Lucent Technologies—Practicum Proposal
In 1996 the systems and technology unit of AT&T was renamed Lucent Technologies and spun-off as an IPO. From its launch, Lucent was a major global telecom player, serving large service providers and enterprises. At the height of the telecommunications market expansion, Lucent operated as eleven semi-autonomous, entrepreneurial entities.
In late 2000; Lucent embarked upon a restructuring effort that abandoned the separate entity model, and adopted a OneLucent approach by centralizing, consolidating and leveraging resources across the company. Emphasis was also placed on reducing expenses and outsourcing manufacturing.
Inthe fourth quarter of fiscal year 2003 Lucent was profitable for the first time in over three years. With its restructuring complete, Lucent is fully focused on transforming the way the world communicates.
Supply Chain Networks
Supply Chain Networks (SCN), the supply chain organization of Lucent, has played a pivotal role in repositioning Lucent’s business. Under our Supplier Relationship Program (SRP), SCN has developed a revolutionary approach to building strategic relationships with key suppliers. These relationships have become Lucent’s engine for driving cost savings and efficiencies. Suppliers are now thoroughly engaged in Lucent’s global outsourcing of manufacturing and non-strategic commodity management. Our suppliers’ design, innovation and production capabilities are fully utilized to support Lucent’s goals. In turn, Lucent has limited its supply base to concentrate spend with key suppliers. More than 80% of Lucent’s total spend on commodities is now concentrated with approximately 60 suppliers. In 2001, 40% was with 1000 suppliers.
The ultimate success of Lucent’s supply chain strategy was affirmed in 2002 when Supply Chain Networks was the recipient of Purchasing Magazine’s Medal of Excellence. Lucent’s very recent return to profitability is an even more tangible affirmation of SCN’s success.
Lucent will participate in one of these two descriptions:
1. Supply chain opportunities: Several years ago, as part of Lucent’s transformation, all manufacturing was outsourced and as part of that a level of sourcing control was provided to the manufacturing partners. As the years progressed these manufacturing partners continued to move Lucent’s manufacturing to various locations around the world. This resulted in more locations and sometimes more complexity. At the time the goal was to lower the cost of the product and this was certainly effected, but the resulting supply chain complexity left us with provisioning and interval problems. Imagine bringing together all the components for a product that may dive down 5-6 layers of supply – the redundant shipping, logistic, pack and repack costs as well as the inventory investment along the way create a less then nimble chain, couple that with delays in information management and poor forecast and you have a supply chain that is not pliable enough to support swings in demand and is subject to the Bullwhip effect.
The Project being considered is to take 3-5 key products and decompose the overall supply chain showing the sources, transformations, interval and accumulated costs along the way. Identify the root cause of interval latency, areas of supply chain weakness and risk, opportunities for total supply chain simplification with a bias for compressing the overall interval.. Recommendations for supply chain re-design could include changing source locations, facilities closure, logistical reconfigurations and information management techniques.
2. New Mobile Technologies
Lucent’s customers have historically been large Network Service providers who focused on either Mobile, Wireline or Transport networks. Telephony technology is at a point where there is a great deal of convergence – in terms of markets, customers and network structure. This convergence has blurred the traditional roles and revenue streams of our customers and opened up new product and service areas to Lucent – beyond the service provider and into the enterprise. These new markets and technology now leave Lucent faced with the classic question of addressing the market solution through our own products, developing new products, partnering with 3rd parties or acquiring companies to support gaps in our portfolio.
Much of the opportunity is in Mobile technologies that allow the end-user to have seamless and ubiquitous mobile access regardless of the mobile interface. A few standards have emerged and are being touted as areas for consideration in our portfolio – or reference architecture. Examples include WiMax, WiFi and mobility “in-building” solutions. All of these technologies provide a slightly different mobility interface and have different markets and applications. Lucent will have to face choices of using it’s own development dollars or partnering with others and define new channels to reach these non-traditional markets.