By Tom Quillin, Global Security Policy at Intel Corporation
As Intel co-founder Andy Grove once wisely said, “If you can’t measure it, you can’t improve it.”
This Grove-ism applies to three supply chain issues EVP and COO Keyvan Esfarjani outlined during a panel on modernizing supply chains last month at the Milken Institute Global Conference. In hearing from the participating panelists, it was clear that we share a common objective: by measuring supply chain resiliency, we can improve downstream visibility, drive sustainability, and improve our global supply chain.
1. Measuring Supply Chain Resiliency
Supply networks depend on the individual reliability of each supplier within them. Problems emerge when data is hard to get. Think back to the computer shortages of the COVID years. People couldn’t get the semiconductors they needed, and although we had the capacity, suppliers were stuck.
Some parts of the supply chain functioned normally, but manufacturers in other areas struggled to complete orders due to shortages of critical components—cables or power supplies, for example—that were normally readily available. There were hidden, unmeasured weaknesses. For example, factory issues for a subcomponent supplier further upstream led to shortages of important assembled components. Or, parts were available but were stuck in transit due to port closures or freight congestion.
The measurement systems were insufficient to identify and diagnose these issues. So, while individual companies or industries might see red flags emerging, downstream supply chain managers lacked the data and visibility to adapt.
2. Improve Downstream Visibility
Data and analytics technologies improve the visibility and control companies have over their complex supply chains. This visibility enables them to adjust and meet customer deliveries, protect their margins, and work with upstream and downstream partners. Several initiatives are poised to improve visibility across industry sectors and layers of the supply chain, including the U.S. Department of Transportation’s FLOW initiative and the True Demand pilot effort from Flex.
The benefits of data sharing and digitization extend to trade, where opportunities to replace paper-based systems can improve supply chain insights and resilience efforts. Key milestone events like customs clearance during transportation can indicate whether schedules are being met. Sensors and RFIDs are cheap and available, but industries need a standardized approach to incorporate them into the supply chain.
One example of this is how Intel is working with the Vietnamese government to explore confidential automated data reporting solutions that would protect the information, reduce errors, and decrease lost revenue from data inaccuracies. This approach will provide Vietnam Customs with access to detailed manufacturing data from companies supporting the country’s duty-free material consumption validation. It has the potential to eliminate up to 5,000 person-hours previously spent by the Intel operations team preparing manual reports and audits.
As suppliers adopt more robust measurement tools and data systems, these efforts should enhance supply chain resiliency and create long-term advantages in speed, cost, and sustainability.
3. Sustainability’s Role in Manufacturing
A recent study showed that only around a fifth of the world’s 2,000 largest public companies have net-zero commitments. More companies must commit to measurable changes to address climate change and challenges of temperature and water scarcity.
Resilience and sustainability goes hand-in-hand. Because growth of the semiconductor requires sustainability, Intel is driving measurable goals and metrics here as well. Intel set a course to do the following by 2030:
Achieve 100% renewable electricity use across its global operations,
Invest approximately $300 million in energy conservation at its facilities to achieve 4 billion cumulative kilowatt hours of energy savings,
Build new factories and facilities to meet U.S. Green Building Council® LEED® program standards, including recently announced investments in the U.S., Europe and Asia, and
Launch a cross-industry R&D initiative to identify greener chemicals with lower global warming potential and to develop new abatement equipment.
Keyvan recently provided an update on Intel’s extended plans and progress toward net-zero greenhouse gas emissions, summarized in the figure below. As we expand our manufacturing footprint to build a more resilient semiconductor ecosystem, we’re also building a more sustainable one. For Intel, it’s not added work. It’s how we work.
Supply Chain Concentration
When a supply chain is concentrated in one region, as semiconductors are today, the risks of disruption loom large. Today there are only three companies that manufacturer leading-edge semiconductor technology, and Intel is the only U.S.-based company.
Before the CHIPS Act passed in 2021, policymakers saw the concentration of production of leading-edge chips as a growing risk to economic and national security, especially since these chips are vital to sustaining innovation and our economy. By passing and funding game-changing industrial policy, the U.S. becomes significantly more competitive.
We as an industry—in conjunction with our partners in government and academia— already know what happens when part of the supply chain breaks down. We need to live by Andy Grove’s adage and do a better job of measuring and solving for risks to the ecosystem.
If we are to create meaningful progress, industry and government must enhance supply chain resilience, strengthen capacity in the U.S. to produce leading-edge chips, ensure the data we need is shared efficiently and conveniently through digitization, and measure our carbon footprint so that our manufacturing operations today create a better world tomorrow.