GRADUATE SCHOOL OF BUSINESS
CASE NUMBER: GS-01
GLOBAL SUPPLY CHAIN MANAGEMENT
For our business, traditional manufacturing is not strategic, but world-class supply and demand chain management and product reliability, are. - George Foo, International Manufacturing Vice President, Lucent Technologies1
As they met in Hong Kong in early 2000, George Foo, International Manufacturing Vice President for Lucent Technologies, and his key staff reviewed with satisfaction the success their supply chain redesign for Lucent’s flagship product, the 5ESS® digital switch. Four years earlier, Asia had been supplied almost exclusively from the United States—a costly and timeconsuming approach. As they considered their redesign, they realized that they had dramatically cut costs and reduced product delivery times, as well as improved support for all Asian operations. More importantly, they had made significant improvements in customer satisfaction and increased market share. They had done this by moving much of the Asia-related manufacturing and material sourcing of the 5ESS® Switch to Asia, with Taiwan as the support hub. They had also become more involved in Lucent’s bid and proposals process, helping the company secure additional business.
But they also realized that the Asian market had continued to grow rapidly, becoming an important part of Lucent’s business, despite the currency crisis of 1997. Furthermore, the manufacturing infrastructures in Asian countries had matured substantially since the 1996 redesign. Was the current process still optimal, or did changing market and manufacturing conditions require continued evolution of the supply chain? Also, did their single-minded focus on cost and speed expose the supply chain to the major component shortage problems that had recently begun to plague the industry?
“Value Creation Through Supply Chain Management,” presentation at Annual Symposium of the Stanford Global Supply Chain Management Forum, Stanford University, June 11, 1998.
Research Associate David Hoyt prepared this case under the supervision of Professor Hau Lee as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
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Version: (A) 1/26/01
Lucent Technologies: Global Supply Chain Management GS-01
Lucent’s history goes back to the 1875 invention of the telephone by Alexander Graham Bell. American Telephone and Telegraph Corporation (now known as AT&T Corporation) was incorporated in 1885 as a subsidiary of Bell’s original company, American Bell. Its charter was to build and operate the original long distance telephone network. AT&T became the parent of the Bell System, the regulated telephone monopoly for much of the United States until it was broken into eight companies in 1984 by an agreement with the U.S. Department of Justice that settled a major antitrust case. Lucent’s genesis was the manufacturing company acquired by the Bell System in the 1800s. It largely supplied only its affiliated operating companies in the United States prior to the 1984 divestiture. International operations were a small part of its business.
From 1984 to 1996, AT&T was an...
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