Inside Intel — how ‘Lean Thinking’ could pave the road for future chip investment

4 Sep 2008

Lean principles are now being adopted by organisations like Intel and Ryanair to boost business.

The technology world marches to a single beat known as Moore’s Law, created by Intel founder Gordon Moore, which dictates that the number of transistors on a single microchip doubles every 24 months.

Today, the average chip in your laptop contains over 40 million transistors and very soon these could reach atomic levels of miniaturisation.

Commenting on this rate of change Joe Foley (pictured), factory manager at Intel Fab Operations (IFO) in Leixlip, says: “If Moore’s Law were to be applied to the airline industry since the Seventies, a flight to New York would cost you one cent and you’d be there in a quarter of a second.”

Intel’s operations in Leixlip, which employ over 5,000 people, are considered the jewel in the crown of Ireland’s inward investment strategy. As Intel nears its 20th anniversary in Ireland, the local operation has succeeded in selling itself and winning key projects such as Fab 24, attracting over US$7bn in investment since 1989.

The plant has gone from manufacturing specific products for the Silicon Valley chip giant to in excess of 110 silicon products that sit in everything from servers used by banks to the chips in laptops and the average digital camera.

According to Foley, the ability to continually win new investment and responsibility has been down to the plant’s ability to achieve return on investment.

In the face of a worldwide economic downturn, rising costs in the local economy, not to mention horrific energy prices, Foley says the local operation is relying on Lean Thinking principles to reduce costs, make processes more efficient and thereby ensure the Leixlip operation is well placed for future investment.

Lean Thinking was introduced by Toyota in the Sixties as a systemic approach to identifying and eliminating waste, creating value and reaching an ideal level of efficiency. It has been embraced by global businesses such as Wells Fargo Bank and locally by Ryanair.

“On any given week here, we would have up to 25 different product lines, with each one involving 300 specific steps. What Lean teaches you is it opens your eyes to the fallacies of the past. For 100 years since Henry Ford started his business, he said volume is the only way to reduce costs. The higher and longer your product runs, the more efficiencies you get.

“But what Lean teaches you is if you reduce your set-up times and waste, that reduces costs and you can serve customers better. Five years ago, it took us 14 weeks to introduce a new chip to our factory; now it takes 10 days. We were the first Intel factory to achieve these times using Lean principles.”

Lean principles involve optimising human effort, reducing capital investment, reducing the amount of raw materials and reducing the time to deliver. It means organisations take a hard look at their top waste such as idle times, transport, whether or not processes are taking too long, errors, inventory and over-producing.

“By working this way, we’re developing support not only for Intel but for Ireland Inc,” Foley says. “All the talk about manufacturing being finished in Ireland is nonsense. If every worker in Ireland, from the private and public sectors, including the healthcare sector in particular, embraced Lean principles, this country would be back on track.”

Foley’s colleague Carmel McLoughlan says Intel has partnered with University of Limerick to run a diploma and master’s degree course in Lean Thinking that involves input from other businesses operating in Ireland. “It’s the first time the universities are asking industry what skills are needed.”

Paul Phelan, IFO programme manager, Intel Leixlip, sums it up in terms of competing on a global scale: “Energy costs are going up and Lean Thinking has made us more productive and therefore competitive.”

By John Kennedy

Pictured: Intel Fab Operations factory manager, Joe Foley

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years