Lucent Technologies faced challenges with its flagship 5ESS Switch product and global supply chain. The 5ESS was customized for each order but the market was shifting to data networks. Additionally, parts production in Asia led to long lead times and high costs. Lucent questioned whether its hub-and-spoke manufacturing model was still effective given the evolving environment and opportunities to leverage external resources and contract manufacturers. It considered outsourcing more activities to adapt to future needs while mitigating material shortages and inventory risks.

1. Lucent TechnologiesGlobal Supply Chain ManagementBino JosephKishore Thomas JohnSaranya MVygha N K

2. Company Background

3. Growth of Lucent TechnologiesAfter becoming independent in 1996, operated in more than 90 countries.Network Systems unit generated 57% of revenue.Market leader in US for switching systems.Flagship product was 5ESS® Switch.

4. Large-scale, software based digital switching platform.This switch was custom configured (unlimited configurations possible).Engineered-to-order product.5ESS® Switch

5. Case Facts

6. Scenario Before 1996 RedesignAsian customers away from order processing and manufacturing activities.Parts produced in Asia shipped to US  long lead times & high costs.

8. Issues in 1996 Redesign

10. 5 Problem Areas

11. 5ESS® Switch efficient for voice networks.Current demand was for data networksProduct life cycle was shortening, and telecommunication technology was progressing at an ever increasing rateContract manufacturers got involved in telecommunication electronics5ESS® switch reaching mature part of its product life cycleOther Factors

12. Was the hub and spoke process, despite its success, the right model for this evolving environment?How could they take advantage of the maturing resources within and outside lucent?What could Lucent do to mitigate exposure to material shortages without increasing inventory?Was today’s leading edge procurement effective for future environments?Questions

13. Should they continue to drive internal breakthrough improvements or should they harvest their previous supply chain investments and direct their attention towards outsourcing for their future needs?Questions... Contd.

14. Recommended Action

20. THANK YOU