Executive Briefings

A Paradigm Shift in Intel's Supply Chain

When Intel realized it lagged behind competitors in meeting same-day delivery of its chips, it knew a drastic makeover of its supply chain was necessary, says Viju Menon, director of worldwide supply planning operations at the company. He discusses how the paradigm shift has improved customer responsiveness and inventory optimization.

Excellence in the supply chain is not just a nice-to-have feature, says Menon, it's critical to have it, especially in a business like microchip manufacturing where complexity is part and parcel of the process. Unfortunately, such a lofty state wasn't always the case for Intel.

From the company's perspective, customer responsiveness, inventory optimization and asset utilization are the three components of a top-notch supply chain. An unwanted situation is for those elements, or the people managing them, to compete rather than work together, Menon says. That was sometimes the case at Intel prior to its supply chain transformation.

Take responsiveness to customer demand, for example. Intel has a metric it calls "percent-yeas-in-one-day," according to Menon. It's designed to track so-called 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.

Some three years ago, Intel's CEO instituted a new program called "Just Say Yes." It was the beginning of radical shift in the supply chain paradigm at the company, says Menon. 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, Menon says, 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."

To view this video in its entirety, click here.

Excellence in the supply chain is not just a nice-to-have feature, says Menon, it's critical to have it, especially in a business like microchip manufacturing where complexity is part and parcel of the process. Unfortunately, such a lofty state wasn't always the case for Intel.

From the company's perspective, customer responsiveness, inventory optimization and asset utilization are the three components of a top-notch supply chain. An unwanted situation is for those elements, or the people managing them, to compete rather than work together, Menon says. That was sometimes the case at Intel prior to its supply chain transformation.

Take responsiveness to customer demand, for example. Intel has a metric it calls "percent-yeas-in-one-day," according to Menon. It's designed to track so-called 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.

Some three years ago, Intel's CEO instituted a new program called "Just Say Yes." It was the beginning of radical shift in the supply chain paradigm at the company, says Menon. 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, Menon says, 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."

To view this video in its entirety, click here.