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Microsoft PowerPoint - 12. Greg Skrovan

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Microsoft PowerPoint - 12. Greg Skrovan

  1. 1. Intel Transportation Supply Chain International Air Cargo Forum and Exposition September 2006 Greg Skrovan Intel Corporation 1 Intel Confidential
  2. 2. The Intel you think of… 2 Intel Confidential
  3. 3. The Intel that is a… 3 Intel Confidential
  4. 4. Intel Supply Chain Intel Supply Chain characteristics 10 fabrication plants, located in Ireland, Israel and USA 7 Assembly Test factories in Asia and Costa Rica 14 Distribution Centers throughout the world, including four retail boxing lines The manufacturing cycle of a typical Intel product includes at least one round world trip Intel ships ~1.9 million shipments per year averaging 550 kilos per day Intel Supply Chain has ~2,500 people in 14 countries. Supplier Fabrication Plant Assembly Test Boxing, Customer Storage and Cross docking 4 Intel Confidential
  5. 5. The Intel Network Europe America Asia 5 Intel Confidential
  6. 6. Intel’s Influence in the Supply Chain Leader in internet negotiations; used for virtually all freight contracts and negotiations. Instrumental in establishing the High Tech Shippers Coalition as a forum for influencing governmental policies. Helping to establish direction for RosettaNet proliferation through leadership in RosettaNet consortium. An original founder of Technology Asset Protection Association (TAPA) and active in leadership positions in all geographies. Transportation Materials & Manufacturing Engineering group has patented thermo-forming solutions that have saved millions in freight and packaging costs. • Intel was ranked number 11 of the “Top 25 Supply Chain Companies” by AMR Research in 2005. 6 Intel Confidential
  7. 7. Freight Spending and Geo Demand Q2 Billings Revenue Q2 Billings Revenue Imbalance between billings and consumption drives freight costs 12% 12% IJKK IJKK Air cargo represents 78% of 18% 18% EMEA EMEA freight spending 51% 51% ASMO ASMO APAC APAC 59% of freight spends originate 19% 19% in Asia (~20% from China 3PL’s) Q2 Consumption Revenue Q2 Consumption Revenue Challenges: 8% – Align the “right service / mode” 8% 26% to the Business Unit needs 26% 33% 33% – Comprehend total landed costs in supply chain decisions 33% 33% 7 Intel Confidential
  8. 8. Network Complexity Emerging Markets: Increase in smaller orders to more remote locations. Unstable logistics infrastructures. – Security risks – Delivery reliability – IT / systems – Accessibility to tier 2 cities Intel Global Freight Profile by Weight Global Freight Profile: Trade imbalance impacting 3% IntraEurope Eur 10% costs and delivery reliability. IntraAmericas TransA tlantic la ic 11% 1% Asia 27% Higher fuel costs passed 1% IntraAsia through to shippers. 24% 3% TransPacific 14% 2005 8
  9. 9. Emerging Markets Latin America (LAR) – LAR sourced primarily via Miami 3PL (84% of 3PL volume) – Direct shipments to LAR limited to MNC’s only – Direct shipments expected to increase by 50% ‘05 to ‘06 China – Lift capacity remains major issue – Linearity in uplift capacity (3X demand to supply Sept-Dec) – Limited landing rights in China – U-turn requirements for intra-China shipments – Non-direct flights between Taiwan and China 9 Intel Confidential
  10. 10. Challenge to the Air Cargo Industry Constantly seek out new ways to improve reliability – Global consistency with materials handling; i.e. Emerging Markets – Practice Business Continuity religiously; terror, hurricanes, etc – Face complexities and challenges as opportunities to get better, not as immovable barriers that halt progress or raise costs – Adequate and affordable lift capacity from growth and emerging markets Cost efficiency and effectiveness – Segmented services (one solution does not fit our BU needs) – Fuel efficiency and environmental awareness – Seamless inter-modal capabilities with customer transparency – Educate shippers on ways to make your life easier (bid timing, etc) Work as an industry to create breakthrough innovations, standards and leverage your collective power. – Increase collaboration with supply network partners – Industry associations / leverage your positions government, regulations. 10 Intel Confidential
  11. 11. 11 Intel Confidential
  12. 12. Back-up 12 Intel Confidential
  13. 13. Intel Supply Chain Vision Vision: Agile fulfillment capability that is easy for customers and maximizes shareholder value. Mission: Increase customer and Intel success by optimizing supply and demand, and delivering valued supply chain solutions 13 Intel Confidential
  14. 14. Global Transportation & Logistics Outsourcing Vision - TransPerfection “Perfecting the Business of Global Transportation” Investing in the Evolving a Growth of our Culture of People Controls Mission: Deliver a Supply Chain Advantage to Intel by: Establishing Providing the Cutting-Edge Right Service at Transportation the Right Cost at Management the Right Time Systems Ensuring Clean, Visible Data for Value-Add Information 14 Intel Confidential
  15. 15. Distribution Availability Regulations Supply Network Trends – Environmental Scan Technology D.A.R.T. Board Distribution Availability of Logistics Supply 1. Globalization: Growth in emerging markets 1. Air Freight Capacity: Capacity constraints challenges logistics capabilities, increases impact delivery performance and drive security risks, and drives up costs. costs up. 2. Inventory Management: Increased requests 2. Fuel: High fuel prices and lack of for consignment, leaner inventory models, management strategies impact distribution SKU proliferation. decisions. 3. Network Complexity: Increased outsourced 3. Ocean Port Congestion: Increased ocean manufacturing, fragmentation of disti channel, volumes causing long wait times at ocean direct- and drop-ship models, exponential lane ports (particularly in China, Japan & West pair growth. Coast US). Regulatory Requirements Technology 1. Security: Challenge network reliability 1. RosettaNet: Enable “plug-and-play” and shipment integrity (e.g., TSA). 2. Customs: EM challenges & inspection startups and improve data quality. of cargo on PAX. 2. RFID: Offers benefits for operations 3. Environmental and Packaging: management and security. Requirements becoming more strict 4. Trucking Regulations: Affecting labor and profitability. 5. Lithium Ion Batteries: Restrictions could impact future shipments 15 Intel Confidential
  16. 16. Business Trend Summary- More intense, not new…. Trend 1: Market and service requirements growing Trend 2: Supply Chain complexity accelerating Trend 3: Increased customer expectation: responsiveness/expectations/power Trend 4: Getting more difficult to manage affordability Trend 5: Our growth is in emerging markets 16 Intel Confidential

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