University of Mauritius Enterprise Resource Planning – CSE 3048 Time limit – 1hr
Test 1 – October 2012
Max. marks – 30
Read the following case study and answer ALL the questions that follow. Lucent’s Enterprise System Speeds Its Global Supply Chain Competition in the manufacture and sales of cellular phones is so fierce that a new phone model can retain its original value for only two-to-three months. After that, newer models from competitors with newer functions and capabilities will make existing models somewhat obsolete. To compete successfully in such a market, speed is critical. Cellular phone manufacturers must be able to improve their products every several months and to shift to the manufacture of their new products within days or hours. This market presented a huge problem to the Lucent Microelectronics Group, which produces the chips that are the heart of many cellular phones. Lucent is a part of Lucent Technologies, the Murray Hill, New Jersey, giant telecommunications technology company divested from AT&T. Lucent silicon wafers are produced in plants in Pennsylvania, Florida, and Spain. They are then assembled into integrated circuits in other plants in Pennsylvania, Thailand, and Singapore where they are also tested. From there they are shipped to customers such as L.M. Ericsson, a telecommunications equipment maker in Stockholm, Sweden. Prior to 1999, Lucent factories were run by legacy systems that often did not even communicate with each other. Each factory had its own supply chain, production schedule, and manufacturing systems. “Gathering data across the enterprise was difficult, if not impossible,” according to Lucent CIO William Stuckey. The solution involved putting all Lucent factories on the same set of information systems and installing an Oracle enterprise system in June 1999 to help the company coordinate materials, processes, schedules, logistics, and accounting information. The new system gives Lucent a global view of its supply chain within three minutes of any transaction. For example, once a purchase order from Ericsson for chips has been entered into the system, the system verifies customer data and checks to see whether the product is available. If it is, the system instructs the Lucent integrated circuit assembly plants to pick and pack the chips and hand them to DHL Worldwide Express for delivery. At the same time, the system sends Ericsson an EDI confirmation. DHL can deliver the order to an Ericsson plant in Sweden about 56 hours after it has been received. The ERP system has reduced processes that used to take 10 to 15 days to less than eight hours. Lucent is able to manage all of its global factories as if they were a single factory. Page | 1
If, for instance, a natural catastrophe hits a plant, Lucent can shift critical production to another plant within eight hours. Customers can even use the Web to track the status of their own orders at any time. While DHL’s rapid delivery service is more expensive than the slower previous companies Lucent had relied upon, it is actually saving Lucent money. Previously, logistics costs, including personnel, warehousing, stocking and transportation, ran about 1.5% of revenue while today they have dropped to under 1%. Lucent has achieved this reduction through lowered warehousing and inventory expenses by substituting “information for inventory.”
Answer ALL the following questions (a)
“Gathering data across the enterprise was difficult, if not impossible,” according to Lucent CIO William Stuckey(See Paragraph 2). Explain how the ERP implementation has solved this problem. [6 marks]
(b)
The above case study illustrates the example of a global supply Chain interfaced with an external system like EDI. (i)
Explain how EDI can be used to increase the productivity of Lucent? [4 marks]
(ii)
Explain how Enterprise Application Integration (EAI) could be used by the company. [6 marks]
(c)
Discuss how the company could have potentially used Cloud Computing for the implementation of the Oracle enterprise system. [6 marks]
(d)
Briefly describe four stages from the ERP life cycle which could have been used to implement the Oracle enterprise system. [8 marks]
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