Executive Briefings

Xylan Corp.: A Company At the Crossroads

Xylan Corp. is a small company on the verge of becoming big. For Catherine McCallum, traffic manager of worldwide logistics, that has meant forging a supply chain that can handle rapid growth in an industry with near-unlimited potential.

Tucked away in Calabasas, just over the mountains north of Los Angeles, Xylan makes network switching equipment that allows for the digital transfer of data, voice and video. Major customers include phone companies, cable companies and banks.

Xylan faces stiff competition from rivals such as Cisco Systems and 3Com Corp., but it's growing fast. Founded in 1993, it has seen revenue climb from $30m to last year's total of $350m. This year, the company expects to do between $600m and $700m worth of business, McCallum said. Even so, that pales in comparison with the overall size of the worldwide switching market, estimated at $5.7bn.

In coping with its dizzying rate of growth, Xylan faced the dual challenge of selecting a third-party logistics (3PL) provider to help manage its expanding global supply chain, and a software package that could automate key functions and documentation in its export program. McCallum turned to Danzas Corp. for the first need, and Syntra Ltd. for the second.

Danzas, a Basel, Switzerland-based forwarder that has recently branched into third-party logistics in the U.S. and elsewhere, had to prove itself to Xylan before getting a substantial piece of the business. Early last year, McCallum found herself needing to move product between the San Francisco Bay Area and Los Angeles on a daily basis. Pickups had to be late at night to allow for early-morning delivery.

Primarily an international forwarder, Danzas jumped at the chance to handle an ostensibly small piece of domestic over-the-road business. For Xylan, it designed a dedicated truck service that could make the run in eight hours. It began by shipping between two and three pallets a day, but volumes soon increased. So did the variety of business that Xylan was willing to hand over to Danzas.

In May of 1998, Xylan appointed Danzas its exclusive handler of heavyweight domestic and international shipments. Services under the new arrangement included warehousing, trucking, air export, customs brokerage, and pick-and-pack activities. Xylan's other freight-forwarding partner is Federal Express Corp., which handles small packages.

An effective software package "has to offer a program that's going to do all my logistics needs today... and come up with input as to what I can't visualize."
- Catherine McCallum of Xylan Corp.

The Danzas/Xylan relationship has since extended even further, to the point where the vendor now has an employee permanently located at Xylan's offices, to coordinate shipping activities throughout the world and solve any problems that might arise, according to Steve Olsen, district vice president of Danzas in Los Angeles.

Danzas employees are also on site at Xylan's European service center in Amsterdam, established to get Xylan closer to its overseas customers. Danzas utilizes the European network of United Parcel Service to deliver Xylan product throughout the region. Similar facilities are planned for Asia, Latin America and the Middle East, although Xylan already brings in some manufactured product from Taiwan.

The choice of Syntra arose from Xylan's need for a software package to handle export documentation and compliance, said McCallum. But Syntra's Global Logistics Systems (GLS) had more features than that. It manages three separate "areas of constraint" within the supply chain, according to Pano Anthos, chairman and co-founder of the New York City-based software provider.

The first area is regulatory, covering compliance and documentation requirements in the U.S. and elsewhere. The second is logistics, including global distribution, carrier interface, tracking and tracing, and reverse logistics. The third is financial, including letters of credit and the posting of charges back to Xylan's internal ERP system. Among GLS's specific features is the automatic transmission of packing lists, commercial invoices and airway bills via fax, electronic data interchange, or the internet.

Syntra signed the deal with Xylan in October 1998, and full implementation wasn't expected until June or July of this year. But refinements are already in the works. Anthos said Xylan will soon take advantage of GLS's merge-in-transit functionality for the Amsterdam service center. McCallum is looking forward to acquiring shipment status, flight availability and ordering capability over the Internet.

To McCallum, the notion of partnership boils down to a single word: service. A software product such as GLS, she said, "has to offer a program that's going to do all my logistics needs today and what I can visualize in the future, and come up with input as to what I can't visualize." Anthos said the dynamic works both ways; Xylan has helped to mold the GLS product based on knowledge of its own customer base.

Olsen speaks of the intricate ties between partners, with Danzas keeping an employee at Xylan headquarters, and Xylan staffing a Danzas warehouse at the Los Angeles International Airport. An effective partnership produces tangible value on all sides, he said. "Both parties gain. Both parties win."

Xylan Corp. is a small company on the verge of becoming big. For Catherine McCallum, traffic manager of worldwide logistics, that has meant forging a supply chain that can handle rapid growth in an industry with near-unlimited potential.

Tucked away in Calabasas, just over the mountains north of Los Angeles, Xylan makes network switching equipment that allows for the digital transfer of data, voice and video. Major customers include phone companies, cable companies and banks.

Xylan faces stiff competition from rivals such as Cisco Systems and 3Com Corp., but it's growing fast. Founded in 1993, it has seen revenue climb from $30m to last year's total of $350m. This year, the company expects to do between $600m and $700m worth of business, McCallum said. Even so, that pales in comparison with the overall size of the worldwide switching market, estimated at $5.7bn.

In coping with its dizzying rate of growth, Xylan faced the dual challenge of selecting a third-party logistics (3PL) provider to help manage its expanding global supply chain, and a software package that could automate key functions and documentation in its export program. McCallum turned to Danzas Corp. for the first need, and Syntra Ltd. for the second.

Danzas, a Basel, Switzerland-based forwarder that has recently branched into third-party logistics in the U.S. and elsewhere, had to prove itself to Xylan before getting a substantial piece of the business. Early last year, McCallum found herself needing to move product between the San Francisco Bay Area and Los Angeles on a daily basis. Pickups had to be late at night to allow for early-morning delivery.

Primarily an international forwarder, Danzas jumped at the chance to handle an ostensibly small piece of domestic over-the-road business. For Xylan, it designed a dedicated truck service that could make the run in eight hours. It began by shipping between two and three pallets a day, but volumes soon increased. So did the variety of business that Xylan was willing to hand over to Danzas.

In May of 1998, Xylan appointed Danzas its exclusive handler of heavyweight domestic and international shipments. Services under the new arrangement included warehousing, trucking, air export, customs brokerage, and pick-and-pack activities. Xylan's other freight-forwarding partner is Federal Express Corp., which handles small packages.

An effective software package "has to offer a program that's going to do all my logistics needs today... and come up with input as to what I can't visualize."
- Catherine McCallum of Xylan Corp.

The Danzas/Xylan relationship has since extended even further, to the point where the vendor now has an employee permanently located at Xylan's offices, to coordinate shipping activities throughout the world and solve any problems that might arise, according to Steve Olsen, district vice president of Danzas in Los Angeles.

Danzas employees are also on site at Xylan's European service center in Amsterdam, established to get Xylan closer to its overseas customers. Danzas utilizes the European network of United Parcel Service to deliver Xylan product throughout the region. Similar facilities are planned for Asia, Latin America and the Middle East, although Xylan already brings in some manufactured product from Taiwan.

The choice of Syntra arose from Xylan's need for a software package to handle export documentation and compliance, said McCallum. But Syntra's Global Logistics Systems (GLS) had more features than that. It manages three separate "areas of constraint" within the supply chain, according to Pano Anthos, chairman and co-founder of the New York City-based software provider.

The first area is regulatory, covering compliance and documentation requirements in the U.S. and elsewhere. The second is logistics, including global distribution, carrier interface, tracking and tracing, and reverse logistics. The third is financial, including letters of credit and the posting of charges back to Xylan's internal ERP system. Among GLS's specific features is the automatic transmission of packing lists, commercial invoices and airway bills via fax, electronic data interchange, or the internet.

Syntra signed the deal with Xylan in October 1998, and full implementation wasn't expected until June or July of this year. But refinements are already in the works. Anthos said Xylan will soon take advantage of GLS's merge-in-transit functionality for the Amsterdam service center. McCallum is looking forward to acquiring shipment status, flight availability and ordering capability over the Internet.

To McCallum, the notion of partnership boils down to a single word: service. A software product such as GLS, she said, "has to offer a program that's going to do all my logistics needs today and what I can visualize in the future, and come up with input as to what I can't visualize." Anthos said the dynamic works both ways; Xylan has helped to mold the GLS product based on knowledge of its own customer base.

Olsen speaks of the intricate ties between partners, with Danzas keeping an employee at Xylan headquarters, and Xylan staffing a Danzas warehouse at the Los Angeles International Airport. An effective partnership produces tangible value on all sides, he said. "Both parties gain. Both parties win."