Lucent Technologies: Global Supply Chain Management Harvard Case Solution & Analysis

Factors behind the Original Supply Chain Strategy

  The original supply chain network strategy that was used by the company for Asian countries before 1996 was basically U.S. centric. Asia was at its peak and was the development hub of the world with massive economic development kicking off in the region. The company had two types of costumers in the market, those who had joint ventures with the company and there were others who were independent costumers.

     Before 1996 as per the original supply chain network strategy most of the production for the Asian countries was done in the U.S. Oklahoma city. The parts and other sub-assemblies that were part of the order were then dispatched to another staging facility of the company in California before being dispatched to the costumers in Asia. The orders that were placed by the joint ventures were shipped to them and they were the ones to perform final assembly and testing of the machinery before delivering it to the costumer and the orders that were placed by independent costumers were directly sent to them.

Before 1990`s there was no technological advancements in the Asian region, so the Asian customers and their markets relied on the western parts and equipments. The basic purpose of the joint ventures for company was to establish and launch itself in the market, but lately the joint ventures had developed parts locally and were allowed to use them and they were certified by the company. Thus, this approach helped greatly in reducing the cost of the machinery while parts were locally produced in Asia. More than 90 % of the world was using integrated circuits that were produced in Asia. Subsequently the company had also adapted to this move. This caused immense delays in deliveries, the quality of the products decreased and prices of the products increased  as the parts were shipped to U.S. first then it were sent back to Asia it was due to these reasons that the original strategy could not be sustained as an adequate measure post 1996 as it was previously.

Factors That Drove the Necessary Changes in Asia In 1996

The management of the company realized that the original supply chain network strategy of the company was no longer sustainable and profitable due to the changing market dynamics and the business structure and raw material line of the company. So the need was felt to revive the organizational structure and policies of the company in order to revive its capacity and efficiency as it was before or even better it.

                        In the late 90`s the Asian electronic market expanded enormously and developed very well to an extent that it became a major electronic hub of the world. Roughly about ninety percent of the world’s integrated circuits were being developed and exported from Asia along with that most of the joint ventures had established their own development skills. Each to its own extant some had most and some had less. The company was also procuring parts from the Asian market by then and this was proving to be damaging for the company as the prices of products became high, the time consumption of the product manufacturing and delivering increased due to dual shipments. It was later decided by the company after viewing above challenges in its supply chain strategy that the production orders of the Asian region would be shifted to Taiwan as it had the most resourceful facilities among other joint ventures. This new adopted supply chain strategy by the company was a very positive move. As it would help the management to bring down the cost of products, the lead time per order would also be reduced and the other parts that would still be exported to the facility would all help the company increase its sales revenue and growth.Lucent Technologies Global Supply Chain Management Case Solution

Internal and External Factors Had Changed From 1996 to 2000

 There are the various both internal and external factors that had changed from 1996 to 2000 and impact the supply chain strategy of the company. The important changes in relationship between customer and supplier as well as in the business models because of the continuous change and improvement in the information technology and internet are among most important factors. Another factor that had changed from 1996 to 2000 reduction in time duration of the product life cycle as it shorten.............................

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