Operation Management

Case Study- 2
Lucent Technology : Global Supply Chain
Q.1- Was the hub-and spoke process the right model for the evolving environment ?
Ans. Yes, from the "US centralized model" to a more distributed approach that relies on the "hub and
the spoke approach" which is the distributed order management hub in Taiwan was an excellent
decision. There are several reasons, first Lucent was struggling to meet complex and intricate demand of
customers in Asian region and provide fast delivery as "quick delivery became more important than
price". Time required to manufacture the product and deliver to customer is greatly reduced from five
weeks to one week. It is clear from the case that manufacturing in close proximity to customers result in
cost savings. The result of this change is that the company become more "productive" and had
significant effect on "delivery performance". Taiwan greatly simplified the asset management and
supply chain management and it provide fast order placement. This approach sets the foundation for a
fundamental realignment of the entire asset management, supply chain, placement order fulfillment
process workflows on a global scale. Other business units of Lucent also implemented this approach and
Taiwan joint ventures had begun to manufacture wireless products and data access products for other
units as Taiwan factory was in a great control of the cost element of 5ESS switch. And more additional
factors are increasing capacity therefore fast deployment became high priority"This decision combined
greatly improve the competitiveness of Lucent's Asian operation".
Q.2- How could Lucent mitigate exposure to material shortages without increasing inventory ?
Ans. To reduce the exposure to material shortages Lucent should forecast the quantity and the features
required on 5ESS switch orders, It should also forecast the need for data network products and forecast
the number of parts needed, thereby reducing potential part shortages. Lucent can reduce exposure by
notify the suppliers about part design, quantity and changes in deadline, "fine tuning the actual number
of and type of parts needed". It should keep suppliers informed throughout design process, this will
enable them to forecast plan their production properly and synchronize order placement with supplier
manufacturing cycles. Therefore communication about forecasts and needed parts help reduce
inventory and costs, aligning part orders with manufacturing cycles can reduce inventory levels.
Q.3- Should they continue to drive internal improvements, or should they consider outsourcing ?
Ans.