Intel Corporation is facing a warehousing challenge due to the 85% increase in demand for its product. The increase in demand is attributed to the introduction of a new product line, which Intel has failed to meet its market needs.The warehousing director has credited the challenge to the lack of enough personnel to handle the newly adopted warehouse processing system. The new system was adopted nine months before the sudden increase in demand, where it altered how the corporation packed, labeled, pulled, and shipped its products. The situation is affecting quality service delivery to the customer and hampering the efficient operations of the Intel production team, precisely the warehousing department.Notably, the logistic challenge is attracting widespread customer discontent due to shipment of incorrect content, misplaced labels, and damaged boxes. More badly, some customers are threatening to switch to Intel’s competitors, which could affect the company’s profitability in the long term and hamper its strategic market initiatives.
There were several participants in identifying Intel’s corporation warehouse challenge and proposing of the right decision to the problem. First, Dennis Martin, the corporation’s floorsupervisor, has noted that the end product demand had increased beyond the normal amount. The report has been forwarded to Jack Tyler, Director of Warehousing and Logistics, to provide potential causes of the challenge.Mr.Tyler attributed the challenge to the introduction of a new product line, while David Goodwin, the commodity manager in the company cited system complications for the problem. Precisely, Mr. Godwin seconded Ms. Martin that the company’s Inbound and Outbound Excellence system was the main cause of the customer complaints because it could not cost the customers issues appropriately. Moreover, Ms. Martin noted that there was no compatibility between the printer driver and the hardware.She also noted different time zone configurations in the newly adoptedsystem and incorrect data mastery by the system.
Relocating Warehouse Capacity
Fundamentally, Intel’s warehouse duty is to receive, cycle counting, and provide factory issuance and returns. The tasks involve maintenance, repair and raw materialscoordinatingto support shipping procedures in the company. Moreover, the warehouse functions are broken down into the type of materials it handles which determines the executionof customerrequests. Due these diverse duties performed by the warehouse department, the two leaders tasked with solvingthe space problem are contemplating on relocating the warehousing labor and capacity. Mr. Tyler and Mr. Goodwin are considering this alternative toaddress customer issues,but there has been no agreement on space allocation. Mr. Tyler sees relocation as a solutionto customer demand upturn, where space is significant in this process. However, the alternative is not visible considering that raw material takes up to 50% of the warehouse capacity.
Adding More Human Resources
The second option for Mr. Tyler is to add more personnelto his team to ensure processes are fastened and executed on time.The customer is the most significant person in the value chain of Intel company; thus, their convenience is paramount in every process. Still the company relies on Original equipment manufactures and originaldevice manufacturers as their primary clients. Notably, these clients are time and quality conscious, which Intel cannot fail to meet in its operations.Concisely, a huge task force would ensure, finished goods are quickly shipped from the warehouse, which reduces uptime in demands. However, thealternative requires more financialinvestment, which cannot be guaranteed by the corporation at the moment. Ideally, the corporation hasa flatheadcount provision for the warehouse department and is trying to cut on the operational cost. In this sense, Mr. Tyler must do more to justify why he needs additional manpower considering he wasrecently funded in the IOE systemenrolment. The implementation of the systemhad taken a substantial amount of resources and time, which further underminesthe chances of this alternative getting the necessary support from the top management.
Detailing the Selected Alternatives
Relocating warehouse can reduce overall cost by spreading liability and improving efficiency into the customer demands. Currently, a majority of the warehouse is used for raw material storage and at the same time the department is used for other labor related duties. Relocating the labor capacity of the warehouse will save the company regarding shipment refunds, wrong product delivery, and factory shuts up in the long term. According to the case study, the projectedsavings could be up to $3000, which is significant in the operations of the company.
Adding more personal is also viable, but the associated implementation cost is not favorable to the profitability of Intel. Moreover, with the IOE system, the only problem a company can face is space. In this sense, if the enterprise decides to employ more personnel, it will be doing it to solve a short-term inventory problem, then after stabilizing operations; it will have to downsizeagain. Similarly, associated cost such as safety and insurance provision for more personnel is expensive in the long term.
Based on the two alternatives, the best solution for the Company is relocating some of its warehouse duties and redesigning its space. To solve the raw material problem during the redesigning process, the company canoutsource service or hire extra manpower on a contract program. The decision will ensure Intel saves on operation cost in the long term as compared with the hiring of more manpower.
The company can use vertical supply chain integration, which increases supply chain efficiency and contribute to competitive advantage based on cost.Practically, Intel can merger with its customers and supplies to offer a perfect Inbound and Outbound logistics service. The approach is based on order fulfillmentby having close corporation between volume contractors, merger, different companiesproviding fleet and product designsurvives.