Global supply chains at risk The supply chain is the lifeblood of the automotive market. Typically, the production of an automobile requires thousands of parts from hundreds of suppliers. If just one critical supplier is unable to deliver a component, manufacturing lines can halt suddenly, potentially costing the automaker weeks of production time and millions of dollars. Natural disasters, political crises, and economic events can threaten the supply chain—and cause devastating business impacts. In 2011, flooding in Thailand pummeled the automotive industry, particularly Japanese automakers. Toyota Motor Corporation and Nissan Motor Company were both forced to stop operations due to a lack of parts from suppliers. It took 42 days for Toyota to resume business as usual—with a financial impact of roughly USD 1.25 billion—and Nissan 29 days, with a loss of about USD 70 million. 1 As the supply chain becomes even more globalized and interconnected, the impacts of natural disasters and other disruptions will be felt much more broadly and severely. It is critical for automakers to have suppliers who are prepared for these events with strong business continuity practices. Building a resilient supply chain Recently, automakers have been trending toward consolidating purchases with larger global suppliers. 2 This can help build a stronger, more resilient supply chain in two important ways. First, auto manufacturing requires a greater diversity of parts than ever before. The path to fully autonomous driving means more in-vehicle compute, communications technology, and support for next-generation in-vehicle experiences. To streamline sourcing, automakers are choosing suppliers who can deliver a full suite of automotive technology today while maintaining long-term research and development efforts for the best solutions tomorrow. Second, global suppliers are better positioned to respond to emergency events. They can more easily shift operations to another facility if one goes offline, fulfill in-demand materials from overstocked inventories, and reach out to a wide network of suppliers for additional support. In addition, Intel was one of the first companies to address the issue of conflict materials in our supply chain. We have worked diligently to create a responsible supply chain that ensures our products will not contain minerals that finance violence. Our commitment to conflict-free 3 mineral resources means greater economic opportunities and safety for miners and their families. Intel, among Gartner’s global “Supply Chain Top 25” for the ninth consecutive year, keeps business moving through some of the most devastating natural disasters and disruptions “Bad companies are destroyed by crises; good companies survive them; great companies are improved by them.” —Andy Grove Intel former president, CEO, and chairman, 1979–2005 Automotive Business Continuity BUSINESS BRIEF When Disaster Strikes, Intel Keeps Supply Chains Moving
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Global supply chains at riskThe supply chain is the lifeblood of the automotive market. Typically, the production of an automobile requires thousands of parts from hundreds of suppliers. If just one critical supplier is unable to deliver a component, manufacturing lines can halt suddenly, potentially costing the automaker weeks of production time and millions of dollars.
Natural disasters, political crises, and economic events can threaten the supply chain—and cause devastating business impacts. In 2011, flooding in Thailand pummeled the automotive industry, particularly Japanese automakers. Toyota Motor Corporation and Nissan Motor Company were both forced to stop operations due to a lack of parts from suppliers. It took 42 days for Toyota to resume business as usual—with a financial impact of roughly USD 1.25 billion—and Nissan 29 days, with a loss of about USD 70 million.1
As the supply chain becomes even more globalized and interconnected, the impacts of natural disasters and other disruptions will be felt much more broadly and severely. It is critical for automakers to have suppliers who are prepared for these events with strong business continuity practices.
Building a resilient supply chainRecently, automakers have been trending toward consolidating purchases with larger global suppliers.2 This can help build a stronger, more resilient supply chain in two important ways.
First, auto manufacturing requires a greater diversity of parts than ever before. The path to fully autonomous driving means more in-vehicle compute, communications technology, and support for next-generation in-vehicle experiences. To streamline sourcing, automakers are choosing suppliers who can deliver a full suite of automotive technology today while maintaining long-term research and development efforts for the best solutions tomorrow.
Second, global suppliers are better positioned to respond to emergency events. They can more easily shift operations to another facility if one goes offline, fulfill in-demand materials from overstocked inventories, and reach out to a wide network of suppliers for additional support.
In addition, Intel was one of the first companies to address the issue of conflict materials in our supply chain. We have worked diligently to create a responsible supply chain that ensures our products will not contain minerals that finance violence. Our commitment to conflict-free3 mineral resources means greater economic opportunities and safety for miners and their families.
Intel, among Gartner’s global “Supply Chain Top 25” for the ninth consecutive year, keeps business moving through some of the most devastating natural disasters and disruptions
“Bad companies are destroyed by crises; good companies survive them; great companies are improved by them.”
—Andy GroveIntel former president, CEO,and chairman, 1979–2005
AutomotiveBusiness Continuity
BUSINESS BrIEf
When Disaster Strikes, Intel Keeps Supply Chains Moving
Enabling business continuityIntel has one of the world’s most complex, technologically advanced supply chains. In 2017, Intel was ranked No. 6 by Gartner in its annual global Supply Chain Top 25 list, which recognizes companies that exemplify the demand-driven supply chain and share their best practices with others in the industry.4
Business continuity is a consideration in the life cycle of every Intel product, from factory design to testing. In the event of a disruption, our business continuity plans enable critical functions, such as handling customer orders, overseeing production and deliveries, and managing the supply chain to recover quickly. Rather than creating plans specific to a given disaster or outage, we prepare for any type of crisis to ensure we can keep business going with little or no impact to our customers. Plans may include relocating operations, deploying redundant processing capacity, or maintaining communications to ensure our employees receive clear instructions. Our Corporate Emergency Operation Center (CEOC) can coordinate multisite emergency responses with help from our site emergency operation centers worldwide.
Intel’s global manufacturing operations are organized with flexibility and continuity in mind, with redundancy and expansion capacity built into our factories wherever possible. For more than 30 years, we have practiced a “copy exactly” approach. This means we can replicate equipment, environments, and parts within a particular process so that manufacturing can be completed at any factory within
Figure 1. Intel has a proven history of responding to global disruption events without impacting business continuity
Business Brief | Business Continuity
that segment. The outcome of this approach is our “virtual factory” network, which mitigates the risk of locking a part to a single location.
According to Gartner, leading companies focus not only on better visibility into their own supply chain networks, but also on integrating similar data from upstream partners. Intel holds our many suppliers to the same high standards we expect of ourselves. We segment our suppliers to prioritize which ones are assessed for financial health, required to provide evidence of their business continuity plans, and included in our disaster event monitoring and notification systems. To ensure that critical Intel suppliers are well prepared, we periodically audit their business continuity plans and use a third-party tool to track any supply chain impacts near them.
Disaster strikes: Intel is ready to respondIn March 2011, a 9.0-magnitude earthquake hit Japan, triggering both a tsunami and nuclear crisis that required an unprecedented level of response from Intel’s CEOC. After ensuring the safety of employees at two Intel facilities, the CEOC turned its attention to material flows and supplier issues.
To fill the materials gap caused by damaged silicon factories, Intel took a multifaceted approach. We asked major suppliers for an increase in materials allocation, searched our supply chain for additional inventories, and explored ways to minimize consumption during each step of the chip-making process.5
Intel Business Continuity Principles1. Assess: Review and update risk and
impact assessments for core business functions annually.
2. Prepare: Create business continuity plans based on the findings of assessments.
3. Test: Exercise the plan through realistic drill scenarios.
4. Improve: Strengthen plans based on discoveries made during tests or actual events.
5. Communicate: Actively connect with suppliers, employees, customers, and stakeholders.
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We pushed these tactics up the supply chain, working with tier 3 suppliers to conserve critical tier 4 supplies. Our engineers sought out alternatives to materials that were in short supply and fast-tracked qualification to ensure they met our high-quality standards.
As a result of our structured processes, ability to react appropriately, and strong supplier relationships, Intel was able to prevent production delays throughout this crisis.
Ensuring reliable, on-time deliveryAlong with the depth and breadth of our portfolio, Intel’s business practices make us a strong supplier for the automotive market. Intel’s automotive solutions include technologies for the car, the cloud, and the connectivity in between. These include power- and performance-efficient processors, FPGAs, communications technologies, data center solutions, development tools, security solutions, and more. Our robust business continuity programs help us ensure the reliable, on-time delivery of these components to automakers and tier 1 suppliers.
We take our commitment to customers and suppliers very seriously. Although no company can guarantee absolute assurance that operations will be available after a disruption, we believe our business continuity practices meet or exceed many of the best practices in the industry. As such, we believe all organizations within Intel are well prepared to face nearly any crisis.
Business Brief | Business Continuity
Figure 2. Intel’s global manufacturing reach creates a unique advantage for business continuity, as redundancy and expansion capacity are built into our factories where possible
Where to get more informationFor more information about Intel business continuity practices, please visit intel.com/content/www/us/en/policy/policy-business-continuity-practices.html.
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1. Haraguchi, Masahiko and Upmanu Lall, “Flood risks and impacts: A case study of Thailand’s floods in 2011 and research questions for supply chain decision-making,” International Journal of Disaster Risk Reduction, 2014, water.columbia.edu/files/2014/10/supply_chain_Thailand.pdf.
2. “Global industry craves megasuppliers,” Automotive News: Top Suppliers, June 2013, autonews.com/assets/PDF/CA89220617.PDF.
3. “Conflict free” and “conflict-free” means “DRC conflict free,” which is defined by the U.S. Securities and Exchange Commission rules to mean products that do not contain minerals (tin, tantalum, tungsten, and/or gold) that directly or indirectly finance or benefit armed groups in the Democratic Republic of the Congo (DRC) or adjoining countries. We also use the term
“conflict-free” in a broader sense to refer to suppliers, supply chains, smelters, and refiners whose sources of conflict minerals do not finance conflict in the DRC or adjoining countries.
4. “Gartner Announces Rankings of the 2017 Supply Chain Top 25,” Gartner, May 2017, gartner.com/newsroom/id/3728919.
5. Sheffi, Yossi, The Power of Resilience: How the Best Companies Manage the Unexpected, MIT Press, September 2015.
Intel technologies’ features and benefits depend on system configuration and may require enabled hardware, software, or service activation. Performance varies depending on system configuration. No computer system can be absolutely secure. Check with your system manufacturer or retailer, or learn more at intel.com.
Tests document performance of components on a particular test, in specific systems. Differences in hardware, software, or configuration will affect actual performance. Consult other sources of information to evaluate performance as you consider your purchase. For more complete information about performance and benchmark results, visit intel.com/performance.
Intel and the Intel logo are trademarks of Intel Corporation or its subsidiaries in the U.S. and/or other countries.
*Other names and brands may be claimed as the property of others.
© Intel Corporation
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