A systematic process for spare part and chemical cost reduction

During 1998, Intel Corporation began a concerted effort to control cost in order to compete more effectively within the marketplace. In an effort to understand cost reduction status and opportunities, the corporation began publication of site comparative data to gage progress and set future goals. This paper describes the steps used to achieve significant cost reduction quickly: development of a cost conscious organization; identification and use of key metrics to facilitate cost reduction; development and use of Bottoms Up Estimate (BUE) models to set target costs based on area specifications; buy in of aggressive cost reduction goals; identification and prioritization of key improvement projects; and weekly monitor of results to goals. Although the cost reduction ideas described in this paper were originally developed for commodity spending within a factory, they can be universally applied to a variety of cost reduction projects.