Internal Analysis

For the Intel corporation which is the manufacturer of microprocessors and an innovator of new technologies the application of modern IT approaches has solved many problems. Although Intel is a leader in the microprocessor industry it still has to reorganize its internal and external operations in order to attract and retain its customers. Moreover Intel has to make business procedures as easy as possible for the partners and in doing so the company has to use the Web to improve their current position. In order to facilitate positive changes Intel has adopted a different technological approach to its value chain operations, the analysis of which will show exactly what has helped the constructive changes to happen. One of the basic elements of value chain is the inbound logistics which is responsible for such operations as materials control and how well does it work, type of inventory system control and its effectiveness, and warehousing of the materials. Intel has adopted a system that works through the Net and analyses the direct supply purchases, meaning all the materials and equipment the company needs to make chips and components are managed instantly. The company is currently doing about 90% of inventory supply/control in this manner however management will only be satisfied when all of the supply purchases are communicated in this way. Another innovation that has helped Intel to reduce time of processing needed information from the suppliers was the implementation of online access to confidential engineering and product-specification documents. This simplification lead to reduction of the amount of time the suppliers needed to find out what exactly the company required and how fast it should be done. This system of secure Web downloads help to cut the amount of time needed to transfer confidential documents from two to three weeks to only 30 minutes. A sufficient number of Intel suppliers also use the Net to check the inventory levels and make estimations about needed components, times of delivery and status of payments. As seen, Intel has shortened the distance between itself and suppliers to a minimum, which resulted in a more efficient manufacturing process, cost reduction and thus more value added to the final product. Another element of value chain is the operations itself which consist of productive equipment, production control system and automation level used in production process. It is understandable that Intel has the best equipment as the company itself is the manufacturer of the parts of equipment. The RosettaNet is a new system of business process standards used in conjunction with XML forms which is a core of technology that allows Intel to build more competent links with its suppliers and customers. It is a set of standards for business processes that enables Intel which uses diverse and often conflicting systems to exchange documents and data over the Internet. thus RosettaNet is of growing importance to manufacturing companies such as Intel and its suppliers that want to do business via Net. Intel that has changed from Electronic Data Interchange (EDI) systems to RosettaNet which allowed it to improve productivity levels, combined with efficient inventory it results in overall production growth. Outbound logistics refer to as delivery of finished products and warehousing of finished products, as well as efficiency of both of these operation. Again using the Web Intel has decreased the time inventory stays in the company’s warehouses to the minimum. By putting the customer order-entry system on the Web, Intel diminishes the errors which routinely occur with paper order forms which had to be entered into a computer, by almost 75 percent. The company has increased online sales from a $1-billion-a-month to a $2-billion-a-month without hiring any additional staff. Intel just let the electronic systems to the work which turned out to be more effective than people in such arrears like telemarketing or advertising. With those electronic systems processing orders, inventory gets quickly moved out of the warehouses and quickly delivered to the customers, which in turn allow the company to focus more on R&D processes than on maintenance issues. As was already discussed Intel’s automated processing systems of inventory supply and demand and communication with customers results in a coordinated company functioning. Marketing and sales procedure is also a part of value chain process and has to be individually assessed in order for all the components to fit the general strategy of the company. This section of value chain is concerned with issues such as marketing research being effectively used to identify customer segments and needs. This question can also be answered by the new technological approaches which Intel has implemented in all spheres of its operations. They have actually improved time to market the products, and in Intel’s kind of business, time to market is everything because high technologies are quickly introduced and as quickly removed from the market. Intel is introducing new chip models and generations every six months and if they are able to reduce marketing time at least to one week they will actually gain a week’s worth of high-margin revenue, because their new products are sold at high prices, or "skimming prices." This minor difference speeds up company’s total revenue rate and makes a big difference in the bottom line. Also due to Intel’s sales system on the Web, about 26 percent of the transactions occur after normal business hours, which is a great deal of all sales made by Intel. This approach stresses customer convenience in terms of hours and fosters international trade, as there are different time zones in countries where Intel sells. Services are the logical outcomes that follow after the purchase is completed. Most of Intel customers are corporate ones and almost 90% of them are making purchases through the Net. The direct customers in more than 60 countries can order various design specifications of their chips online in designing their end products, but also in making changes or/and suggestions about specific finished product. The speed with which customers are taken care of is the primary competence of Intel. It is related to all five major value chain factors, and it results in company’s leading position on the market in the price-quality-inventory and customer service department. Automated systems enable company to quickly react to any changes in the market as well as in their external business issues.