Lucent Tech Case Summery

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Lucent Technologies: Case Summery The inception of Lucent Technologies starts with the invention of the telephone in 1875. During this time Lucent started as part of the AT&T monopoly that eventually was dissolved by the government in 1984. In 1995 AT&T decided to restructure the company into three different public companies. One of the companies was called Bell Labs and its main focus was to handle the communications equipment. Bell become known as Lucent and become totally independent when AT&T decided to sell 17.6 percent of its holdings. By this time Lucent had a strong presence in ninety countries around the world and was producing its signature product, the 5ESS switch. Having a global presence Lucent needed to think about the most efficient way to handle their supply chain. Currently Asian customers were away from order processing and manufacturing activities apart from the final assembly that was done by the Asian joint ventures. Having to produce most of the switches aimed to Asia in Oklahoma City was not proving to be the best alternative. As a consequence, the company decided to make a supply chain redesign by changing the US centric supply model to a “hub and spoke” approach in Taiwan. This allowed Asian joint ventures to take control of some of the custom engineering and manufacturing of Asian orders. By 1998 all Asian orders were being processed in Taiwan. Growth in the Asian telecommunications market became a huge potential for Lucent and their decision to move production to Taiwan was vital in supporting the spike in demand. However, the supply chain redesign was not enough. By 2000 component demand was greater than the respective supply and the company was having material shortages. To add to the problems, lead times more than doubled and inventories increased by 25 percent. Furthermore, the redesign caused fear in the sense that moving Asian

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