Essay on Lucent Technologies

644 WordsOct 16, 20103 Pages
Prior to 1996, Supply Chain Strategy used by lucent technologies was adequate because Asian customers were away from order processing and manufacturing activities. All the orders were placed with AT&T, processed in New Jersey and then placed with factory for production in Oklahoma City. From there, the parts and subassemblies were shipped to staging center in California. So, Shipments to Asian customers were made directly from the United States. Asia was only related with supplying parts along with United States. Asia had very little market prior to 1996 and the major market was the US which has no competition and so no penalties for late deliveries. Without having involved in the business, Asian customers had bagged the final product.…show more content…
Throughput time(period required for a material, part or subassembly to pass through a manufacturing process) decreased from 5weeks to 1week and so the margins improved by 10% and Lucent was three times as productive in 1998, as it had been in 1995. Exceptional growth in cellular and web, resulted in more component demand than supply, leading to material shortages. Inventories costs increased and lead times doubled. Contract manufacturers who have increased their quality to international level and competency in telecommunication electronics made Lucent think to develop its own assets and inventories. In order to respond to the new challenges, Lucent must focus bidding on projects where the switch has cost and feature advantages over competing products. Also forecast the number of parts needed, thereby reducing potential part shortages. Also offer reconfiguration service for 5ESS switches from landline to cellular voice networks. Synchronize order placements with supplier manufacturing cycles. Creating partnerships with secondary tier suppliers, reduces the probability of material shortages. Manufacture in close proximity to customers which reduces transport cost. Consider outsourcing if necessary for cost effectiveness. Finally, use factory expertise to reduce manufacturing lead time, improve product quality and reduce costs. The main lessons from this case study for Supply Chain Managers are, adapting a
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