Consolidating point-of-sale suppliers saved Intel more than $2m in its first year
Consolidating point-of-sale suppliers saved Intel more than $2m in its first year

Winner: Intel's supplier rationalisation

6 December 2019

The tech giant picked up two CIPS Supply Management Asia awards with its process improvement initiative

A project to standardise marketing services at chip maker Intel Corp achieved savings of more than $2m in its first year and enabled Intel to scoop the overall winner award at the CIPS Supply Management Asia Awards 2019, as well as the award for Best Process Improvement Initiative. The technology firm, which operates across 12 culturally diverse countries in Asia Pacific and Japan (APJ), consolidated its retail marketing supplier base in the region from 35 to three. Two provide field force agents, who set up the products in store, and one supplies point-of-sale merchandise (POSM) print and distribution to about 5,000 stores that support sales of Intel-based devices.

Lay Ean Oon, commodity manager at Intel, explains the need to reorganise: “Each of our country teams was required to take the corporate or regional marketing campaign briefs to their local suppliers to execute. We had to deal with differences in processes, delivery lead times, quality of items and services, tools, data availability, reports and pricing, as well as brand consistency.”

In the face of these challenges, the ‘One Agency Model’ project involved standardising production and delivery of in-store POSM, with locally relevant messaging across stores. Suppliers were encouraged to drive cost efficiencies, eliminate operational redundancies and reduce legal risks for Intel. The team worked to identify a single agency in each of the functions or countries in order to reduce the suppliers covering this scope. The project has now reduced the number of supplier touchpoints for Intel’s retail marketing business partners, allowing for centrally managed budgets, increased transparency, as well as a consistent Intel brand identity.

Optimisation of supply was achieved partly through eAuctions, often an effective process for driving down pricing for highly commoditised goods and services. Intel Procurement selected Ariba, and the eAuctions have worked well for printing and online ordering, a transforming efficiencies in the business, according to Oon. “We got our POSM supplier to run eAuctions with their printers so that we could get the best pricing, and we would have a cost-savings sharing model with the POSM supplier,” says Oon.

As part of critical end-consumer marketing activity, the project included a platform for technology automation for POSM procurement. The print-ordering tool was developed by the POSM supplier for Intel and addresses standard and bespoke requests. For standard orders, at the start of every quarter, the corporate POSM materials are loaded into the tool like a catalogue, from which the country marketing teams can order, explains Oon. The country teams are allocated certain budgets depending on their respective market sizes, and they place their orders based on their needs and budgets, by a certain deadline. 

“Centralising the orders for the entire APJ region gives us better scale and consistency,” says Oon. For bespoke orders, she continues, the tool also allows marketing teams to submit their requests, which link into the suppliers’ eAuction tool for cost savings.

Chip shop

Intel was founded in 1968 by semiconductor pioneers Gordon Moore and Robert Noyce; the latter a key inventor of the microchip. Although Intel created the world’s first commercial microprocessor chip in 1971, it wasn’t until the success of the personal computer that chips became its primary business. 

Today, the company is the world’s second largest and second highest-valued semiconductor chip manufacturer by revenue (only superseded by Samsung). Headquartered in California, Intel is a supplier of processors for computer system manufacturers such as Apple, Lenovo, HP and Dell. The company also makes motherboard chipsets, flash memory, graphics chips, embedded processors and other devices related to computing and communications.

CIPS Asia Supply Management Awards 2020 are now open for entries.

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