DC Velocity - March 2014

48 DC VELOCITY MARCH 2014 www.dcvelocity.com strategicinsight RESPONDING TO SUPPLY CHAIN DISRUPTIONS

allows Agilent to check with its manufacturers and suppliers to determine parts availability, including whether production would encounter any parts shortages. If the simulation reveals possible problems with component availability, Agilent can then work with its suppliers to source the part on the open market or obtain it from other distributors. In some cases, the company has re-engineered the product to use an alternative part when the original version was unavailable.

Tan says that the control tower can
quickly predict the revenue impact from
any possible deal as well as the compa-
ny’s ability to meet a delivery date before
promising it to a customer. “Because of
the wide range of products, it was quite a
challenge to do this manually in the past
within a short time,” he says. “The con-
trol tower lets you know how much you
have on hand and how fast you can get
these parts into the factory that produces
the product for the final customer.”
Since setting up the control tower,
Agilent has speeded up its response time
for customer order promises. In the past,
turnaround time for demand propaga-
tion took three to four weeks, as the
instrument maker had to contact manu-
facturers and suppliers involved in a par-
ticular order and wait for their responses
to determine parts availability for pro-
duction. Now, turnaround time is a week
or less.

The control tower also helps Agilent with crisis management, such as when the floods in Thailand shut down its contract manufacturer there. The tower simulates the constraints facing a manufacturer or supplier when an unforeseen event disrupts the supply chain. It enables a bottoms-up modeling through the supplier levels to identify the total impact of a disruption on sales orders, forecasts, and safety stock for the various products. It also lets Agilent prioritize the allocation of constrained materials to meet critical demand on the basis of the greatest business benefit. “Because of this tool, we are able to quickly simulate gaps [in supply],” says Tan.

As a result of this capability, Agilent was able to minimize disruption for its customers during and after the floods.

In some cases, it found other sources for parts that it normally would buy from its Thai supplier. In other cases, it redesigned the product or engaged in “value engineering,” a technique that involves identifying acceptable substitute parts.

A WINNING CONCEPT

For the control tower to provide invento-
ry visibility, Agilent’s supply chain part-
ners must furnish clean, accurate data.
The original owner of the data—whether
it’s Agilent’s procurement team or a sup-
plier—is responsible for accuracy and
timely updates. “When new products are
introduced, the bill of materials needs
to be set up correctly at each level,” Tan
says. “That’s why governance is import-
ant. Any change needs to be communi-
cated throughout all levels of the supply
chain.”
Because the control tower needs accu-
rate data for its parts calculations, Tan
says, the company must work closely
with contract manufacturers and their
suppliers. For any data-sharing effort to
succeed, he adds, all parties involved
must benefit. “It is very important to col-
laborate to ensure that the data sharing
will help [manufacturers and suppliers]
as well,” he says. “They have to realize
that they are linking to systems to let
them know their shortages. Then they can
see the benefits of linking to the control
tower.”
Given Agilent’s positive experience,
would Tan recommend that other com-
panies with complex supply chains con-
sider the use of a control tower to manage
inbound supply? He’s a firm believer in
the concept. For one thing, he says, end-
to-end supply chain visibility on a single
platform will give companies the ability
to manage their supply chains across
regions and across time zones. “This will
help the company to perform proactive
and effective collaboration with suppliers
and also enable speed in decision mak-
ing in the shortest turnaround time,” he
says. That’s key for avoiding unnecessary
inventory and expediting costs. But just
as importantly, he adds, “it will enable the
company to win deals as well as provide
customers the best customer experience
in terms of delivery responsiveness.” ;

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