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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. [email protected] 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.