I have served in various roles in my last 22 years with Intel, both in the business units and in IT, driving transformative change. Currently, I am leading the digital transformation of Intel’s supply chain in IT. As described in the 2018-2019 Intel IT Annual Performance Report, “Driving the Digital Enterprise Transformation,” we are applying the power of data and artificial intelligence (AI) to modernize our supply chain processes and architecture in the face of an ever-changing business and technology landscape.
Of course, we’ve been optimizing Intel’s supply chain for a decade, and Intel has been on the Gartner Top 10 Supply Chain list for several consecutive years. But we’re going further to orchestrate the supply chain across Intel’s business units, using analytics to create a supply chain that is responsive to customers’ needs. AI can tell us what the customer wants and enables us to put that signal in our entire end-to-end business process.
Artificial Intelligence Is a Must-Have in Our Digital World
Intel’s supply chain is exceedingly complex and sophisticated. For example, it includes several hundred facilities in over 60 countries, nearly 20,000 suppliers, and thousands of customers. Each year, we fulfill one million orders and ship one billion units. In addition, Intel’s new business growth has dramatically increased our supply chain complexity. Today we have a hybrid supply chain, meaning there’s a mixture of in-house and outsourced manufacturing. Instead of high-volume, low-mix product, we’re seeing more highly variable product demands. Our factories will be creating 10 nm products while still producing 14 nm products.
Our customer landscape is also changing, requiring us to accommodate new safety standards, laws, and regulations associated with various verticals, such as government, automotive, and healthcare markets. The bottom line is that we need to modernize, standardize, and simplify end-to-end, and rely on analytics more than ever so we can plan and synchronize everything.
By harnessing the power of AI, Intel can leapfrog ahead of the competition. That is really what we’re trying to do. We are working with Intel’s Corporate Data Office (CDO) to get the data foundation in place so we can use AI in analytics. We are also building on that momentum by integrating financials, sales and marketing, and supply chain into a single analytics platform. This integrated platform will enable Intel to make optimized, real-time decisions.
Focus on the Business Need: Strategic Differentiation in the Supply Chain
Too often, companies start a digital transformation by talking about technology. But we have found that to create competitive advantage you have to lead with strategic goals, then focus on business process, and only then should you talk about technology.
As I see it, the following five items are key to our success in transforming Intel’s supply chain:
- Start with top-down alignment.
- Set clear, measurable strategic goals.
- Partner with the business units by moving from the back room to the board room.
- Simplify the platform by taking advantage of software-as-a-service (SaaS) innovations that are available for non-differentiating tasks.
- Focus investments and customizations on Intel’s strengths, which are our factories and our intellectual property.
Create the Right Supply Chain Synergies to Achieve Results
We have formed a strategic partnership between sourcing, planning and logistics, and IT. It’s a triad that combines people, end-to-end processes, and technology. IT is a fantastic strategic partner to the business units because 1) we are familiar with the technology that runs the company and the supply chain, and 2) we are in a unique position to see the end-to-end processes.
Over the last year of our supply chain transformation journey, we’ve accomplished two very exciting goals:
- Optimized sourcing. We consolidated multiple purchasing processes and technologies onto a standard enterprise resource planning (ERP) platform and then combined that with the innovation of the cloud, SaaS, and a hybrid on-premises solution. Standardized business processes have helped to increase negotiating power, maintain the right inventory in the right place, and decrease scrap. Design engineers now have a menu of materials that have already been vetted by our supply chain analytics for availability, price, and risk. This streamlines the product design process.
- Configure-to-order. Increasingly, Intel will sell not just hardware, but hardware/software combinations. For example, Intel® Rack Scale Design customers need to be able to pick from a menu so Intel can build exactly the product they want—from the hardware stack all the way up through the data center. We have demonstrated that true pull demand—configure-to-order—is possible. Our Intel Rack Scale Design proof point is a compass for many of Intel’s business units, including those working on the Internet of Things (IoT), Intel® Silicon Photonics, and all the data-centric businesses that we’re betting the company’s future on.
Our supply transformation with AI has already provided USD 58 million in savings associated with inventory optimization, and has increased our warehouse planning to 95 percent accuracy. We are now integrating our original design manufacturing supply network (external suppliers) into our models to further facilitate configure-on-demand as well as reduce the time it takes to make design changes.
Planning the Next Leg of our Supply Chain Transformation Journey
We plan to apply what we learned about sourcing/purchasing to other areas of the supply chain. That is, standardize and simplify the end-to-end transportation process. This will allow the Intel personnel who negotiate contracts and pick the sea lanes to optimize their decisions based on availability and cost. We anticipate that this will save Intel hundreds of millions of dollars.
We’re also encouraging Intel IT staff to embrace our partnership with the business units. Modern IT personnel need more than technology skills—they need to have business savvy, understand Intel’s customers, and be able to act as an influencer and a change agent. On top of these soft skills, they need to acquire modern technical skills, such as AI and data science, in-memory databases and distributed file systems, and SaaS and the cloud.
Want to Learn More?
You can find more details about how Intel IT is transforming Intel’s supply chain by reading the 2018-2019 Intel IT Annual Performance Report, “Driving the Digital Enterprise Transformation.”