lucent technologies
GRADUATE SCHOOL OF BUSINESS
STANFORD UNIVERSITY
D
CASE NUMBER: GS-01
JANUARY 2001
O
LUCENT TECHNOLOGIES:
GLOBAL SUPPLY CHAIN MANAGEMENT
N
For our business, traditional manufacturing is not strategic, but world-class supply and demand chain management and product reliability, are.
- George Foo, International Manufacturing Vice President, Lucent Technologies1
O
As they met in Hong Kong in early 2000, George Foo, International Manufacturing Vice
President for Lucent Technologies, and his key staff reviewed with satisfaction the success their supply chain redesign for Lucent’s flagship product, the 5ESS® digital switch. Four years earlier, Asia had been supplied almost exclusively from the United States—a costly and timeconsuming approach. As they considered their redesign, they realized that they had dramatically cut costs and reduced product delivery times, as well as improved support for all Asian operations. More importantly, they had made significant improvements in customer satisfaction and increased market share. They had done this by moving much of the Asia-related manufacturing and material sourcing of the 5ESS® Switch to Asia, with Taiwan as the support hub. They had also become more involved in Lucent’s bid and proposals process, helping the company secure additional business.
T
CO
But they also realized that the Asian market had continued to grow rapidly, becoming an important part of Lucent’s business, despite the currency crisis of 1997. Furthermore, the manufacturing infrastructures in Asian countries had matured substantially since the 1996 redesign. Was the current process still optimal, or did changing market and manufacturing conditions require continued evolution of the supply chain? Also, did their single-minded focus on cost and speed expose the supply chain to the major component shortage problems that had recently begun to plague the industry?
PY
1
“Value Creation Through Supply Chain
STANFORD UNIVERSITY
D
CASE NUMBER: GS-01
JANUARY 2001
O
LUCENT TECHNOLOGIES:
GLOBAL SUPPLY CHAIN MANAGEMENT
N
For our business, traditional manufacturing is not strategic, but world-class supply and demand chain management and product reliability, are.
- George Foo, International Manufacturing Vice President, Lucent Technologies1
O
As they met in Hong Kong in early 2000, George Foo, International Manufacturing Vice
President for Lucent Technologies, and his key staff reviewed with satisfaction the success their supply chain redesign for Lucent’s flagship product, the 5ESS® digital switch. Four years earlier, Asia had been supplied almost exclusively from the United States—a costly and timeconsuming approach. As they considered their redesign, they realized that they had dramatically cut costs and reduced product delivery times, as well as improved support for all Asian operations. More importantly, they had made significant improvements in customer satisfaction and increased market share. They had done this by moving much of the Asia-related manufacturing and material sourcing of the 5ESS® Switch to Asia, with Taiwan as the support hub. They had also become more involved in Lucent’s bid and proposals process, helping the company secure additional business.
T
CO
But they also realized that the Asian market had continued to grow rapidly, becoming an important part of Lucent’s business, despite the currency crisis of 1997. Furthermore, the manufacturing infrastructures in Asian countries had matured substantially since the 1996 redesign. Was the current process still optimal, or did changing market and manufacturing conditions require continued evolution of the supply chain? Also, did their single-minded focus on cost and speed expose the supply chain to the major component shortage problems that had recently begun to plague the industry?
PY
1
“Value Creation Through Supply Chain