Lucent Technologies

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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. By 1996, Asian market had developed a diversified manufacturing capability. During this time many competitive issues like cost and delivery time had become apparent because of multiple suppliers, rapidly developing Infrastructures, quick delivery becoming more important than price. Also the parts that were produced in Asia had been shipped to US which produced long lead times and high costs. Additional factors include, deregulation of tele communication market, fast deployment becoming high priority and penalty of 30% contract value for late customer delivery. Along with these factors cheap labor in Asia and different time zones necessitated changes in 1996. The network systems which was the largest unit of the four, generated 57% of the total Lucent revenue for the first year of operation. Taiwan became the hub of Asian Supply Chain and orders were placed there itself rather than New Jersey and so a rapid response to customer changes was possible. Asian originated components undergone direct procurement to Taiwan. For low volume, Asian Joint Ventures did final assembly & testing, and for the higher ones, the level of local production increased. By 1998, all Asian orders were produced in Taiwan and a...
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