Agilent

Manufacturing cycle: down by 43%Percentage of products delivered in three weeks: 70% (up from 57%)Inventory cost: down by a third ($44million)

CIMA value: Agilent

Michael Tan ACMASupply Chain Operations Director Agilent Technologies, Malaysia

CIMA, where business + finance meet

T. +44 (0)20 8849 2251 E. cima.contact@cimaglobal.com www.cimaglobal.com

Improved conversion rates from 51% to 60% and brought inventory costs down by a third

‘With my training and experience, I can add value to the company wherever I go. These subjects of strategic planning and decision making have been extremely useful to me and have enabled me to give a different kind of value-add to the company.’

Through his ‘War on Waste’ initiative, Michael Tan,

Supply Chain Operations Director at measurement

equipment manufacturing company Agilent, delivered

significant enhancements to his employer’s inventory

management, manufacturing cycles, delivery times

and overall return on investment capital.

Between 2006 and 2009, Tan helped to improve efficiency

in Agilent’s supply chain which resulted in a 43%

reduction in the manufacturing cycle and a reduction

in inventory of $44 million. The percentage of Agilent

products delivered to customers within three weeks rose

from 57% to 70%.

Formerly part of Hewlett-Packard, Agilent’s electronic

measurement devices are bought by international names

such as Samsung, Nokia, GlaxoSmithKline, Cisco, Hitachi

and Motorola. Its diverse product portfolio serves market

sectors including communications, pharmaceuticals,

life sciences and electronics. The ‘WoW’ initiative was a

response to increasing competitive and internal pressures,

says Tan. Agilent’s customers required shorter lead times

and keener pricing, and the company wanted a more

streamlined operation poised for growth.

Having established that for the last quarter of 2006, order

fulfilment lead times stood at 19 days, inventory was

$123 million and the order to shipment delivery rate was

51%, Tan delved into processes at Agilent and also up and

down the supply chain to drive out inefficiencies.

Key strategies included implementing a Lean Six Sigma

culture throughout the workforce, re-engineering

process flows, improving yields and collaborating with

suppliers and customers on planning, forecasting and

replenishment.

The measures led to greater responsiveness: a decrease

in order fulfilment lead times from 19 days to eight.

The $123 million inventory fell to $79 million over the

three year period and the order to shipment conversion

rate rose from 51% to 60%, significantly improving

return on investment capital. ‘WoW’ has also garnered

industry recognition including an award for Supply Chain

Operational Excellence from the US Supply Chain Council.