Optimizing Inventory Levels Within Intel's Channel Supply Demand Operations

Intel's Channel Supply Demand Operations (CSDO) organization is responsible for satisfying the boxed processor demands of Intel's vast customer network of distributors, resellers, dealers, and system integrators. In 2005, CSDO began a multiechelon inventory optimization (MEIO) project to improve its efficiency and effectiveness by optimizing inventory levels and locations across CSDO's end-to-end supply chain. This paper describes the project plan, workflows, and results. One year after implementation, total inventory levels were reduced by more than 11 percent; in addition, service levels of products modeled using the MEIO process were eight points higher than products not modeled using this process. The MEIO process continues to be in place at Intel and has resulted in sustained reductions in inventory levels, average service levels exceeding 90 percent, and more than an order-of-magnitude reduction in the number of expedites.