12. greg skrovan
TRANSCRIPT
Intel Confidential1
International Air Cargo Forum and ExpositionInternational Air Cargo Forum and Exposition September 2006September 2006
Greg SkrovanGreg Skrovan Intel CorporationIntel Corporation
Intel Transportation Supply Chain
Intel Confidential2
The Intel you think of…
Intel Confidential3
The Intel that is a…
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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,Storage and
Cross docking
Customer
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The Intel NetworkEuropeEurope
AmericaAmerica
AsiaAsia
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Intel’s Influence in the Supply Chain
Leader in internet negotiations; used for virtually all freight Leader in internet negotiations; used for virtually all freight contracts and negotiations.contracts and negotiations.
Instrumental in establishing the High Tech Shippers Coalition Instrumental in establishing the High Tech Shippers Coalition as a forum for influencing governmental policies.as a forum for influencing governmental policies.
Helping to establish direction for RosettaNet proliferation Helping to establish direction for RosettaNet proliferation through leadership in RosettaNet consortium. through leadership in RosettaNet consortium.
An original founder of Technology Asset Protection An original founder of Technology Asset Protection Association (TAPA) and active in leadership positions in all Association (TAPA) and active in leadership positions in all geographies.geographies.
Transportation Materials & Manufacturing Engineering group Transportation Materials & Manufacturing Engineering group has patented thermo-forming solutions that have saved has patented thermo-forming solutions that have saved millions in freight and packaging costs.millions in freight and packaging costs.
• Intel was ranked number 11 of the “Top 25 Supply Chain Intel was ranked number 11 of the “Top 25 Supply Chain Companies” by AMR Research in 2005.Companies” by AMR Research in 2005.
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Freight Spending and Geo Demand
Imbalance between billings and consumption drives freight costs
Air cargo represents 78% of freight spending
59% of freight spends originate in Asia (~20% from China 3PL’s)
Challenges: – Align the “right service / mode”
to the Business Unit needs
– Comprehend total landed costs in supply chain decisions
Q2 Billings Revenue
51%
12%
18%
19%
IJKK
EMEA
ASMO
APAC
Q2 Billings Revenue
51%
12%
18%
19%
IJKK
EMEA
ASMO
APAC
Q2 Consumption Revenue
33%
26%
8%
33%
Q2 Consumption Revenue
33%
26%
8%
33%
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
Global Freight Profile: Trade imbalance impacting
costs and delivery reliability. Higher fuel costs passed
through to shippers.
IntraAmericasIntraAmericas27%27%
IntraAsiaIntraAsia24%24%
IntraEuropeIntraEurope11%11%
TransPacificTransPacific
3%3%
14%14%
20052005
Intel Global Freight Profile by WeightIntel Global Freight Profile by Weight
88
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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
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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.
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Back-up
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Intel Supply Chain Vision
Mission: Increase customer and Intel success by Mission: Increase customer and Intel success by optimizing supply and demand, and delivering optimizing supply and demand, and delivering valued supply chain solutionsvalued supply chain solutions
Vision: Agile fulfillment capability that is easy for customers and maximizes shareholder value.
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Vision - TransPerfectionVision - TransPerfection “Perfecting the Business of Global Transportation”“Perfecting the Business of Global Transportation”
Global Transportation & Logistics Outsourcing
Establishing Cutting-Edge
Transportation Management
Systems
Providing the Right Service at the Right Cost at the Right Time
Evolving aCulture of Controls
Ensuring Clean, Visible Data for
Value-Add Information
Investing in the Growth of our
People
Mission:Mission:Deliver a Supply Chain Advantage to Intel by:
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Supply Network Trends – Environmental ScanD.A.R.T. Board
Distribution
Availability
Regulations
Technology
DistributionDistribution Availability of Logistics SupplyAvailability of Logistics Supply
Regulatory RequirementsRegulatory Requirements
1.1. Air Freight Capacity:Air Freight Capacity: Capacity constraints impact delivery performance and drive costs up.
2.2. Fuel:Fuel: High fuel prices and lack of management strategies impact distribution decisions.
3.3. Ocean Port Congestion:Ocean Port Congestion: Increased ocean volumes causing long wait times at ocean ports (particularly in China, Japan & West Coast US).
1.1. Security:Security: Challenge network reliability and shipment integrity (e.g., TSA).
2.2. Customs:Customs: EM challenges & inspection of cargo on PAX.
3.3. Environmental and Packaging:Environmental and Packaging: Requirements becoming more strict
4.4. Trucking Regulations:Trucking Regulations: Affecting labor and profitability.
5.5. Lithium Ion Batteries:Lithium Ion Batteries: Restrictions could impact future shipments
1.1. RosettaNet:RosettaNet: Enable “plug-and-play” startups and improve data quality.
2.2. RFID: RFID: Offers benefits for operations management and security.
1.1. Globalization:Globalization: Growth in emerging markets challenges logistics capabilities, increases security risks, and drives up costs.
2.2. Inventory Management:Inventory Management: Increased requests for consignment, leaner inventory models, SKU proliferation.
3.3. Network Complexity:Network Complexity: Increased outsourced manufacturing, fragmentation of disti channel, direct- and drop-ship models, exponential lane pair growth.
TechnologyTechnology
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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