Since Agilent separated from Hewlett-Packard,
we've been working on a major effort to align our operations with
the needs of our businesses and to make our systems and processes
world-class. Over the last 18 months, this work has made it much
easier for customers to do business with Agilent across multiple
channelsboth online and offline. At the same time, we're enabling
our businesses to intensify their focus on customers, markets and
competitors. "Our operational transformation is all about simplifying,
being even more externally focused and being more efficient,"
said Alain Couder, executive vice president and chief operating
operational transformation is all about simplifying, being even
more externally focused and being more efficient.
When we launched Agilent, we knew that the systems
and processes in key functionsincluding customer service and support,
manufacturing, information technology (IT), procurement, human resources
(HR) and otherswere not well-suited to Agilent's needs as an independent
company. In mid-2000 we began to transform how we manage and perform
these functions and the systems that support them. We rolled out
more than a dozen separate programs focused on customers, company-wide
processes and employees.
All these programs share two fundamental goals.
The first is to make Agilent easier for customers to work with by
standardizing and simplifying our processes. These and other efforts,
such as outsourcing to partners who are leaders in their fields,
are helping us reach our second goal, which is to improve our operational
efficiency across the company.
During 2001 we added, completed and refocused
operational initiatives as different efforts reached
their goals and as we navigated the sharp downturn
in the communications and semiconductor markets.
From mid-2000 through fiscal 2001, we delivered
major improvements and created a foundation for
- We measurably improved on-time delivery, customers'
ability to reach the right Agilent person quickly
and the cost-effectiveness of many functions;
- We redesigned and streamlined hundreds of IT
systems and business processes, and we consolidated
a number of facilities;
- We reduced Agilent's total selling, general and
administrative costs by several hundred million
dollars in fiscal 2001.
During 2001 we made substantial progress in a
range of customer-facing activities. We consolidated
from 40 customer business centers worldwide to five
regional centers. We made it a lot easier for customers
to do business with us online by customizing Web
pages for 13 major customers and by improving our
Web site's overall performance and availability. We
also improved our on-time delivery rate substantially
after making customer requested delivery dates the
metric for progress.
These accomplishments helped us win important
recognition in 2001. We won the President's
Customer Satisfaction Award from Cisco Systems Inc.,
which is that company's highest supplier honor. Nortel
Networks, Celestica Inc. and CIENA Corporation also
recognized Agilent as an outstanding supplier.
In manufacturing, we increased our use of contract
manufacturers (CMs) while lowering the number
of strategic CMs to five. The result is greater manufacturing
flexibility while optimizing our processes
with fewer CMs. We also continued to move manufacturing
to lower-cost regions, such as Southeast Asia.
In IT we're improving how customers, employees,
suppliers and shareholders interact with Agilent. We
completed more than 60 initiatives designed to improve
IT efficiency and effectiveness in areas such as the
administration of our voice and data networks and
the delivery of help desk services to employees. We
consolidated under-utilized servers and moved data and
applications to them, and the result was that we freed
more than 200 servers for other business needs. These
and related efforts enabled us to achieve overall IT
savings of about $160 million over 18 months.
In 2001 we also made substantial progress in
a major initaitive to deploy new, global enterprise resource planning
(ERP) system. Our plan is to implement
a single, company-wide infrastructure that will
replace hundreds of legacy IT systems and applications
and will span many functions, such as order
management, manufacturing operations and product
introduction. The phased ERP rollout, which will occur
in 2002 and 2003, will make Agilent faster and more
responsive to customers by delivering up-to-the-minute
information to customers and employees anywhere
in the world.
mid-2000 through fiscal 2001, we've delivered major improvements
and created a foundation for future progress.
In procurement we achieved great results from
our work to simplify, standardize and consolidate. We reduced our
supplier base worldwide by more than 50 percent, achieved significant
reductions in spending on materials, and rolled out a single, company-wide
banking and procurement card solution for the thousands of small
transactions that take place every month at Agilent. Over 18 months
we have achieved total net savings in procurement of more than $300
million, from a combination of direct materials savings in our business
units and company-wide purchases.
In human resources we made it easier for employees
to access and use a broad range of information.
We consolidated the Human Resources Management
System into a single, Web-based system that enables
worldwide delivery of services and consistent HR
transactions within Agilent. This effort allowed us to
implement a major rollout of HR services to the Web,
including, where feasible, training services that had
previously been done in person. These and other
actions helped us reduce per-employee spending
on HR by 50 percent compared with a year ago.
We also achieved significant recognition as
an employer of choice. We were No. 46 on Fortune magazine's
"100 Best Companies to Work For in America" list. Agilent
ranked No. 2 in "20 Best Companies to Work For" published
by the Cahners Electronic Group, a major high-technology periodical
publisher. Agilent's operations were ranked No. 1 in Singapore and
No. 4 in Malaysia on the inaugural list of "Best Employers
in Asia" in a study done by Dow Jones Publications and Hewitt
Associates. We were also named the 13th best place to work in the
United Kingdom in a survey of more than 200 companies by The
Sunday Times (UK).
We're greatly encouraged by our results in
making Agilent's operations more effective and efficient. We're
focusing on inventory reduction as
a major opportunity, and we'll continue to make
customer satisfaction, on-time delivery and manufacturing
efficiency key priorities.
Our ability to be a high-performance company
depends on how well we perform the operational
functions that enable us to be fast and focused.
During 2001 we made substantial progress on many
fronts, and we're determined to extend this progress
in 2002 and beyond.