#Lessonsfromthebest : Make-to-Order
Intel, one of the world’s largest computer chip manufacturers, needs no introduction.
Nevertheless, despite introducing the low-cost “Atom” chip to market, the company had to
drastically reduce supply chain spending. Supply chain costs for units selling for $100 were
bearable at about $5.50 per chip, but the price of the new chip was a fraction of this, at about
$20.
Intel needed to somehow reduce the expense of the Atom chip’s supply chain but had just
one area of leverage — inventory.
The chip had to work, so Intel could not make any trade-offs for service.
The only alternative was to try to lower the inventory levels, which had been held very high
up until that point to accommodate a nine-week order period. The only way Intel could find
cost savings in the supply chain was to push down this processing time and thereby reduce
