Supply Chain Leadership in Action: Intel Corporation
Intel is an industry leader in supply chain planning, customer fulfillment, logistics and the building of supply chain talent. Tony will share insights on the building of global processes to sense and respond to customer needs and improve supply chain resiliency.
Tony Romero, General Manager of the Customer Fulfillment, Planning and Logistics Group (CPLG) for Intel Corporation.
3. Supply Chain Insights Global Summit #SCISummit September 2013, p.3TM
Technology
Leadership
Extending leadership
through innovation
Manufacturing
Scale
Making significant
investments and
have the scale to
deliver
Agile and Responsive
Supply Chain
World-class
Supply Chain delivering
what customers want
Social
Responsibility
Caring
for the planet
and its people
This decade we will create and extend computing technology
to connect and enrich the lives of every person on earth
3
4. Supply Chain Insights Global Summit #SCISummit September 2013, p.4TM
Intel’s Manufacturing Supply Chain
3,300
Ship To
Locations
24
Global
Warehouses
7
Assembly/Test
Facilities
920,000
Orders
Per Year5275
SKUs
4M ft2
Manufacturing
Space10,000
Suppliers in
100 Countries
9
Fabs in
4 countries
Orchestrating an increasingly complex environment
5. Supply Chain Insights Global Summit #SCISummit September 2013, p.5TM
2005 2011-2013+
Supply Chain Leadership Journey
2007-2010
6. Supply Chain Insights Global Summit #SCISummit September 2013, p.6TM
Strong Results in Core PC Business
Source: Intel
Avg.
Lead
Time
Days
2008 2012
75%
OFLT
PERFORMANCE
RESPONSIVENESS
30%
DELIVERY
PERFORMANCE
2008 2012
RELIABILITY
Perfect
Order %
AGILITY
50%
CYCLE TIME
7. Supply Chain Insights Global Summit #SCISummit September 2013, p.7TM
Evolving to Win New Business
• Deep Customer Understanding and
Business Unit Engagement
• Matching Supply Chain
investment to business
needs and maturity
• Modular, configurable
Supply Chain solutions
enabling TTM and reach
8. Supply Chain Insights Global Summit #SCISummit September 2013, p.8TM
In Closing…
• Supply Chain leadership both a commitment and a
journey
• Metrics driven approach created world class Supply
Chain
• New markets are requiring configurable, customizable
solutions with the ability to scale
• Great supply chains are demand-driven
9. Supply Chain Insights Global Summit #SCISummit September 2013, p.9TM
September 2013, p.9TM
Supply Chain Insights Global Summit #SCISummit
10. Supply Chain Insights Global Summit #SCISummit September 2013, p.10TM
Supply Chain Horizon
Horizon 4 Horizon 3 Horizon 2 Horizon 1
Development Introduction Growth Maturity Decline
PLC Theme Explore Launch Scale Optimize EOL/Exit
Horizons Theme "Anticipate & Plan" "Good Enough" "Innovate" "Support" "Harvest"
Business
Unit Needs
(Demand)
Determine
Customer’s
Requirements
Deliver samples
Ready the S.C. to
Establish Market
Presence
Scale the S.C. to
Extend Market
Presence
Optimize the
Balance between
Cost and
Responsiveness
Honor Contractual
Obligations
Supply
Chain
Response
Enable TTM and
“path to profitability”
in S.C. requirements
Build New Capability
(Prime the Inv.
Pipeline; Logistics
infrastructure in place)
Initiate the Feedback
Loop via R.L.
Expand Capability to
new regions,
products/inventory,
customers
Deliver Sustaining
S.C. infrastructure
(logistics, inv.,
planning, etc.)
Enable EOL
Minimize Scrap
Risk
Cost
Reduction
Opps
Network Design
Contract T&Cs
SKU/Inventory Mgt
Warr/Returns Model
3PL & Depot Procurement
Process Set Up for Cost &
Controls
IT Systems: B2B &
Planning
Cost Optimization:
• Freight
• Warehouse
• Inventory
• People
• Systems
Apply Key Learnings to Horizon 4 Projects
Scale Back
Capability
Disinvest HC
dedicated to
Optimization
TTM Cost Optimization
11. Supply Chain Insights Global Summit #SCISummit September 2013, p.11TM
TTM
Affordability
Capability
& Reach
Configurable Solutions
90%+ of solutions designed from
“off the shelf” SC capabilities
Next Generation Computing
Rapid Deployment
Solutions configured and deployed to
meet business needs in 30 days or less
Be Competitive
Redefine Si/SOC affordability model
using ESPX as a lead vehicle; drive
learnings back into “Core”
New capabilities:
• X-org external manufacturing
option/model(s)
• Modular (cloud) B2B,B2C ERP
connectivity solutions
• Multi-element fulfillment (FG,
S/W, services on one PO)
New capabilities:
• Active benchmarking
intelligence, data & metrics
• End-to-end SoC/Foundry SC
cost models/targets
• Inventory, planning
models/tools
New Capabilities:
• Flexible resource model w/o
adding h/c
• MM/BOM, CMF set up (days)
• Product classification ;
import, export licensing (GTT,
weeks)
12. Supply Chain Insights Global Summit #SCISummit September 2013, p.12TM
Customer Value Metrics
Name Description Freq. Calculation Target Performance
1. Hub Utilization
Measure of Customer’s use of Intel’s VMI
Hub service
Monthly /
Quarterly
Percent of Customer CPU shipments
shipped through VMI
60% 52%
2. Allocation
Utilization
Measure of short term forecast to actual
shipments
Quarterly
Current week (w) shipments versus
previous week (w-1) ending allocation
80% 85%
3. Perfect Order
Measure of Intel’s order process performance
– 3 components
Monthly /
Quarterly
Weighted average of 3 PO components 78% 79%
On Time (40%)
Measure of Intel’s ability to meet shipment
commitments
Monthly /
Quarterly
Intel committed shipment date based
calculation.
98% 98%
Quality (20%)
Quality based measure of Intel’s ability to
meet shipment quality requirements
Monthly /
Quarterly
# of issues divided by DN line items X
1mln
99.8% 99.65%
Response to
Forecast (40%)
Measure of Intel’s ability to respond to
Customer demand submissions (supply
linearity + supply availability)
Monthly /
Quarterly
Percentage of skus with acceptable
response (90%+) over 8 week horizon.
70% 70.5%
4. RMA
Measure of Intel’s timely response to RMA
requests
Quarterly
Percentage of DNs under SLA; Call to
credit based;
95% 96%
5. Inventory Measure of Customer’s on hand inventory Quarterly
Percentage calculation of avg IOH to
Quarter shipments, Cost of IOH
10%
(+ $ component)
10.9%
6. TPT
Measure of impact of Intel service levels (Hub
+ Logistics)
Quarterly
Monitored as a percent of shipments
within given days of TPT.
Status
ILLUSTRATIVE PURPOSES ONLY
Hinweis der Redaktion
Technology LeadershipLeading Manufacturer of Computer, Networking & Communications Products9 Fabs in 4 countries; 1.1Bu+ HK+MG shipped; 14 nm fabs ramping80,000 technical roles, 10,400 Masters in Science, 5,200 PhD’s, 4,000 MBA’sManufacturing Scale166 Sites and 579 Buildings in 63 Countries$54B in Annual Revenues from Customers in Over 120 CountriesOver 100,000 EmployeesAgile and Responsive Supply ChainWorld class supply chain: Gartner rating from 16 to 11 to 7 to 5 in 2013Best in industry have 77% Customer Delight, semiconductor average is 53%Excellence in Supply Chain Continuity during global disruptionsSocial ResponsibilityRanked #46 on Fortune’s 100 Best Companies to Work For ListInvests $100 Million Each Year in Education Across More than 70 CountriesThe Single-Largest Voluntary Purchaser of Green Power in the United StatesMore than One Million Hours of Volunteer Service in Our Communities in 2011
Intel’s Technology and Manufacturing Supply Chain is vast and reflects the SC complexity of a global presence.On the Sourcing and Procurement side of the business, we are managing upwards of 10,000 suppliers across 100 countriesOur Technology and Manufacturing Engineering team builds and ramps our fab network consisting of 9 fab and 7 assembly test facilities.All of this SC infrastructure churns out over 5K unique products that we ship to over 3K locations annually.From a volume perspective, we are managing upwards of 1 million orders a year with nearly 3M unique shipments.So orchestrating the complexities of this is no small challenge and it’s never been more important to leverage these collective assets as a competitive advantage for Intel.
Internal Alignment (Partnership) Inward facing alignment and partnership Focused on addresses lateral process across different functional group within Intel – SMG, MMBP, CPLG, Fab/ATM Network Be more efficient Result: Got more efficient, but lacked strong external results, not world class recognized supply chainOutward Facing Responsiveness (Just Say Yes Campaign) Customer Responsiveness and Delivery Performance Created strong common goals across function business organizations Focused on customer perception of performance – responsiveness and delivery performance Was a turning point for Supply Chain improvements Gained global recognition for supply chain improvements Gartner #16DetailsJUST SAY YESExcellence in the supply chain is not just a nice-to-have feature, it's critical to have it, especially in semiconductormanufacturing where complexity is part and parcel of the process. Unfortunately, such a lofty state wasn't always the caseforIntel.From Intel’s perspective, customer responsiveness, inventory optimization and asset utilization are the three components of a top-notch supply chain. An unwanted situation is for these elements, or the people managing them, to compete rather than work together.. That was sometimes prior to our Just Say Yes supply chain transformation. Take responsiveness to customer demand, for example. We built a metric called "percent-yes-in-one-day," While not a standard supply chain metric, it was designed to track change requests: customer demands to alter product orders in some manner, cancellations, swaps, whatever. The metric reflects "how many of those change-order requests that we said 'yes' to within one day." Not many, as it turned out. Something else - something internal - had to change.In 2007, we instituted a SC program called "Just Say Yes." It was the beginning of radical shift in the supply chain paradigm at the company. And now? Customer responsiveness has tripled, order fulfillment lead-times have improved by 25 percent and delivery to customer dock "has gone up by several tens of units and is at world-class levels now."The most important thing, is that the results occurred while decreasing inventory 45 percent from peak levels set in 2006. "It's a pretty amazing accomplishment. It's been a long and difficult journey. The paradigm shift radically affects the way we think about the supply chain.“ -Supply Chain Brain, May 7, 2010Next focus is cost, speed, agility and new market supply chain excellence
Order Fulfillment Lead Time = From the time a customer places an order until the time it hits their doc.Cycle Time – The time it takes us to move material from Customer Forecast (initial Demand signal) to Customer Dock (Delivery)Delivery Performance AMB – Perfect Order = Arrives on the right date, in the right quantity, with quality you expect (paperwork, damage, labels)
The great supply chains are customer-driven or demand-driven. It’s about understanding what people need and being able to respond faster with the right mix of products, the right cost, the right quality, to the right locations around the world. This fits very well with Intel’s move to providing great user experiences as well as great products.