Tuesday, February 18, 2014

Intel: Making it to the Top 7!

There is so much that goes behind turning silicon wafers to integrated circuits to CPUs and graphic cards. Manufacturing Technology which is the heart and core of Intel's Business needs materials for production processes, tools and machines for factories, and packing and logistic services. With more than 16000 suppliers in over 100 countries, Intel is one of the market giants when it comes to Supply Chain. In the latest report released by The Gartner Group on the annual Supply Chain Top 25, which identifies global leaders in the supply chain, Intel has bagged the 7th position. Intel attributes its success to the role that IT has played in implementing this supply chain transformation. 

Technology, today, in Supply Chain is not merely the use of computers. It includes the use of technology in various dimensions starting from factory automation, enhanced communication, inventory management and consumer expectation. 

How did they do it?

Technology at Intel has helped them in making their supply chain more responsive and productive than ever before. It has also helped them reduce process cycle times and inventory levels. The focus was on re-designing the business processes and delivering better information systems coupled with various aspects of the supply chain. Some of the efforts included:[1]

- Consolidating legacy systems across many businesses into better ERP  systems.
- Re-engineering data and data flow.
- Bringing the data related to customers, suppliers, locations and products into centrally managed data systems.
- Re-engineering over all planning and other processes ranging from demand forecasting to master production schedule, order fulfillment, and warehouse logistics.

This re-modeling reduced the amount of manual work, reduced the errors in the process and the associated rework thus helping their supply chain become more responsive and efficient. 

A Closer Look: The Just Say Yes Program (2005-2010)

This program was a by product of another program aimed at achieving better consumer satisfaction. IT Data Analytics was leveraged to understand the on-going process by analysing various data points. The data points were focused on the change in the number of orders over time. the initial goals of this program were:

- Improve the reponsivess of change requests in the order.
- Quicker response to customer in general. Target was 24 hours.
- Reduce inventory
- Reduce errors in demand forecasting.

The first phase of the program from 2005-2007 turned out to be a huge success. And to continue the efforts in improving customer responsiveness, Intel launched the second phase of this program with various new initiatives. Some of them were:

- Transition to Standard Metric
- Increase Responsiveness through Automation
- Reduce Order Horizon
- Better Inventory Management
- Transportation Optimization
- Automated Invoicing and Customs
- Dynamic Order Management System
- Supply Network Replenishment 


Through the continued effort in the past few years, including automation, standardizing ERP, and simplifying the supply chain Intel has shown substantial improvements thus bagging the 7th position world wide. Some of the highlights are:[1]

- Order Fulfillment Lead Time - 65 % reduction.
- Order-to-delivery Time - 50 % reduction.
- Responsiveness to customers - 300 % increment.
- Inventory - Reduction by 32 %.
- Number of CPUs produced per headcount - 21 % increment.
- Number of CPU units per dollar capital - 16 % increment.

The mantra of Intel was to bring the supply chain business teams and the technology teams together. IT indeed played a prime role in transforming Intel’s supply chain to meet market challenges. IT helped them in re-designing the business processes, delivering better information systems associated with planning, demand forecasting, production planning, order fulfillment, and warehouse logistics leading to an overall upliftment of the supply chain model of the organization.

Having read the strategies adopted by Intel in the past few years, what we need to think is "What is that Intel could do to strive for for perfection, and aim for reaching at the top? What is that they are still lacking? What is that they still need to learn?"


[1] http://www.intel.com/content/dam/www/public/us/en/documents/best-practices/transforming-supply-chain-to-meet-market-challenges.pdf
[2] http://www.intel.com/content/www/us/en/corporate-responsibility/supply-chain.html
[3] http://www.intel.com/content/www/us/en/it-management/intel-it-best-practices/inside-it-transforming-intels-supply-chain-podcast.html

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