ANALOG DEVICES, INC.

Presented by:
fanasia viral h.

WHAT IS ANALOG AND DIGITAL SIGNALS

AnAnalog signalisanycontinuoussignalforwhichthe timevaryingfeature(variable)ofthesignalisa representationofsomeothertimevaryingquantity,i.e., analogoustoanothertimevaryingsignal.Itdiffersfroma digitalsignalintermsofsmallfluctuationsinthesignal whicharemeaningful. Adigital signalusesdiscrete(discontinuous)values.By contrast,non-digital(oranalog)systemsusea continuousrangeofvaluestorepresentinformation. Althoughdigitalrepresentationsarediscrete,the informationrepresentedcanbeeitherdiscrete,suchas numbersorletters,orcontinuous,suchassounds,images, andothermeasurementsofcontinuoussystems.

HOW TO CONVERT ANALOG SIGNAL IN TO DIGITAL

digital 1 computer 0 0 1 modem 0 analog Telephone line Cable system Wireless media Analog device

Video of convert analog in to digital signal

ADI OVERVIEW

Who is ADI? 1996 Operations Company Goal 1996 Company Strategy

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ADIS SUCCESSES
Growth

to early 1980s
at 27% per year

1984

to 1986

Revenues

grew by 46% ($313 M) Profits grew by 105%

1988

Goal
Growth of $1 Billion

Revenue

WARNING SIGNS
1984

1986

Sales grew only 6.7% Profits fell by 38%

Operational

Problems

Process yields less than 15% Defect Level > 20,000 PPM (Motorola @ 1,000 PPM) On-time delivery was missed 40% of time Customers complaining about quality
1986

Revenues Stagnant & Profits Declining

Sales

declined by 5% - Industry sales up by 25% Income Statement

LOOKING FOR SOLUTIONS

Half Life (QIP) Scorecard TQM Hoshin Kanri

HOSHIN KANRI PLANNING PRINCIPLES

Identify important areas of opportunity for the organization to change or improve Determine the most cost effective actions throughout the organization to achieve these changes Create a detailed implementation plan; and Provide a review mechanism to identify corrective actions and learning.

VISION 2000
Build

leadership positions in seven critical areas for signal processing sales & profits more than 20%

Grow

Develop

employees skills and competencies

ADIS PLAN

Four Business Drivers

Customer

Satisfaction New Product Development Organizational Capabilities Financial Expectations

See Exhibit 8 (in case)

MICHAEL BEER
GRADUATE SCHOOL OF BUSINESS ADMINISTRATION HARVARD UNIVERSITY

view TQM as the continuous improvement of work processes to enhance the organizations ability to deliver high-quality products or services in a cost-effective manner.

WHY TQM FAILED AT ADI !

Lack

of commitment by senior teams to TQM, in adopting TQM, and agreement on implementing TQM of commitment to organizational and cultural changes for TQM of company wide two way (vertically and horizontally) communication for TQM of managerial capabilities in

Lack

Lack

Lack

HOW TO IMPLEMENT TQM

Insist that:

Leadership teams discuss the appropriateness of TQM to their sub-units business model and problems. The senior team conduct a diagnosis of organizational and management barriers to TQM and develop a comprehensive action plan for change. The data collection and discussion process allow important, often threatening, issues to get raised and publicly discussed without negative repercussions. New plans be stress-tested by those who implement them to determine their validity and the organizations willingness and capacity to implement them.

Critical Success Factors for Employee Involvement (EI)

Customer and Market Focused Strategyand Action Plans

Marketing Research/R&D

Leadership Steering Committee

Strategic Planning

Management

Support
Employee Involvement

Rewards

Teamwork

Training

Quality Results Innovation

Leading manufacturer of Integrated circuits Technology leader and was first to market many innovative products From 1981 through 1996 company experienced both growth and stagnation achieving record profits and first ever loss Extremely robust MCS Total Quality Management (TQM) ADIs corporate scorecard was recognized as management best practice

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Q1.WHATWASADISSTRATEGYINTHE2ND HALFOF1980S?

Problemsfacedinmid80s Growinginventory Increaseindefectlevelofproduct ADIsstrategyin2ndhalfof80s Emphasisonquality QIP:Half-lifebyimplementingTQM Scorecard

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TQM OUTCOME
Parameter On time delivery Cycle time Average yield Defects in products shipped Measured improvement Increased from 70% to 96% Decreased from 15 weeks to 8 weeks Increased from 26% to 51% Decreased from 500PPM to 50 PPM
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Q2A.EVALUATEHALF-LIFECONCEPT. Q2B.WHATAREITSBENEFITS& LIMITATIONS? Q2C.HOWISITDEVELOPEDFOR DIFFERENTPROCESSES? Q2D.HOWISITDIFFERENTFROM EXPERIENCECURVECONCEPT?

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Benefits of half life:

HALF-LIFE AS A TOOL Goal setting tool Diagnostic tool BENEFIT Rational determination of future performance Benchmarking improvement efforts against best practice for processes of similar complexity To make comparisons with alternative methodologies.

Measure of organizational learning

Limitations of half life concept

Difficult

to determine half life as it is dependent on technical and organizational complexities Calculated based on historical data which may not give a very clear picture

IMPLEMENTATION OF HALF-LIFE

Half Life Rate of decline of defect level is constant over time Concept generally deals with defects Defect reduction owing to a root cause being eliminated and subsequent tackling of the next root cause

Learning Curve With doubling of cumulative experience the unit cost drops by a constant percentage Concept generally deals with cost Cost reduction owing to the same action being performed repeatedly

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Q3A.IDENTIFYTHECONFLICTSTHAT EXISTBETWEENQIPMEASURESANDTHAT REPORTEDBYFINANCIALSYSTEMS? Q3B.WHICHNUMBERSSHOULDWE BELIEVE? Q3C.CANTHEYBERECONCILED?

The major conflicts between the QIP and the financial measures are: ADIs

incentive and performance evaluation systems were based on the financial measures only QIP measures emphasized on the cost reduction whereas the financial measures were more inclined towards revenue enhancement QIP measures were more useful for evaluating the performance of the cost centers whereas financial measures could more effectively capture the performance of the profit centers QIP measures were not given much importance as these are mere avenues to achieve higher financial measures

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Q4A.CRITICALLYASSESSTHE USEFULNESSOFCORPORATESCORECARD. Q4B.WHATROLEDOESEACHMEASURE PLAYINSTRATEGYEXECUTION? Q4C.WHATSHOULDBETHERELATIVE IMPORTANCEOFFINANCIALVERSUSNONFINANCIALMEASURES?

Scorecard is a blend of financial v/s nonfinancial measures. ADIs corporate scorecard assesses the performance of the company on Financial, New products and QIP measures by comparing targeted value with the actual value. Role of each measure:

Financial Revenue

Revenue Growth Profit ROA

Help determine the financial performance of a company and also how effectively assets are employed

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New Products NP introduced NP bookings NP breakeven NP peak revenue Time to market QIP On time delivery Cycle time Yield Defects Employee productivity Turnover Help measure the operational and human resource effectiveness of ADI Help determine the pace of innovation at ADI

Non-financialmeasuresareusedatlowlevelsfortask control 27 Financialmeasuresareusedathighlevelsformanagement control

Q5.EVALUATETHEMANAGEMENT PLANNING&CONTROLSYSTEMSATADI DURING1990-95INLIGHTOFADIS STRATEGYIN1STHALFOF1990S

In period 1990-95 the emphasis shifted from cost reduction (QIP) to wealth creation New dynamic measures were introduces to measure performance Hoshin became a guiding philosophy Complementing ADIs scorecard, key success factors were introduced to measure milestones related to companies business plans New planning system was introduced where planning was done by teams rather than being done centrally

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Q6.DOYOUAGREEWITHTHE COMPENSATIONPHILOSOPHYOFADI?

Compensation not linked to the performance on the scorecard ,as the performance measures change quickly owing to the dynamic environment Senior management compensation was based on stock price performance For all other employees compensation linked to revenue and the operating profit Hence, individual performances were not appreciated So we do not agree with the compensation philosophy.

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Q7A.DESCRIBEADISSTRATEGYASOF 1996. Q7B.HOWSHOULDSCORECARD&OTHER MANAGEMENTSYSTEMSCHANGEIN1996 TOBESTFITTHESTRATEGICNEEDSOF THECOMPANY?

Analog was pursuing a four pronged strategy in 1996

Expand

traditional SLIC business the market share in the DSP IC market

Increase Pursue

growth opportunities for system level signal processing ICs core technology to develop innovative
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Leverage

products

ManagerialcompensationcanbelinkedtoEVA.

THANK YOU
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