Nortel Networks is in partnership discussions with Singapore-based Flextronics International to offload its manufacturing interests, which cost the network gear maker approximately $2bn in production costs.
As part of its strategy, Nortel said it intends to transfer all of its remaining manufacturing activities, including product integration, testing, and repair operations carried out in the company’s systems houses in Canada, Brazil, Northern Ireland and France.
If the deal goes through, management of the supply chain and related suppliers for these locations will be transferred to Flextronics.
Nortel will keep its supply-chain operations' strategic management and control responsibilities in-house, including customer service, order management and new product integration.
Chahram Bolouri, president of global operations for Nortel, said that by implementing this operating model, the company will be able to drive reduced inventory and improved customer service and responsiveness. It will also be able to focus on those areas of the supply chain of most importance to its customers.
He added it is likely that Nortel's 2,500 employees will become Flextronics employees once the deal is settled.
Flextronics said it is pleased to be recognised by Nortel for its supply-chain capabilities and for its ability to meet Nortel's time-to-market, quality and cost reduction objectives. The company also said the proposed transaction would strengthen its position as the leader in the infrastructure market.
Carly Suppa writes for ITWorldCanada.com