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.
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 control tower's staff uses simulation software to model the impact of parts shortages on production and devise a plan to solve any problems. In the case of the Thai floods, the company used that software to rapidly identify shortages so that alternative sources for parts could be quickly found, or in some cases to permit the redesign of parts. "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 business from its computer business. Headquartered in Santa Clara, California, Agilent Technologies reported US $6.9 billion in revenue in 2012. The Electronic Measurement Group (EMG) is one of four groups within the company, and it's the most profitable one, with US $3.3 billion in revenue in 2012. EMG sells products 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 make the Electronic Measurement Group 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, keep 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, if Agilent wanted to determine whether it had all the necessary inventory to make an order delivery-time commitment to a customer, it could take three to four weeks to get an answer from all the parties involved.
Simulation saves the day
To solve this problem, Agilent decided to construct a control tower that would give the instrument maker visibility into inventory holdings down to the supplier level in as many nodes in its supply chain as possible. For this vertical supply chain integration project, it bought RapidResponse software from Kinaxis, a vendor of enterprise supply chain software solutions. Besides facilitating supply chain visibility, the software handles demand, supply, and inventory planning as well as what-if analyses, among other functions.
In 2011, Agilent got the control tower up and running with three contract manufacturers and two of its own technology center facilities. Since that time, the control tower's scope has expanded in stages. Currently, it extends to five contract manufacturers and five Agilent-owned sites. Three of the contract manufacturers are in Malaysia, one is in Thailand, and one is in California. Agilent's own facilities linked to the tower include its plants in Penang, Malaysia, and in Santa Clara, California. The tower is also linked to technology centers located in California and Colorado in the United States, and one in Germany.
Staff members who oversee the control tower's operation work out of Agilent's main facility in Penang. There are two teams involved: one conducts the analysis, while the other manages data governance to ensure that all linked locations provide correct, high-quality information.
The suppliers transmit information to the tower on a daily basis. As of this writing, the control tower has visibility of more than 94 percent of all parts used in the EMG supply chain. The tower uses this information to create a complete picture of Agilent's supply chain, which the company employs to manage both daily operations and crisis situations. The information is displayed on computer screens formatted in customized worksheets that show purchase orders, plan, and supply allocation. Tan says the customized worksheets allow Agilent to monitor part-by-part shortages throughout different levels of the supply chain via weekly projected balances based on demand.
The control tower is routinely used to simulate the impact of a major sales event on production. "Our sales engineers want to be able within a half day to come back to a customer and say whether we can support them and get the product in a four-week shipment time," Tan explains.
Whenever a major customer deal is in the offing, the control tower helps Agilent to determine an accurate commitment date for product delivery. It does so by simulating the parts requirements. The simulation 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 the availability of components, 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 very quickly predict the revenue impact from any possible deal as well as the company'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 control 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 propagation took three to four weeks, as the instrument maker had to contact manufacturers and suppliers involved in a particular order and wait for their responses to determine parts availability for production. Now turnaround time is a week or less.
The control tower also helps Agilent with crisis management, such as when the floods in Thailand affected 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]," said 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 inventory visibility, Agilent's supply chain partners must furnish clean, accurate data. The original owner of the data—whether it's Agilent's procurement team or a supplier—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 important. Any change needs to be communicated throughout all levels of the supply chain."
Because the control tower needs accurate 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 collaborate 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 companies with complex supply chains consider 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 making 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."
Business software vendor Cleo has acquired DataTrans Solutions, a cloud-based procurement automation and EDI solutions provider, saying the move enhances Cleo’s supply chain orchestration with new procurement automation capabilities.
According to Chicago-based Cleo, the acquisition comes as companies increasingly look to digitalize their procurement processes, instead of relying on inefficient and expensive manual approaches.
By buying Texas-based DataTrans, Cleo said it will gain an expanded ability to help businesses streamline procurement, optimize working capital, and strengthen supplier relationships. Specifically, by integrating DTS’s procurement automation capabilities, Cleo will be able to provide businesses with solutions including: a supplier EDI & testing portal; web EDI & PDF digitization; and supplier scorecarding & performance tracking.
“Cleo’s vision is to deliver true supply chain orchestration by bridging the gap between planning and execution,” Cleo President and CEO Mahesh Rajasekharan said in a release. “With DTS’s technology embedded into CIC, we’re empowering procurement teams to reduce costs, improve efficiency, and minimize supply chain risks—all through automation.”
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.
Even as a last-minute deal today appeared to delay the tariff on Mexico, that deal is set to last only one month, and tariffs on the other two countries are still set to go into effect at midnight tonight.
Once new U.S. tariffs go into effect, those other countries are widely expected to respond with retaliatory tariffs of their own on U.S. exports, that would reduce demand for U.S. and manufacturing goods. In the context of that unpredictable business landscape, many U.S. business groups have been pressuring the White House to pull back from the new policy.
Here is a sampling of the reaction to the tariff plan by the U.S. business community:
American Association of Port Authorities (AAPA)
“Tariffs are taxes,” AAPA President and CEO Cary Davis said in a release. “Though the port industry supports President Trump’s efforts to combat the flow of illicit drugs, tariffs will slow down our supply chains, tax American businesses, and increase costs for hard-working citizens. Instead, we call on the Administration and Congress to thoughtfully pursue alternatives to achieving these policy goals and exempt items critical to national security from tariffs, including port equipment.”
Retail Industry Leaders Association (RILA)
“We understand the president is working toward an agreement. The leaders of all four nations should come together and work to reach a deal before Feb. 4 because enacting broad-based tariffs will be disruptive to the U.S. economy,” Michael Hanson, RILA’s Senior Executive Vice President of Public Affairs, said in a release. “The American people are counting on President Trump to grow the U.S. economy and lower inflation, and broad-based tariffs will put that at risk.”
National Association of Manufacturers (NAM)
“Manufacturers understand the need to deal with any sort of crisis that involves illicit drugs crossing our border, and we hope the three countries can come together quickly to confront this challenge,” NAM President and CEO Jay Timmons said in a release. “However, with essential tax reforms left on the cutting room floor by the last Congress and the Biden administration, manufacturers are already facing mounting cost pressures. A 25% tariff on Canada and Mexico threatens to upend the very supply chains that have made U.S. manufacturing more competitive globally. The ripple effects will be severe, particularly for small and medium-sized manufacturers that lack the flexibility and capital to rapidly find alternative suppliers or absorb skyrocketing energy costs. These businesses—employing millions of American workers—will face significant disruptions. Ultimately, manufacturers will bear the brunt of these tariffs, undermining our ability to sell our products at a competitive price and putting American jobs at risk.”
American Apparel & Footwear Association (AAFA)
“Widespread tariff actions on Mexico, Canada, and China announced this evening will inject massive costs into our inflation-weary economy while exposing us to a damaging tit-for-tat tariff war that will harm key export markets that U.S. farmers and manufacturers need,” Steve Lamar, AAFA’s president and CEO, said in a release. “We should be forging deeper collaboration with our free trade agreement partners, not taking actions that call into question the very foundation of that partnership."
Healthcare Distribution Alliance (HDA)
“We are concerned that placing tariffs on generic drug products produced outside the U.S. will put additional pressure on an industry that is already experiencing financial distress. Distributors and generic manufacturers and cannot absorb the rising costs of broad tariffs. It is worth noting that distributors operate on low profit margins — 0.3 percent. As a result, the U.S. will likely see new and worsened shortages of important medications and the costs will be passed down to payers and patients, including those in the Medicare and Medicaid programs,” the group said in a statement.
National Retail Federation (NRF)
“We support the Trump administration’s goal of strengthening trade relationships and creating fair and favorable terms for America,” NRF Executive Vice President of Government Relations David French said in a release. “But imposing steep tariffs on three of our closest trading partners is a serious step. We strongly encourage all parties to continue negotiating to find solutions that will strengthen trade relationships and avoid shifting the costs of shared policy failures onto the backs of American families, workers and small businesses.”
In a statement, DCA airport officials said they would open the facility again today for flights after planes were grounded for more than 12 hours. “Reagan National airport will resume flight operations at 11:00am. All airport roads and terminals are open. Some flights have been delayed or cancelled, so passengers are encouraged to check with their airline for specific flight information,” the facility said in a social media post.
An investigation into the cause of the crash is now underway, being led by the National Transportation Safety Board (NTSB) and assisted by the Federal Aviation Administration (FAA). Neither agency had released additional information yet today.
First responders say nearly 70 people may have died in the crash, including all 60 passengers and four crew on the American Airlines flight and three soldiers in the military helicopter after both aircraft appeared to explode upon impact and fall into the Potomac River.
Editor's note:This article was revised on February 3.
GE Vernova today said it plans to invest nearly $600 million in its U.S. factories and facilities over the next two years to support its energy businesses, which make equipment for generating electricity through gas power, grid, nuclear, and onshore wind.
The company was created just nine months ago as a spin-off from its parent corporation, General Electric, with a mission to meet surging global electricity demands. That move created a company with some 18,000 workers across 50 states in the U.S., with 18 U.S. manufacturing facilities and its global headquarters located in Massachusetts. GE Vernova’s technology helps produce approximately 25% of the world’s energy and is currently deployed in more than 140 countries.
The new investments – expected to create approximately 1,500 new U.S. jobs – will help drive U.S. energy affordability, national security, and competitiveness, and enable the American manufacturing footprint needed to support expanding global exports, the company said. They follow more than $167 million in funding in 2024 across a range of GE Vernova sites, helping create more than 1,120 jobs. And following a forecast that worldwide energy needs are on pace to double, GE Vernova is also planning a $9 billion cumulative global capex and R&D investment plan through 2028.
The new investments include:
almost $300 million in support of its Gas Power business and build-out of capacity to make heavy duty gas turbines, for facilities in Greenville, SC, Schenectady, NY, Parsippany, NJ, and Bangor, ME.
nearly $20 million to expand capacity at its Grid Solutions facilities in Charleroi, PA, which manufactures switchgear, and Clearwater, FL, which produces capacitors and instrument transformers.
more than $50 million to enhance safety, quality and productivity at its Wilmington, NC-based GE Hitachi nuclear business and to launch its next generation nuclear fuel design.
nearly $100 million in its manufacturing facilities at U.S. onshore wind factories in Pensacola, FL, Schenectady, NY and Grand Forks, ND, and its remanufacturing facilities in Amarillo, TX.
more than $10 million in its Pittsburgh, PA facility to expand capabilities across its Electrification segment, adding U.S. manufacturing capacity to support the U.S. grid, and demand for solar and energy storage
almost $100 million for its energy innovation research hub, the Advanced Research Center in Niskayuna, NY, to strengthen the center’s electrification and carbon efforts, enable continued recruitment of top-tier talent, and push forward innovative technologies, including $15 million for Generative Artificial Intelligence (AI) work.
“These investments represent our serious commitment and responsibility as the leading energy manufacturer in the United States to help meet America’s and the world’s accelerating energy demand,” Scott Strazik, CEO of GE Vernova, said in a release. “These strategic investments and the jobs they create aim to both help our customers meet the doubling of demand and accelerate American innovation and technology development to boost the country’s energy security and global competitiveness.”