better than Oracle's supply chain application, Fischer said.
The SAP IBP implementation project began in March 2022, and the system went live in May 2023.
Overall, the project went smoothly, but Fischer explained that moving from a largely manual system to a cloud-based digital supply chain system required both a change of mindset and a rethinking of long-established processes.
Change is good, but complicated
Change management was a huge issue for the project, as the majority of Arista employees had never touched an SAP system, Fischer said.
"It's been a journey of discovery for us," he said. "I was with HP previously, and we went from SAP APO [Advanced Planning and Optimization] to SAP IBP. So you're going from one SAP system to another, and the transition is easier because people are familiar with the terminology."
Ken FischerManufacturing project engineer, Arista Networks
The organizational change management for Arista's SAP IBP implementation project included a variety of training methods and paths, including video, online and face-to-face sessions, he said.
"That's a big organizational change on its own because you're getting people up on the very basics of IBP," Fischer said. "These are things that wouldn't need to be taught if you had a group of experienced SAP users."
Arista's heavily customized processes presented another challenge for the IBP move, he explained.
Many of the supply chain processes were designed by the company's founders and grew organically within the organization; as a result, they were nonstandard. The processes worked well for a smaller organization, but are not appropriate for a multibillion-dollar company, according to Fischer.
"We need to be expandable and more robust, because our folks are doing a lot of very manual things today like manual spreadsheet manipulation," he said. "These are things that systems do in big companies, so we want to stop people from doing those mundane tasks and get them to use their brains on longtime planning."
Benefits of Arista Networks' supply chain transformation
Networking products maker Arista Networks grew out of its manual, spreadsheet-based supply chain management system. It recently implemented SAP Integrated Business Planning, a cloud supply chain system that modernizes outdated processes.
Here are some of the expected benefits from the new SAP IBP system:
- Single source of truth for supply chain data.
- Advanced planning capabilities.
- Standardization and modernization of processes.
- Collaboration with suppliers and contract manufacturing partners.
Standardization over customization
The company has also tended to "overcustomize" its tools, Fischer said. For example, the Oracle NetSuite ERP has been customized so heavily that it's difficult to maintain. Because SAP IBP is a cloud application, it discourages heavy process customization in favor of standardization.
"As a mantra of this project, we had a very robust change request process to allow the minimum number of customizations," Fischer said. "We are trying to become an off-the-shelf company on this project and all projects moving forward. We're looking at our processes to say, 'This is a big organizational change of processes anyway, [so] let's get out of processes that grew up at Arista organically.'"
The benefits of the new IBP digital supply chain system will take time to realize, but Fischer expects that it will improve both internal processes and relations with suppliers and partners.
The company's growth means that it's not small anymore, but it might still be thinking like a small company when it comes to the relationships with its CMs.
"We sometimes think that we're fortunate that a CM like Flex, Sanmina or Jabil would take us on and build our products for us, where a massive company like HP can go in and tell CMs what they're going to do or they will be fired," Fischer said. "The relationship needs to be on a little more of an equal footing, and IBP will help us to get some of the data we need to put us on a more equal footing with all of our CMs and suppliers."
Arista's relationship with its largest chip supplier, Broadcom, will also become more collaborative because it also uses SAP IBP, and it will be possible to share plans and data.
"When we started talking about going to IBP with our vendors, suppliers, CMs and partners, their reaction was, 'It's about time,'" Fischer said. "They're tired of dealing with us being as big as we are but not having these proper enterprise-class tools."
Jim O'Donnell is a senior news writer who covers ERP and other enterprise applications for TechTarget Editorial.