BY JAMES A. COOKE, EDITOR AT LARGE
RESPONDING TO SUPPLY CHAIN DISRUPTIONS
strategicinsight
IN 2011, WHEN THE WORST FLOODING IN DECADES SWAMPED THAILAND, MANY
of the manufacturing plants that produce electronic parts and components in that country were forced to suspend operations. That left many of their customers—mostly large
international manufacturers—without critical parts needed to fill orders. But not Agilent
Technologies Inc. Although Agilent’s contract manufacturer in Thailand was out of commission, the testing-equipment maker was able to fill most of the orders that normally would
have included items produced by that supplier. That’s because Agilent had a resource its
competitors didn’t have: a “control tower” it had installed a year earlier for its Electronic
Measurement Group (EMG).
The control tower is an information hub that links Agilent with its suppliers
to provide visibility of the inventory in its supply chain, at both the company’s
own locations and at the sites of its contract manufacturers and their suppliers. The tower’s staff uses simulation software to model the impact of parts
shortages on production so they can devise workarounds if needed. In the
case of the Thai floods, Agilent used the software to rapidly identify
shortages so that alternative sources for parts could be found,
or in some cases, products could be redesigned using parts
that were on hand. “The control tower helps us to be able
to capture all components during a shortage so we can
come up with risk mitigation actions,” says Michael
Tan, Agilent’s EMG supply chain operations director.
INVENTORY UNKNOWNS
Agilent Technologies was created in 1999 when Hewlett-
Packard spun off its test and measurement instrument busi-
ness from its computer business. Headquartered in Santa
Clara, Calif., Agilent Technologies reported $6.9 billion in
revenue in 2012. The Electronic Measurement Group
is one of four groups within the company, and
it’s the most profitable one, with $3.3 billion
in revenue in 2012. EMG sells products
Agilent Technologies’ “control tower”—an information hub linking the instrument maker
with its suppliers to provide inventory visibility—has helped the company deftly model parts
availability, manage order promising, and counteract parts shortages during a natural disaster.
The power
of a control tower
DC VELOCITY 45
This story first appeared
in the Quarter 4/2013
edition of CSCMP’s
Supply Chain Quarterly,
a journal of thought
leadership for the supply
chain management
profession and a sister
publication to AGiLE
Business Media’s
DC VELOCITY. Readers
can obtain a subscription
by joining the Council of
Supply Chain Management
Professionals (whose
membership dues include
the Quarterly’s subscription
fee). Subscriptions are also
available to nonmembers
for $34.95 (digital) or $89
a year (print). For more
information, visit www.
SupplyChainQuarterly.com.
