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like oscilloscopes, spectrum analyzers, and network analyzers that are
used in such industries as aerospace,
defense, communications, and computers. The group has 9,000 customers worldwide. (In September 2013,
Agilent Technologies announced
plans to spin off the Electronic
Measurement Group as a separate,
publicly traded company.)
To make 5,000 different types of
electronic instruments, EMG works
with 1,100 suppliers, 52 percent of
which are based in Asia. Although
the measurement group operates
some of its own factories, it relies on
strategic contract manufacturers to make
70 percent of its products. On average,
EMG ships 70,000 units each month to
customers.
Agilent’s inbound supply chain spans
the globe and requires the coordination
of parts flows between its own factories
and those of its contract manufacturers.
For example, Agilent technology centers
in the United States and Germany make
integrated circuits. Contract manufacturers in Asia incorporate those components
into what Tan refers to as printed-circuit
assembly boxes. But Agilent’s main manufacturing plant, in Penang, Malaysia,
also incorporates the integrated circuits
into microcircuit assemblies found in
electronic instruments.
All of those factories, both in-house and
contract, maintain their own inventories
of parts to support production. Each
plant also has its own suppliers, which
keep their own stockpiles of inventory.
The whereabouts and availability of
inventory in Agilent’s extended global
supply chain became a concern in 2009.
That’s when the economic downturn subsided and business began to pick up again.
Cutbacks in production and the demise of
some suppliers during the recession had
led to parts shortages throughout the
electronics industry. As a result, when
Agilent needed to ramp up production,
it “had some challenges” in locating parts
that were in short supply, Tan says.
Compounding the problem was the fact
that Agilent needed accurate information
about parts availability from its suppliers
in order to make delivery commitments
to key customers and win business, yet it
had no way to get that critical information quickly. One reason was that Agilent,
its contract manufacturers, and their suppliers were using different information
systems. While Agilent relies on Oracle’s
technology to keep tabs on production,
many of its contract manufacturers and
suppliers use enterprise resource planning
software from SAP. Because the different
information systems in the supply chain
were not linked, communications tended to bog down. For instance, if Agilent
wanted to determine whether it had all
the necessary inventory to make an order
delivery-time commitment to a customer,
