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Lucent Technologies: Case Analysis
Introduction:
Lucent Technologies is a global communications equipment giant spun off as an independent entity in 1996 by AT&T. The case under consideration focuses on the supply chain redesign of the 5ESS digital switch for the Asian market. The 5ESS switch was an industry standard digital switching platform providing a whole range of communication services and a profit engine for Lucent. In the last decade of the twentieth century, the strong growth of Asian economies coupled with the deregulation of the telecommunications sector led to an explosion in demand for telecom equipment in the region. However, Lucent was faced with one major challenge to overcome before it could take full advantage of the situation.
Lucent's Challenge:
The 5ESS switch was a highly complex device consisting of a large number of printed circuit boards, cables, power supplies and other assorted electro-mechanical components. Some of these assemblies could be manufactured from industry standard components while others were Lucent proprietary. In addition, the switch itself was a highly customized, engineered-to-order product, and as a result only a limited amount of pre-fabrication was possible.
By the early 1990s Lucent had established four Asian joint ventures (JV) in Taiwan, China, Indonesia and India. These JVs were primarily market entry vehicles to gain a foothold in the markets and not seen as strategic partners that could be leveraged to help with the operations. Most of the manufacturing for the Asian orders continued to take place at Lucent's Oklahoma City plant in the US, where economies of scale could be achieve ...