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Lucent Technologies

Through a transition from a vertical to a leveraged environment, Lucent transformed itssupply chain network into a profitable, award-winning collaboration with EMS providers.

The Transition to a More Leveraged Model

Lucent Technologies, a global leader in the development and deployment of advanced communications networks, owned and controlled most aspects of the design and manufacture, implementation and support of its products. By early 2000, Lucent’s business units had long-established processes for parts numbering, product design and local communication on product information. Those practices, in many cases, were localized and unique to the products being built.

To more effectively meet the rapidly changing needs of customers, Lucent transitioned its global equipment manufacturing operations to a blended model that mixed external and internal capabilities. By dramatically shifting to a leveraged model, Lucent could gain competitive advantages by tapping into the strengths of business partners. This also allowed the company to retain a set of competencies that would focus on only the most complex systems, both supporting new product introduction “time to volume” ramps and an “integration” service and operational competency to serve customers’ needs.

As Lucent’s structure changed, the company needed to adopt a new shared approach to managing product information in order to successfully transition to an integrated company that leveraged providers to manufacture its products. Consolidating the product design, structure, description and part information into a standard format for supply-chain-wide visibility and accessibility was essential to achieving the production quality, volume discounts and product design standardization Lucent expected to gain from outsourcing. This migration would set the stage for greater flexibility, speed to market and improved cash flow. To help accomplish this, Lucent’s systems, processes and resources were overhauled.

Challenges Faced

As Lucent transitioned, the supply chain network team increased the leverage of partners. However, integrating partners into the Lucent supply chain was encumbered by the numerous tools and processes used to manage product data. Design and manufacturing teams used local processes and tools specifically suited to their needs. In addition, multiple part-numbering schemes were used throughout the company as well as a wide variety of approved manufacturers. There were existing legacy systems and conflicting roles and responsibilities across the company’s business units that resulted in the partners receiving product data in different formats and structures, leading to confusion, delays and errors.

Manufacturing partners reported that a significant number of our bills of material (BOM) contained inaccurate data, incorrect documentation or the absence of critical pieces of product data. Nonstandard and multiple formats and structures caused delays as our manufacturing partners worked on translation and conversion of Lucent’s product data. My team came to realize that the absence of a single partner collaboration process was impacting margins and creating delays in product realization intervals. That was the beginning of Project Genesis.

In 2001, I charged a cross-functional team with eliminating our disparate information systems and localized processes to create a OneLucent collaboration process. This process would include a single repository for product content data, approved part substitutes and approved parts manufacturers.

Goals and Objectives

The team looked for an Internet-based solution to support the required changes to fundamentally alter the way Lucent conducted business. This would help the company adapt more quickly to shifts in the market to effectively reassert itself as a profitable enterprise.

The goals and objectives of Project Genesis were to:

• Develop a high-quality, cost-effective and well-synchronized collaboration process;
• Implement a comprehensive Web-centric, business-to-business solution to accelerate the transformation to a fully outsourced business model;
• Implement one solution across all Lucent business units to support manufacturing collaboration that would provide a streamlined, disciplined process and infrastructure for data management;
• Have one voice to partners – a single part-numbering scheme, a global approved manufacturers list and consistent processes and policies;
• Obtain complete visibility of the latest data with one record system for the product data; and
• Establish ourselves as best in class from the perspective of original equipment manufacturer collaboration.

Lucent’s Support of Project Genesis

The supply chain network team dedicated a highly integrated cross-functional team to support Project Genesis, under the leadership of Marc Benowitz, director of reliability and engineering infrastructure, Lucent platforms and quality engineering. Benowitz and his team outlined the problem statement, goals and objectives and provided the expertise on our legacy systems and business processes.

The project team also extended to Lucent’s EMS providers. Many of these EMS providers were already using the Internet-based software Lucent selected, one of the factors we considered as they were brought into the process. The supply chain network team also formed localized deployment teams in support of individual business units. These teams developed data migration plans for each business unit.

Project Genesis was a large global deployment that required multiple business units to abandon or adjust their current processes, practices and tools. The Project Genesis team had expected that developing a OneLucent approach would be challenging, but during the development of the solution, the differences among the current practices became clearer and we realized that there was less commonality across the business units in product data structure and process than originally expected.

In spite of that, the Project Genesis team realized that to take full advantage of our EMS providers’ capabilities, it needed to approach the providers with a business model reflecting one “face” and in effect eliminate the individual processes and data structures of Lucent’s individual business units. The software solution for Project Genesis was implemented companywide as the singular manufacturing collaboration standard for Lucent.

The software was deployed on one e-Hub, forcing a common data configuration across the business units. The team then used the common data configuration to develop a OneLucent product structure and data definition that tied all levels of the product together. The implementation of one e-Hub required Lucent to enforce one global approved manufacturers list and a single part numbering scheme.

Combining industry standards and a common product structure using a single part-numbering scheme with a disciplined, common process allowed Lucent to transform the approach to manufacturing from multiple, inconsistent, noncollaborating methods to one seamless, integrated collaboration process.

Project Implementation

The cross-functional teams within each product unit worked countless hours to transform the way Lucent collaborated with its EMS providers. Once Genesis processes and policies were developed and documented, a training program was rolled out to Lucent and EMS system users. Legacy systems were gradually decommissioned and the OneLucent solution for managing product data and collaborating with EMS providers was implemented.

The implementation of Project Genesis was made more challenging by some of the changes happening in the industry and within the company. During the time of the project, Lucent continued to restructure the business. Lucent sold more assets and formed new business relationships. This resulted in additional downsizing and created resource constraints for supporting the development and implementation of Project Genesis.

As Benowitz and his team identified data for conversion to the new part-numbering scheme they identified deficiencies in product and component data. The team had two options. They could migrate the data with the existing problems and be no worse off than before, or take this opportunity to correct the data and assure the highest standards for data integrity. The second option was chosen and the results have been impressive. Data errors were corrected on 50,000 components (parts).

A New Standard at Lucent

The successful execution of Project Genesis transformed the way Lucent collaborates with its EMS providers and has led to a new Lucent standard for data management. The current solution has been rolled out to more than 2,600 users (both Lucent and EMS), with consolidation of data from seven legacy systems into a single enterprise PLM system with a common set of business processes and tools. To date, more than 370,000 product data records have been created. Data management has evolved from disjointed and nonstandard tools and processes to a OneLucent solution and a set of common processes across Lucent.

Thanks to the hard work of this team, Lucent can now collaborate with its EMS partners on product design and see changes in real time – creating a critical link between the design chain and the supply chain.

Integrating existing computer-aided design systems and component management systems produced a single, consistent product structure definition throughout the design and supply chain. This reduced the time to market and contributed to improved quality, ultimately improving product margins.

Lucent has now gained control of change management across the supply chain, improving communication and collaboration with our EMS providers. A number of benefits have resulted and include:

• For the first time, a single repository for all Lucent product data exists, providing visibility to the latest documentation. Components can be managed with a Lucent-wide list of approved vendors.
• Lucent and its EMS providers can review and modify product data with real-time sharing capability. Engineering changes can be reviewed, documented and tracked within one system.
• Improved collaboration resulted in reduced new product introduction cycle times and decreased times for communication of engineering changes. The interval from the completed design until the design is released to Lucent’s EMS providers decreased from weeks to days. This reduced the time to market, ultimately contributing to improved quality and product margins.
• Exceptional data integrity due to the common processes, policies and cleansing resulted in a reduction of the BOM error rate to less than 5 percent. Previously, virtually every order had some error. This surpassed the original goal of 15 percent – the industry best in class.
• A central location for accurate component data enabled Lucent to identify preferred parts. This enabled preferred parts to be selected during design, enabling more efficient reuse, improved quality, reduced scrap and rework in manufacturing.
• With everything in one place it was possible to do a global “where used,” enabling further reductions in inventory by providing exposure to component usage across product lines and BOMs.
• With the continued restructuring of Lucent’s supply chain model, it was important to have the flexibility to create new partnerships.The speed of product portability between EMS providers and global regions decreased from weeks to hours. These improvements in the product transfer process have produced substantial savings to Lucent.
• The success of Project Genesis has resulted in reduced scrap, reduced rework, increased inventory consumption and significant savings to Lucent.

Lucent is now a benchmark to which others are being compared with regard to collaboration. Manufacturing partners have recognized the success of Project Genesis. In February 2003, Celestica, one of Lucent’s EMS providers, recognized Lucent’s Project Genesis “Manufacturing Partner Integration Team” for best-in-class collaboration between Lucent and Celestica. In October 2004, Lucent’s work was recognized by APICS, the Association for Operations Management and named runner-up for their Corporate Awards of Excellence in the technology partnership category.

Project a Clear Success

Project Genesis is a clear success. Moving all of the product data to one place provides global visibility to components, suppliers and assemblies, enabling Lucent to build upon this foundation for continued growth and additional success.

The knowledge gained and lessons learned from Project Genesis continue to be applied internally and will be used in Lucent’s future endeavors with EMS providers. The critical aspects of program management discipline, performance metrics, common deliverables and clear accountabilities are now being applied as the company takes the next steps to expand and continually improve upon manufacturing collaboration.

The scope of collaboration will extend to include management of software and material not covered by product designs. Lucent is also increasing the user base to integrate and team with more manufacturers, distributors and the second tier of suppliers. The scope of the application will also be expanded to include collaboration with external design providers. Process improvements and data integrity efforts will continue, as Lucent continues working toward becoming the industry benchmark for successful global manufacturing collaboration.