Lucent Technologies: Global Supply Chain Management
Lucent Technologies is a multinational telecommunication company which was spun off from AT&T in 1996. Before restructure, as an integrated telecommunications services and equipment company, AT&T had been primarily U.S.-centric market and more than half of income was generated by services in U.S. However, the restructure made Lucent focused on communications equipment globally. When Lucent expand into global market, its flagship product, the5ESS® digital switch, was a market leader in worldwide telecommunication infrastructure equipment. While the 5ESS® digital switch provided the company’s more competitive edge in global market. This custom configured, engineered-to-order product made only a portion of its assemblies could be built to stock. Moreover, 5ESS® digital switch orders from Asian market had continued to grow rapidly, and Asia became an important part of Lucent’s business.
U.S.-centric Supply Model
Before Lucent’s independence from AT&T, it established some joint ventures in four Asian countries to meet the increasing telecommunication equipment demand in Asian market. But this marketing entry mode just provided access to these markets. Most manufacturing continued to be done in Oklahoma City. The Asian joint ventures only performed final assembly and testing. It was believed that Lucent would benefit from the cost saving from economies of scale in manufacturing in US. However, as tremendous demand growth and intense competition arose from these countries, the delivery costs and lead time became two critical issues in this industry. The long distance inhibited the instant response. Delay means market losing. What’s more, increasing local content by having locally purchased parts would lower the costs and made product more locally attractive.
Asian-centric Supply Model
After 1996, asset management, product lead time and supply chain efficiency became more and...
Please join StudyMode to read the full document