lucent technology case - supply chain

7/23/2019 Lucent Technology Case - Supply Chain

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Case AnLUCENT

TECHNOS

GLOBAL SUPPLY

MANAGEMENT

ByGaurav KKri&i'a LoPra+)u G(!"!*%

Sou,en (!"$#%



LUCENT TECHNOLOGIES - HISTO.Y

AT/T 0 An in&e1ra&e &ele2o,,uni2a&ions servi2es / e3ui4,en&2o,4any5 In2or4ora&e in 667 as a su+siiary o8 A,eri2an Bell

997 0 AT/T res&ru2&ure in&o * se4ara&e 4u+li2 2o,4anies

Bell la+s +e2a,e Lu2en& Te2)nolo1ies an en& 4u+li2 on !&)

A4ril;99$ Mar'e& leaer in US 8or si&2)in1 sys&e,s

<la1s)i4 4rou2& 0 7ESS= Si&2)



ASIAN >OINT ?ENTU.ES

Early 99";s 0 Tre,enous Gro&) o44or&uni&ies in Asia

<our >oin& ?en&ures &o 2a&er &o &)e risin1 Asian @e,an

Use as a ,ar'e& en&ry ve)i2le



SUPPLY CHAIN BE<O.E 99$ .E@ESIGN

Prou2&ion 8or Asian Mar'e&s 0 O'la)o,aCi&y

Par&s / Su+asse,+lies s)i44e &o s&a1in12en&er in 2ali8ornia

<inal asse,+ly / &es&in1 one +y Asian oin&

ven&ures

.everse Lo1is&i2s 5 Lon1 lea &i,es / )i1) 2os&



THE 99$ SUPPLY CHAIN .E@ESIGN

US 2en&ri2 a44roa2) Hu+ / s4o'ea44roa2)

Priori&ia&ion o8 &)e Asian su44ly 2)ain

Taian (Asian Hu+% - Orer Pla2e,en& D2us&o, e1ineerin1 / ,anu8a2&urin1 o8Asian orers

Asian >?s 0 <inal Asse,+ly / &es&in1

In2rease e2ien2y D 4ar&s 4ro2ure,en&D

3uali&y 2on&rol



BA..IE.S TO .E@ESIGN

E,4loyees resis&an2e &oars 2)an1e 0 .eu2e 8un2&ion / )en2e 8ear o8 lo o+s

Lu2en& Prou2& Mana1e,en& or1ania&ion

Cos&

.esis&an2e 8ro, sales an su44or& or1ania&ions in Asian 2oun&ries



CU..ENT SCENA.IO : YEA. #"""ISSUES <ACE@

7ESS )as rea2)e &)e ,a&uri&y s&a1e o8 &)e 4rou2& li8e 2y2le

7Ess 2)allen1e +y al&erna&e &e2)nolo1ies an 4rou2&s +ase on 4a2'e& s&e2)nolo1ies

Su44ly s)or&a1e )as ra4ily in2rease ,aorly ue &o:

Sole-sour2e 2o,4onen& lea &i,es ,ore &)an ou+le

Inven&ories in2rease +y a+ou& #7FD as asse,+lies 2oul no& +e 2o,4le&e Taian 8a2&ory )a &o 2o,,i& &o early 4ar&s elivery &o ensure availa+ili&y

Prou2& s)i4,en&s &o 2us&o,ers ere eo4arieD an orers ere a& ris'ina+ili&y &o s)i4 on &i,e

Pre,iu, 4ri2es ere re3uire in orer &o o+&ain e4ei&e s)i4,en&s o8 ,



CASE UESTION -

Ou&line &)e 8a2&ors &)a& e4lain )y &)e ori1inal su44ly 2)ain ne&or' s&ra&eLu2en& in Asia as ae3ua&e 4rior &o 99$



SOLUTION

E2ono,ies o8 S2ale

Cos& Ee2&ive

Manu8a2&urin1 0O'la)o,a ?s Taian

Ai&ional Lo2alSu44liers

• Prior &o 99$D &)e e,an 8ro, &)e Asian ,an &)e )u1e ,anu8a2&urin1 uni& in O'la)o,su2ien&

• AT/T )a )u1e 2as) Join1 8ro, 4)one +ill

• Cos& o8 Manu8a2&urin1 as )i1) in >? ,anu8a

Taian 2o,4are &o O'lo)a,a;s Manu8a2&u• Manu8a2&urin1 2a4a+ili&y as lo in Taian

• T)e asse,+ly an &es&in1 lines in Taian nes)or& o8 su44ly ue &o ai&ional lo2al su44l



CASE UESTION - #

)a& ere &)e 8a2&ors &)a& rove &)e ne2essary 2)an1es in Asia in 99$ )as &)e +ene&s 8ro, &)ose 2)an1es



SOLUTION

<a2&ors

Cos&Hi1) 2os&s in &)e 2on&ra2&si&) ,ul&i4le su44liers

S2ale o8 O44or&uni&y• Asia 0 <as&es& 1roin1 re1ion 8or 7ESS s• Hu1e 4o4ula&ion i&) s,all +ase o8 ins&all

&ele4)ones (# 4)ones "" in C)ina

Co,4e&i&ion@ere1ula&ion o8 &)e&ele2o,,uni2a&ion,ar'e& 1ave en&ry &one 2o,4e&i&ors

Penal&ies 8 *"F o8 &)e

value 8or ela

@elivery Ti,e• Boo, in &)e Taian

,ar'e& le &o ,ul&i4leorers

• @elay in &)e eliveryan e4loy,en& ,ean&loss o8 2us&o,er



SOLUTION (CONT@%

Pull ,anu8a2&urin1D .eesi1n o8 inven&oryD2onsi1n,en& an venor ,ana1e inven&oryarran1e,en&sD an ou&sour2in1 4rou2&ioni&) lo ou&4u&s ,ae &)e factory 3 timesproductive in 1998 2o,4are &o 997

Prou2& ,anu8a2&urin1 throughput timedecreased 8ro, 7ee's in 997 &o ee'in 99 )el4e in i,4rovin1 elivery4er8or,an2e 0 6"F elivere on &i,e inInonesia +y Nov 99

Prot Margins rose +y "F

Inven&ory ays sales 8ell +y ,ore &)an )al8

Bene&s Costs per termination e

Increase in responsiveneis&an2e an &i,e ieren2e

Bullwhip !ect 0 In8or,a&i&)in &)e su44ly 2)ain ,i&i

"reat cost advantage 4roavan&a1e a1ains& &)e 2o,4

1##$ mar%et share in &)e

&ele2o,,uni2a&ions ,ar'e&

Taian;s ou&4u& nearly tripl#"""



CASE UESTION - *

)a& in&ernal an e&ernal 8a2&ors )a 2)an1e 8ro, 99$ &o #"""D )i2) nerevisi& o8 &)e su44ly 2)ain s&ra&e1y 8or Lu2en& )a& oul you re2o,,en

res4on &o &)e ne 2)an1es



SOLUTION 0 <ACTO.S LEA@ING TO .E?ISIT O< SUPPCHAIN ST.ATEGY

Internal &actors 'ternal &actors

#7F in2rease in &)e inven&ory ue &o in2reasein 4rou2&ion

@e,an Ou&4a2es Su44ly &re,

Sole sour2e 2o,4onen&s; lea &i,e )asou+le

Co,4e&i&ion 8ro, 2on&ra2& ,an

S)or& Prou2& Li8e Cy2le

7ESS 4rou2& is in &)e ,a&uri&y4rou2& li8e 2y2le 0 Pressure 8roinnova&ions

C)ina e,er1in1 as &)e lo 2os&



.ECOMMEN@ATION

Ma'e Inves&,en& in e4anin1 &)e asse&s o8 >oin& ven&ures

8or ,ore 4rou2&ion

.easons: <avoura+le ,ar'e&D )i1)ly 4ro&a+le 2o,4any

Ma'e Su44ly 2)ain ,ore a1ile:

Lean +aseSu44lyC)ain

A1ileSu44ly2)ain

Cos& E2ien&

More.es4onsive



HO TO MAKE IT AGILE

Mar%et (enstive) Proper &oresystem)

To 8ore2as& &)e 3uan&i&y an 8eon 7ESS

To 8ore2as& &)e nu,+er o8 4ar&

To 8ore2as& &)e nee 8or a&a n(2o,4e&i&ors 4rou2&s%

*etwor% Based) ImplementatInformation sharing system

No&i8y &)e su44liers a+ou& 4ar&an ealine 2)an1es

I,4le,en& a E.P sys&e, 8or +2oorina&ion



HO TO MAKE IT AGILE

Process Integration

Kee4 su44liers in8or,e &)rou4ro2ess

Colla+ora&ive 4lannin1 8or oin&evelo4,en&

+irtual Con&inue Ma'e &o Orer (su44

,anu8a2&urers% 8or +e&&er ,an

inven&ory



<INAL SUPPLY CHAIN

In8or,a&ionS)arin1Sys&e,



,-.*/ 02

42(,I*(5

lucent technology case - supply chain

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