Lucent Technologies, Global Supply Management

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PROBLEMS FROM THE CASE;
1. There has been an unprecedented growth in demand and this has led to a sharp increase in the demand of components and this has led to shortages of material. In addition, procurement arrangements have failed;
2. Parts availability has become a big problem;
3. Single sourced component lead times have more than doubled;
4. Inventories have increased by about 25 percent because the assemblies could not be completed on time;
5. The Taiwan factory had to commit to early parts delivery so that the parts would be available;
6. Product shipments to customers were being delayed and orders were likely to get cancelled because of late delivered;
7. Scarce parts were purchased at very high prices to meet the shipment dates;
CURRENT STRATEGY AND LOGISTICS DESIGN;
1. The current strategy is that of hub and spoke:
2. The use of Taiwan and Quingdao as the hub reduced the number of routes leading to efficient use of time
3. Manufacturing was consolidated at the hub rather than at each node;
4. Taiwan and Quingdao presented excellent spokes and new spokes could be connected quickly.
5. The customers of the company found this arrangement easy to understand.

The current strategy had been focused on cost and speed of delivery;
With the focus on reducing costs the company had not done any vertical integration nor had it developed pats making capacity;
The company had little control over the supply of parts to its operations in Taiwan and China;
Problems with the current strategy:
1. The hub and spokes modes is centralized and so is inflexible;
2. The changes in the hub can lead to supply and scheduling problems;
3. Cargo must be routed through the hub before it reaches its destination, requiring a longer journey.

PROPOSED STRATEGY:
1. There should be a collaborative manufacturing strategy for Lucent Technologies:
2. The product life cycle is not very long and s the manufacturing should take place ...