Intel purchasing in sweeping overhaul
By Tom Stundza -- Purchasing, 7/6/2006 2:00:00 AM
Purchasing and related functions at Intel are getting a facelift that the company says will transform them into a leaner, more agile group.
Under a sweeping reorganization that began this month (July 2006), the world’s largest chipmaker will eliminate an entire layer of management and cut staff by 30% for purchasing, materials management and supply-chain management, according to an internal corporate memo obtained by Purchasing.
All three functions fall under the materials management group based in Chandler, Ariz and headed by Craig Brown, a corporate vice president of manufacturing and technology and director of materials. Brown declined to respond to a request for comment.
Sources say the reorganization follows a promise made by CEO Paul Otellini to Wall Street analysts last April. “We will restructure, resize and repurpose Intel Corp. for where we think the business is going,” Otellini told the analysts. “Every part of Intel will be included, and no stone will be left unturned or unlooked at.”
The company’s first quarter revenue fell 12%. Rival AMD has made some gains in market share.
Among objectives of the reorganization, purchasing personnel say, are development of a flatter materials organization, more clarity in the organization’s scope and responsibilities and expanded global and diverse representation of staff.
The new materials organization will now include eight re-defined groups. They are:
* assembly test global materials, which deliver materials to factories;
* construction materials and services, which supply materials for new plants;
* global fab materials, which primarily purchase silicon wafers and create opportunities for expanded chipmaking productivity;
* platform memory operations, which manages commodity and spare parts purchasing;
* system materials operations, which centralizes purchasing contracts for key components use by electronic systems manufacturing;
* contract manufacturing and procurement operations, which will centralize purchasing of supply application-specific integrated circuits (ASICs), application specific instruction set processors (ASIPs), flash and other memory chips, subcontracted assembly and test components
* business operations purchasing, the coordinator of corporate e-procurement and supply chain operations and
* global indirect procurement, which keep plants and offices operating and now includes the former information technology strategic procurement organization.
The reorganization also will create new Greater European Region, Greater Asian Region and Latin American Region procurement staff roles. The primary objective of these groups will be to provide a senior single voice to internal partners in the regions to resolve internal conflicts, create alignment to corporate materials strategies and keep the regional materials groups ahead of emerging market opportunities.
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