Impact of product design choices on supply chain performance in the notebook computer industry

Abstract

Intel Corporation is the world's leading manufacturer of processors for personal computers. As the company strives to maintain its leadership position in this industry, it identifies significant trends in the industry and attempts to develop product solutions that intercept these trends. One such set of industry vectors is the continued movement toward lower cost and smaller notebook system designs with a coincident shift toward fully outsourced production in China. These trends point to increased future demand for processors utilizing a ball-grid-array (BGA) package in notebook computers, which is the lower cost, smaller size packaging technology available today. This project was initiated to understand why with such a seemingly favorable environment for BGA, it still represents a small minority of Intel's mobile processor volume. The analysis shows that significant changes must be made to Intel's product roadmap, OEM product scalability strategies, or after-sale service models to enable a full transition to BGA processors. SKU levels increase by lOx with a BGA transition resulting in much higher supply chain complexity, management cost, and inventory cost. In addition, simple modeling approaches are developed and utilized for this study that can be leveraged in the future to quantify possible product strategy impacts on the industry supply chain. They can also be used in other industries contemplating supply chain simplification strategies.