Intel's Dallman Vows To Improve Channel And Supply Logistics

"VBI just got off to slow start last year. It was a lot harder to do than a lot of us thought," Dallman said Monday at the Intel Solutions Summit in San Diego.

Intel rolled out VBI to help provide custom-system builders with financial support and standardized PC components such as power supplies, batteries and LCD panels. Though the program stumbled a bit out of the gate, the Santa Clara, Calif., chip maker has made some changes and hopes to see improvement when its next notebook motherboard platform, code-named Santa Rosa, launches the next quarter, according to Dallman.

One big factor that hampered VBI was inconsistency in the quality of supplies from Intel ODMs, but this month Intel is tapping a new aggregator, or third-party logistics company, that it expects to improve component availability from ODMs as well as drive up volume to bring pricing down.

And to bolster the supply of Intel components to partners, Intel aims to reduce fulfillment time for requests from the channel. Under a new initiative, a percentage of Intel employee bonuses will be affected by how well Intel responds to such needs. Eleven weeks into the effort, Intel has improved the percentage of time it OKs a request within 24 hours of receiving it from 12 percent to 50 percent, and the company aims to raise that to 70 percent this year, Dallman said.

By cutting the time it takes to fulfill channel needs, distributors and VARs can reduce the inventory they have to hold, he noted.

"In the channel, what we noticed when we talked to distributors is that some 60 percent of their orders are same-day, next-day stuff. The pools of inventory have disappeared. We had systems designed around six weeks inventory, but the costs of doing that are just too high," Dallman said.

"One of the biggest things we then noticed is that we had an extremely high percentage of orders that changed four weeks before we delivered," he added. "The other thing we had happening was we had distributors calling up and saying, 'I'm out of these. I need more.' And it would take us two weeks to get back to them. So we knew we had to do something different."