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What could Lucent do to mitigate exposure to material shortages without increasing inventory?
The strategy to mitigate exposure to material shortages without increasing inventories needs to start with their customers and their forecasts of demand for this complex, highly customized SE55 Switches. The need for creating a more accurate collaborative planning and forecasting system is critical in this regard. By having a very accurate forecast, Lucent will be able to source only the specific components required and use inventory minimization techniques including Just in Time (JIT) and Vendor Managed Inventory (VMI) techniques to minimize inventory risk while having a more accurate forecast from customers.
Was today's leading edge procurement effective for future environments?
Simply put, no, it is not. There is much room for improvement in this regard, specifically using the SRM strategies mentioned earlier in this paper, the need for creating a strategic sourcing initiative in Lucent, organized in Taiwan, and the need for a Toyota TPS-level of quality assurance at the supplier level. There is very little in the way of quality control and quality management across the suppliers, specifically processes for corrective action/preventative action (CAPA) workflows and nonconformance process definitions. All of these would be included in the Lucent interpretation of the TPS initiatives Toyota has perfected. It...
In addition the further build-out of the distributed order management system using the hub-and-spoke model as the foundation is critical and could become a major global competitive advantage if replicated across multiple locations. From the "harvest" perspective, there needs to be a focus on outsourcing software development of the switch electronics to India for lower cost of development, yet more importantly, because many Indian firms now have greater and higher levels of programming expertise than Lucent potentially has inside. Lucent needs to "harvest" those areas that have run out of cost reduction potential, or alternatively, have been tapped out in terms of depth of expertise. Given these two factors and the fact that software that is necessary for making the SE55 Switch function is highly valuable, Lucent needs to consider outsourcing its development to India.
Ayers (2000, p. 4) describes a supply chain as "Life cycle processes supporting physical, information, financial, and knowledge flows for moving products and services from suppliers to end-users." A supply chain can be short, as in the case of a cottage industry, or quite long and complex as in the manufacture, distribution, and sales of automobiles. In fact, the automobile supply chain has its origin in the mining of the
This allows for greater levels of planning and cooperation, and fills in the information gap that currently exists between the factory floor and the rest of the supply chain. Lexmark provides an example of waste. Recently, the company found itself with more than $1 million in scrap from one lot. Engineers had insufficient information to isolate and fix the problem, so were instead relegated to crisis control. With more accurate
Problem Statement #2 The Problem The problem with Hewlett-Packard’s (HP) vision of how to run a successful organization shifted dramatically in the 2000s, beginning with its plan in 2002 to outsource “PC manufacturing facilities worldwide, in keeping with its longstanding strategy to decrease operations costs and improve profitability” (Mourdoukoutas, 2014). By outsourcing its manufacturing, HP entered into a phase of self-destruction, inviting the collapse of its own supply chain through fragmentation inevitably