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Nortel Networks - Essay Example

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Summary
The global logistics system of Nortel Networks is built around what it calls the Lead Logistics Supplier Strategy (LLSS) that looks at the supply chain as a global network where services to customers are provided through outsourcing to third parties.
At the center of this network lies the customer that acts as the originator of the order…
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Download file to see previous pages When a customer initiates an order, it goes to one of twenty Logistics Operating Centers (LOCs) worldwide, which then determines the best combination of services that could be exchanged among the customer-centered rings. It is the LOC that is in-charge of the order that looks for the Nortel Network partners, key parts sources, and assemblers that are part of that ring around the customer and that would best meet the customer's order at the lowest cost and in the fastest possible time.
This LLSS-based system differs from Nortel's old supply chain structure, which was built around an orderly sequence of activities that happened one after another. This traditional supply chain needed long lead times and higher costs. With the new global logistics system, designed around a networked framework, activities happen continually at the same time.
What does this mean Rather than wait for the completion of a prior activity, say the assembly of sub-components before deliveries are made, Nortel's worldwide network of partners and suppliers are constantly on the move taking care of order fulfillment from several customers. An OEM for example can be doing production and assembly work for several clients at a time, each one with different or similar requirements, and managing various parts of the supply chain according to standards established by Nortel.
In other words, by outsourcing the "lower value-added" activities like assembly to third party providers, Nortel can focus instead on the high value-added activities like the management of the global supply chain or research and development to improve existing products or come up with new ones based on more advanced technologies. This is only one among the many advantages that Nortel derives from its global logistics system.
What are the others
We have already discussed the customer-centered focus of the whole organization. By placing the customer at the center of the logistics network, Nortel can work at the important but very tough and challenging task of ensuring that everyone maintains that customer focus. Customers then feel special, being the center of attention of the whole global organization, knowing that its orders could be met no matter how tough its specifications and deadlines would be. Of course, it is hard work for Nortel to do the work of integrating all of its alliance partners all over the globe, but that is part of the design of the system.
We can also see how the system ensures speed of delivery to meet tight customer deadlines, because the arrangement gives Nortel and its partners the flexibility it needs to get the work done on time. Instead of managing the whole supply chain, which requires coordinating several factors at the same time, Nortel's system delegates the management of portions of that supply chain by outsourcing. Rather than sweat on the large stuff, it seems that Nortel and its partners would rather sweat on the parts of that large stuff that they can manage well, and to concentrate on the "large stuff" of coordinating 20 manageable LOCs.
This allows Nortel to keep its costs down, which it does in a very specific way. By keeping the suppliers of key parts in the supply chain conveniently located close to ...Download file to see next pagesRead More
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