Case Study Lucent Technologies

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Report for Lucent Technologies
Lucent’s history goes back to the 1875 invention of the telephone by Alexander Graham Bell. It’s one of the three companies which were separated from AT&T’s restructure. Lucent was organized into four units, the largest of which was Network Systems. It provided networking systems and software to local and long distance telephone companies and cable companies. It was the marker leader for switching systems. The Switch Solutions Group(SSG), which made the 5ESS Switch, was part of the Network Systems organization.

The 5ESS Switch
Lucent’s flagship product was the 5ESS Switch. It was based on a modular design consisting by AM, CM, SM. Its modules consisted of several types of assemblies: printed circuit boards, cables, power supplies, and other assorted electrical and mechanical components. Among two hundred unique circuit pack assemblies, some of these were used in high quantity, while others were relatively infrequently used. Some could be assembled from standard industry components, while others required Lucent proprietary ASICs and other proprietary components. Finally, due to the wide range of specialized needs of customers, the 5ESS Switch was a custom configured, engineered-to-order product.

Manufacturing Strategy
Four joint ventures had been established in Asia in response to requirements from customers. Once a joint venture was established, most manufacturing continued to be done in the United States. It was believed that the high volume of production in Oklahoma City led to the lowest product costs through economics of scale. Oklahoma City selected the materials, and fed them to the Asian joint ventures for assembly and testing. This process was called “infeeding”. AT&T retained all profits from direct sales to end-users and to joint ventures, but profits from joint venture sales to end-users were split between the joint venture partners.

Facing the Questions before 1996
With its huge population and...
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