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LUCENTTECHNOLOGIES DavidW Hoyt ACHIEVINGTHE IMPOSSIBLE BYUSINGPROVISIONINGANDPOSTPONEMENT Content 37263134384347575962 OpportunityHistoryofLucent5ESSDigitalSwitchTheOriginalProcessLucent sManufacturingProblemsPostponementRelievingConstraintsProvisioningandParallelProcessingOrganizationalIssuesResultsandConclusion Opportunity 1998SaudiArabiaManydigitalswitchesneedtobereplacedY2Kcompliant MillionsofdollarsSignificantadditionalbusiness 5ESSDigitalSwitch 23 25weeksTresCantos Spain InsufficientCapacityOklahomaCity US Differentengineeringsystem OvercomecapacityconstraintsImprovedeliverytime Opportunity 1998SaudiArabiaManydigitalswitchesneedtobereplacedY2Kcompliant MillionsofdollarsSignificantadditionalbusiness 5ESSDigitalSwitch 23 25weeksTresCantos Spain InsufficientCapacityOklahomaCity US Differentengineeringsystem OvercomecapacityconstraintsImprovedeliverytime Opportunity 1998SaudiArabiaManydigitalswitchesneedtobereplacedY2Kcompliant MillionsofdollarsSignificantadditionalbusiness 5ESSDigitalSwitch 23 25weeksTresCantos Spain InsufficientCapacityOklahomaCity US Differentengineeringsystem OvercomecapacityconstraintsImprovedeliverytime Opportunity 1998SaudiArabiaManydigitalswitchesneedtobereplacedY2Kcompliant MillionsofdollarsSignificantadditionalbusiness 5ESSDigitalSwitch 23 25weeksTresCantos Spain InsufficientCapacityOklahomaCity US Differentengineeringsystem OvercomecapacityconstraintsImprovedeliverytime HistoryofLucent 1877BellTelephoneCompany1880AT TLongLine1885AT T AmericaTelephoneandTelegraphCompany 1899AmericaBell BellSystem AT T 1925BellLaboratories 3 outputofAT TCommunication RadioAstronomySemi conductor ComputerScienceC Unix Telephone Transistor DigitalSwitchCommunicationsSatellite OpticalFiberInformationTheory Shannon MonopolyPositioninAmericaandCanada HistoryofLucent 1877BellTelephoneCompany1880AT TLongLine1885AT T AmericaTelephoneandTelegraphCompany 1899AmericaBell BellSystem AT T 1925BellLaboratories 3 outputofAT TCommunication RadioAstronomySemi conductor ComputerScienceC Unix Telephone Transistor DigitalSwitchCommunicationsSatellite OpticalFiberInformationTheory Shannon MonopolyPositioninAmericaandCanada HistoryofLucent 1877BellTelephoneCompany1880AT TLongLine1885AT T AmericaTelephoneandTelegraphCompany 1899AmericaBell BellSystem AT T 1925BellLaboratories 3 outputofAT TCommunication RadioAstronomySemi conductor ComputerScienceC Unix Telephone Transistor DigitalSwitchCommunicationsSatellite OpticalFiberInformationTheory Shannon MonopolyPositioninAmericaandCanada HistoryofLucent 1877BellTelephoneCompany1880AT TLongLine1885AT T AmericaTelephoneandTelegraphCompany 1899AmericaBell BellSystem AT T 1925BellLaboratories 3 outputofAT TCommunication RadioAstronomySemi conductor ComputerScienceC Unix Telephone Transistor DigitalSwitchCommunicationsSatellite OpticalFiberInformationTheory Shannon MonopolyPositioninAmericaandCanada HistoryofLucent 1877BellTelephoneCompany1880AT TLongLine1885AT T AmericaTelephoneandTelegraphCompany 1899AmericaBell BellSystem AT T 1925BellLaboratories 3 outputofAT TCommunication RadioAstronomySemi conductor ComputerScienceC Unix Telephone Transistor DigitalSwitchCommunicationsSatellite OpticalFiberInformationTheory Shannon MonopolyPositioninAmericaandCanada HistoryofLucent 1984UnitedStatesantitrustlawAT T MaBell and7BabyBells Marketshare Profit R DExpenseCommunication Semi conductor 1995Backtothetop 1996SeparationAT T TelecommunicationServiceLucent EquipmentManufactureNCR Computer 2005AcquisitionbySBC HistoryofLucent 1984UnitedStatesantitrustlawAT T MaBell and7BabyBells Marketshare Profit R DExpenseCommunication Semi conductor 1995Backtothetop 1996SeparationAT T TelecommunicationServiceLucent EquipmentManufactureNCR Computer 2005AcquisitionbySBC HistoryofLucent 1984UnitedStatesantitrustlawAT T MaBell and7BabyBells Marketshare Profit R DExpenseCommunication Semi conductor 1995Backtothetop 1996SeparationAT T TelecommunicationServiceLucent EquipmentManufactureNCR Computer 2005AcquisitionbySBC HistoryofLucent 1984UnitedStatesantitrustlawAT T MaBell and7BabyBells Marketshare Profit R DExpenseCommunication Semi conductor 1995Backtothetop 1996SeparationAT T TelecommunicationServiceLucent EquipmentManufactureNCR Computer 2005AcquisitionbySBC HistoryofLucent 1984UnitedStatesantitrustlawAT T MaBell and7BabyBells Marketshare Profit R DExpenseCommunication Semi conductor 1995Backtothetop 1996SeparationAT T TelecommunicationServiceLucent EquipmentManufactureNCR Computer 2005AcquisitionbySBC HistoryofLucent Lucent OrderofSprintandMCI1996Listing 90 countries 4unitsNetworkSystems 50 revenues TheDot comBubbleMassAccountsReceivables2000Crumbletodust CarlyFiorinaAvayaofLucent BellLabs Alcatel CISCO HistoryofLucent Lucent OrderofSprintandMCI1996Listing 90 countries 4unitsNetworkSystems 50 revenues TheDot comBubbleMassAccountsReceivables2000Crumbletodust CarlyFiorinaAvayaofLucent BellLabs Alcatel CISCO HistoryofLucent Lucent OrderofSprintandMCI1996Listing 90 countries 4unitsNetworkSystems 50 revenues TheDot comBubbleMassAccountsReceivables2000Crumbletodust CarlyFiorinaAvayaofLucent BellLabs Alcatel CISCO HistoryofLucent Lucent OrderofSprintandMCI1996Listing 90 countries 4unitsNetworkSystems 50 revenues TheDot comBubbleMassAccountsReceivables2000Crumbletodust CarlyFiorinaAvayaofLucent BellLabs Alcatel CISCO HistoryofLucent Lucent OrderofSprintandMCI1996Listing 90 countries 4unitsNetworkSystems 50 revenues TheDot comBubbleMassAccountsReceivables2000Crumbletodust CarlyFiorinaAvayaofLucent BellLabs Alcatel CISCO HistoryofLucent Trend Internet MobilephoneLeadingenterprise Money Tech ShannonLabs 9 11 SouthwestBell SBCSecondTelecomCompanyM A AT T AT T ResourceService HistoryofLucent Trend Internet MobilephoneLeadingenterprise Money Tech ShannonLabs 9 11 SouthwestBell SBCSecondTelecomCompanyM A AT T AT T ResourceService HistoryofLucent Trend Internet MobilephoneLeadingenterprise Money Tech ShannonLabs 9 11 SouthwestBell SBCSecondTelecomCompanyM A AT T AT T ResourceService HistoryofLucent Trend Internet MobilephoneLeadingenterprise Money Tech ShannonLabs 9 11 SouthwestBell SBCSecondTelecomCompanyM A AT T AT T ResourceService 5ESSDigitalSwitch 250thousandsubscriberlines100thousandtrunklinesdigital voice data video wired wireless Modulardesign Administration Communication Switching 250thousandsubscriberlines100thousandtrunklinesdigital voice data video wired wireless Modulardesign Administration Communication Switching 5ESSDigitalSwitch 5ESSDigitalSwitch PCB PrintedCircuitBoards CablesPowerSuppliesOtherComponents Cabinets 298PCBs 22Cabinets 21OtherunitsCombinedwithcustom builtassembliesCustomizedproducts Atypicalsystem 6 7Cabinets1MilliondollarsDetailedrequirement ConfigurationRequiredanalogtrafficlevel 5ESSDigitalSwitch PCB PrintedCircuitBoards CablesPowerSuppliesOtherComponents Cabinets 298PCBs 22Cabinets 21OtherunitsCombinedwithcustom builtassembliesCustomizedproducts Atypicalsystem 6 7Cabinets1MilliondollarsDetailedrequirement ConfigurationRequiredanalogtrafficlevel 5ESSDigitalSwitch PCB PrintedCircuitBoards CablesPowerSuppliesOtherComponents Cabinets 298PCBs 22Cabinets 21OtherunitsCombinedwithcustom builtassembliesCustomizedproducts Atypicalsystem 6 7Cabinets1MilliondollarsDetailedrequirement ConfigurationRequiredanalogtrafficlevel TheOriginalProcess Lucentengineers On siteinspection Configuration Requirements Information Billofmaterials BOM BasicproductmanufacturedCustompartsaddedShippingandcustomsclearanceAssembleandtestsystemDelivertocustomersiteInstallandtestequipment Shipmentbyseatookabout10daysShipmentbyairwasexpensiveTimingofclearancewasunpredictable TheOriginalProcess Lucentengineers On siteinspection Configuration Requirements Information Billofmaterials BOM BasicproductmanufacturedCustompartsaddedShippingandcustomsclearanceAssembleandtestsystemDelivertocustomersiteInstallandtestequipment Shipmentbyseatookabout10daysShipmentbyairwasexpensiveTimingofclearancewasunpredictable TheOriginalProcess Lucentengineers On siteinspection Configuration Requirements Information Billofmaterials BOM BasicproductmanufacturedCustompartsaddedShippingandcustomsclearanceAssembleandtestsystemDelivertocustomersiteInstallandtestequipment Shipmentbyseatookabout10daysShipmentbyairwasexpensiveTimingofclearancewasunpredictable Lucent sManufacturing OklahomaCity US Worldwide Bythelate1990sSuppliedprimarilybylocalfacilitiesTresCantos Spain EMEAregion Europe MiddleEast andAfrica Fast growingcapacitySlow growingneedofcapacity1circuitboardsupply8 32subscribersEffectivecapacityhadgrowndramatically Capacitysurplus Imbalance Lucent sManufacturing OklahomaCity US Worldwide Bythelate1990sSuppliedprimarilybylocalfacilitiesTresCantos Spain EMEAregion Europe MiddleEast andAfrica Fast growingcapacitySlow growingneedofcapacity1circuitboardsupply8 32subscribersEffectivecapacityhadgrowndramatically Capacitysurplus Imbalance Lucent sManufacturing OklahomaCity US Worldwide Bythelate1990sSuppliedprimarilybylocalfacilitiesTresCantos Spain EMEAregion Europe MiddleEast andAfrica Fast growingcapacitySlow growingneedofcapacity1circuitboardsupply8 32subscribersEffectivecapacityhadgrowndramatically Capacitysurplus Imbalance Lucent sManufacturing OklahomaCity US Worldwide Bythelate1990sSuppliedprimarilybylocalfacilitiesTresCantos Spain EMEAregion Europe MiddleEast andAfrica Fast growingcapacitySlow growingneedofcapacity1circuitboardsupply8 32subscribersEffectivecapacityhadgrowndramatically Capacitysurplus Imbalance Problems InsufficientcapacityinEuropeLongoverallfulfillmentcycle 400cabinetsand44000circuitpackAllEuropeanfacilities NootherordersOvera12monthperiodOKC Differentengineeringsystem IncreasethecapacityinTC 10millions months Workers Equipment ProductioninSaudiArabia ImpossibleStockpilecompletedsystems Impossible Requirementsbeknown InstallationCustomclearance 3weeks Problems InsufficientcapacityinEuropeLongoverallfulfillmentcycle 400cabinetsand44000circuitpackAllEuropeanfacilities NootherordersOvera12monthperiodOKC Differentengineeringsystem IncreasethecapacityinTC 10millions months Workers Equipment ProductioninSaudiArabia ImpossibleStockpilecompletedsystems Impossible Requirementsbeknown InstallationCustomclearance 3weeks Problems InsufficientcapacityinEuropeLongoverallfulfillmentcycle 400cabinetsand44000circuitpackAllEuropeanfacilities NootherordersOvera12monthperiodOKC Differentengineeringsystem IncreasethecapacityinTC 10millions months Workers Equipment ProductioninSaudiArabia ImpossibleStockpilecompletedsystems Impossible Requirementsbeknown InstallationCustomclearance 3weeks Problems InsufficientcapacityinEuropeLongoverallfulfillmentcycle 400cabinetsand44000circuitpackAllEuropeanfacilities NootherordersOvera12monthperiodOKC Differentengineeringsystem IncreasethecapacityinTC 10millions months Workers Equipment ProductioninSaudiArabia ImpossibleStockpilecompletedsystems Impossible Requirementsbeknown InstallationCustomclearance 3weeks Problems InsufficientcapacityinEuropeLongoverallfulfillmentcycle 400cabinetsand44000circuitpackAllEuropeanfacilities NootherordersOvera12monthperiodOKC Differentengineeringsystem IncreasethecapacityinTC 10millions months Workers Equipment ProductioninSaudiArabia ImpossibleStockpilecompletedsystems Impossible Requirementsbeknown InstallationCustomclearance 3weeks Postponement RedesigningandbuildingTime Cost Effort Push Build to stock PlaceinstockPull Build to order meetspecificrequirement Push pullboundary Standardization Customization Originalprocess farleftMinimizedinventory Longdeliverytime Solution movetotherightStandardization Product Processdesign Postponement RedesigningandbuildingTime Cost Effort Push Build to stock PlaceinstockPull Build to order meetspecificrequirement Push pullboundary Standardization Customization Originalprocess farleftMinimizedinventory Longdeliverytime Solution movetotherightStandardization Product Processdesign Postponement RedesigningandbuildingTime Cost Effort Push Build to stock PlaceinstockPull Build to order meetspecificrequirement Push pullboundary Standardization Customization Originalprocess farleftMinimizedinventory Longdeliverytime Solution movetotherightStandardization Product Processdesign Postponement RedesigningandbuildingTime Cost Effort Push Build to stock PlaceinstockPull Build to order meetspecificrequirement Push pullboundary Standardization Customization Originalprocess farleftMinimizedinventory Longdeliverytime Solution movetotherightStandardization Product Processdesign RelievingConstraints TheSupplyChainEngineeringGroup Irrelevanttocustomer Options ConfigurationsConventions Decision Requirement Allsystem Sufficientcabling simplifiedModestmaterialscostReducedexpeditingcharges Totalmanufacturingcost Planning BuildingMaintainingmultiplevariations Createonestandardversion RelievingConstraints TheSupplyChainEngineeringGroup Irrelevanttocustomer Options ConfigurationsConventions Decision Requirement Allsystem Sufficientcabling simplifiedModestmaterialscostReducedexpeditingcharges Totalmanufacturingcost Planning BuildingMaintainingmultiplevariations Createonestandardversion RelievingConstraints TheSupplyChainEngineeringGroup Irrelevanttocustomer Options ConfigurationsConventions Decision Requirement Allsystem Sufficientcabling simplifiedModestmaterialscostReducedexpeditingcharges Totalmanufacturingcost Planning BuildingMaintainingmultiplevariations Createonestandardversion RelievingConstraints TheSupplyChainEngineeringGroup Irrelevanttocustomer Options ConfigurationsConventions Decision Requirement Allsystem Sufficientcabling simplifiedModestmaterialscostReducedexpeditingcharges Totalmanufacturingcost Planning BuildingMaintainingmultiplevariations Createonestandardversion RelievingConstraints TheSupplyChainEngineeringGroup Irrelevanttocustomer Options ConfigurationsConventions Decision Requirement Allsystem Sufficientcabling simplifiedModestmaterialscostReducedexpeditingcharges Totalmanufacturingcost Planning BuildingMaintainingmultiplevariations Createonestandardversion RelievingConstraints 95 BNEs BasicNetworkElements 5 deltas Custommanufacturing Low level CircuitboardsTop level Site specificconfigurations BNEsdefined CertifiedinOKCTC AssembletheBNEsintothesystem Test BNEs buildcommonlyusedmodulestostockDeltas customdesigned Fast responseengineeringteam Customer TimerequiredforthepullportionLonglead time PushsideShortcustomizationprocess Pullside RelievingConstraints 95 BNEs BasicNetworkElements 5 deltas Custommanufacturing Low level CircuitboardsTop level Site specificconfigurations BNEsdefined CertifiedinOKCTC AssembletheBNEsintothesystem Test BNEs buildcommonlyusedmodulestostockDeltas customdesigned Fast responseengineeringteam Customer TimerequiredforthepullportionLonglead time PushsideShortcustomizationprocess Pullside RelievingConstraints 95 BNEs BasicNetworkElements 5 deltas Custommanufacturing Low level CircuitboardsTop level Site specificconfigurations BNEsdefined CertifiedinOKCTC AssembletheBNEsintothesystem Test BNEs buildcommonlyusedmodulestostockDeltas customdesigned Fast responseengineeringteam Customer TimerequiredforthepullportionLonglead time PushsideShortcustomizationprocess Pullside RelievingConstraints 95 BNEs BasicNetworkElements 5 deltas Custommanufacturing Low level CircuitboardsTop level Site specificconfigurations BNEsdefined CertifiedinOKCTC AssembletheBNEsintothesystem Test BNEs buildcommonlyusedmodulestostockDeltas customdesigned Fast responseengineeringteam Customer TimerequiredforthepullportionLonglead time PushsideShortcustomizationprocess Pullside RelievingConstraints 95 BNEs BasicNetworkElements 5 deltas Custommanufacturing Low level CircuitboardsTop level Site specificconfigurations BNEsdefined CertifiedinOKCTC AssembletheBNEsintothesystem Test BNEs buildcommonlyusedmodulestostockDeltas customdesigned Fast responseengineeringteam Customer TimerequiredforthepullportionLonglead time PushsideShortcustomizationprocess Pullside ProvisioningandParallelProcessing TC servedasanintegrationfacilityAdistributioncenter SaudiArabia Deltaassemblies Fast responseAcableassemblyfacility SaudiArabiaFinalassemblybedoneonsite ProvisioningandParallelProcessing TC servedasanintegrationfacilityAdistributioncenter SaudiArabia Deltaassemblies Fast responseAcableassemblyfacility SaudiArabiaFinalassemblybedoneonsite OrganizationalIssues ManypartsoftheLucentorganizationinvolvedHighpriorityinLucentseniormanagementOverallproject simportance changesrequired TC TestofBNEmodulesanddeltasInstallationengineers FinalassemblyandfullsystemtestEngineeringstaff RequirementsofBNEsanddeltas Afastmanufacturingteam deltaAnewlogisticssystem BN