©1985, 2000 arthur m. schneiderman all rights reserved. slide 1 5/22/90-05220-7 (e)is...the fuel...

©1985, 2000 Arthur M. Schneiderman All Rights Reserved.

Slide 1 5/22/90-05220-7

(E)IS...THE FUEL FOR CONTINUOUS IMPROVEMENT

Art Schneiderman

Analog Devices

Analog Devices at a Glance

The Quality Improvement Process (TQM)

Linking Performance Measurements to Corporate Goals

The "Half-Life" Concept

ADI's 1992 QIP Goals

The Quarterly "Scorecard"

ADI's Executive Information System

An Example: Customer Service

Lessons Learned

May 22, 1990


Slide 2 c. 1990-PREZ-1

Analog Devices at a Glance

• Headquartered in Norwood

Massachusetts

• Publicly Held (NYSE Symbol ADI)

• $453 Million in Sales (FY1989)

• 48% of Sales Outside United States

• 5200 Employees Worldwide


Slide 3 c. 1990-PREZ-1a

ANALOG DEVICES AT A GLANCE

Products: ICs, assembled products, subsystems

Applications: precision measurement & control

Markets: data acquisition

Integrated supplier

(cont)

40% industrial/instrumentation30% military/avionics13% computer17% other

designmanufacturing (8 locations)direct sales (100 locations)


Slide 4 c. 1990-PREZ-11

1989 Top Customers WorldwideCustomer Bookings

$MCumulati

ve%

IBM (US, Japan & France) 26.8 6.0GE/RCA 10.5 8.3Fuji (Japan) 10.3 10.6HP (US, UK & Germany) 9.1 12.6Honeywell (US, Germany) 7.4 14.2General Dynamics (US) 5.4 15.5Raytheon (US) 5.1 16.6Siemens (US, Germany) 5.1 17.7TI (US) 4.1 18.6Mitsubishi (Japan) 4.0 19.5Fujitsu (Japan) 4.0 20.4Toshiba (Japan) 3.7 21.1Marconi (US, UK) 3.6 22.0Hughes (US) 3.4 22.8Rockwell (US) 3.3 23.5Hitachi (Japan) 3.3 24.3Westinghouse (US) 3.1 25.0Philips (US, Europe) 3.1 25.6Motorola (US) 3.0 26.3DCASR (US) 2.7 26.9


Slide 5 2/14/90-02140-1rev 2/16/90

TOP 10 MIXED SIGNAL IC SUPPLIERS

Source: VLSI Research

ADINEC

NationalTI

PhilipsToshiba

HitachiMatsushita

SanyoMotorola

0

50

100

150

200

250

300Sales $M

RMS=1.4


Slide 6 4/12/89-04129-1t.doc

Financial ModelFY 1987-FY 1992

Sales Growth 20-25 %/yr

Operating Profits 17 %

Profit after Tax 9.4 %

Return on Capital 15.0 %


Slide 7 4/8/90-QIP-15a

ADI CORPORATE QIP COUNCIL

Jerry Fishman

Kozo Imai

Larry LaFranchi

Bill Manning

Art Schneiderman, Chairman

Ray Stata

Tom Urwin

MEMBERS:

CHARTER:QIP Goals Deployment

QIP Organization

priorities

Training Juran

Monitoring metrics

Incenting/Rewarding

Suzanne Thomson

Executive VP

VP, Japanese Operations

Operations Controller

Division GM

VP, Quality/Productivity Improvement

Chairman of the Board and President

VP, European Operations

Director, Training & Development

Doug Newman VP, Sales and Marketing

Goodloe Suttler Division GM


Slide 8 4/8/90-04080-4

culture

GOALS

IS

scorecard

projectsMETRICS

SOLVINGPROBLEM THE QIP CULTURE

We each have a dual function

daily job SDCA cycle

process improvement PDCA cycle

We are committed to improving customer satisfaction

We are dedicated to continuous improvement (kaizen)

We are part of a parallel organization: functional and cross-functional

We are a continuously learning organization


Slide 9 3/11/90-03110-1rev 4/8/90

GOALS

METRICSSOLVING

IS

QUALITY IMPROVEMENT PROCESS

culture scorecard

projectsPROBLEM


Slide 10 4/8/90-04080-1

PROBLEM SOLVINGGOALS

METRICS

ISculture scorecard

projectsSOLVINGPROBLEM

Participants:

Cross Functional Problem Solving Teams (QIP Teams)

Task Forces

QC Circles

Individuals

Systematic Approach:

Deming Cycle (PDCA)

Tools:

7 QC Tools (fishbone, histogram, ...)

7 Management Tools (KJ Method, affinity diagram,...)

Design of Experiments (Taguchi, etc.)

SQC (control charts)

SPC (Cp, Cpk)

Quality Cost (failure, prevention, appraisal)

QFD

Hoshin Kanri

SMED

TPM

EI

JIT/Kanban (cycle time, WIP reduction)


Slide 11 5/22/90-05220-3

PLAN WHAT

PERCEPTION OF PROBLEM

EVALUATION OF

WHY ANALYSIS OF CAUSES

WHO

WHEN

WHERE

HOW

PLANNING OF

IMPLEMENTATION OF COUNTER-MEASURES

EVALUATION OF RESULTS

STANDARDIZATION

SUMMARY & FUTURE PLANS

DO

CHECK

ACTION

1

2

3

7

6

5

4

8

CURRENT SITUATION

COUNTER-MEASURES

PROBLEM SOLVINGGOALS

METRICS

ISculture scorecard

projectsSOLVINGPROBLEM

The Deming Cycle (PDCA)


Slide 12 c. 1982-YHP

Source: Kenzo Sasaoka, PresidentYokagowa-Hewlett-Packard 7/84

Process Quality Improvement (Dip Soldering Process)

Counter Action I

Counter Action IIICounter Action II

%

ppm

0.4%0.4

0.2

0.1

0.3

0

Failure R

ate

11 1 4 7 10 1 4 7 10

Masking MethodImprovement

Omit Hand ReworkProcess

40ppm

Dip Solder wasmade to oneworker job

Basic WorkingGuide Manual

Revision of ManufacturingEngineering Standards

PC Board DesignInstructions 3ppm

78 79 80 81 82 FY

10 1 4 7 10 1 4 7 10 1 4 7 10 month

40

20

10

0

30


Slide 13 12/12/85-ZD4

YOKOGOWA HEWLETT PACKARD

60483624120

Failu

re R

ate

%

1

.1

.01

.001

.0001

months

10,000

1,000

100

10

1

PPM

50 % improvement each:3.6 months

Dip Soldering Defects


Slide 14 3/19/87-imp-9rev. c. 1989-hflf-2

PROPOSED HALF-LIFE MODEL VALUES

PROJECT TYPE

EXAMPLES

MODEL HALF-LIFE

EXPECTED RANGE

uni-functional

cross-functional

multi-entity

operator errors

WIP

new product cycle time

outgoing PPM

vendor quality

warranty costs

3

9

18

0 to 6

6 to 12

12 to 24

MONTHS


Slide 15 2/18/90-02180-2

Embodies the concept of KAIZEN

Easy to understand

Makes sense

Data not negotiation based

Accepted by line organization

Works

Hard to understand

Doesn't reflect where we need to be

Hard to use

manual vs. computerized

assumes instant startup

assumes constant rate of learning

focuses on results not processfocuses on results not process

realistic

"...the rate at which individuals and organizations learn

may become the only sustainable competitive advantage..."

Ray Stata

Supporters Critics

ADI RESPONSE TO HALF-LIFE CONCEPT


Slide 16 c. 1/17/89-?/3/12/90-03120-2rev 4/8/90

CUSTOMERS

EMPLOYEES

partnership growth

returnSTOCK-HOLDERS

ADI's

BUSINESS

OBJECTIVES

capital

ADI's CONSTITUENCIESMETRICS

IS

culture scorecard

projects

GOALS

SOLVINGPROBLEM


Slide 17 c. 1/17/89-AMS-5rev. 4/8/90-04080-2

METRICS

ISculture scorecard

projects

GOALS

SOLVINGPROBLEM ADI QIP GOALS

MARKET LEADERSHIP (RMS)

REVENUE GROWTH

PROFITABILITY

BE RATED #1 BY OUR CUSTOMERS

TOTAL VALUE DELIVERED

PRODUCTS

DEFECT LEVELS

ON-TIME DELIVERY

LEADTIME

PRICE

RESPONSIVENESS

TIME TO MARKET

PROCESS PPM

MANUFACTURING CYCLE TIME

YIELD

BUSINESS

OBJECTIVES:

DRIVERS:

EXTERNAL LEVERS:

INTERNAL LEVERS:

IN


Slide 18 c. 7/12/87-QIP-16/QS-16Brev. 7/25/87

ADI QIP GOALS(IC OPERATIONS, ESTABLISHED PRODUCTS)

METRIC 1987 HALF-LIFE 1992

On time delivery

Lead time

Manufacturing Cycle Time

Yield

Outgoing defect levels

Time to Market

EXTERNAL

INTERNAL

CORPORATE-WIDE COST MANAGEMENT

WHILE AGGRESSIVELY PURSUING

Process Defect Levels

85%

10 wks

500 PPM

9

9

9

>99.8%

<10 PPM

<3 wks

15 wks

20%

9

9 >50%

5000 PPM 6 <10 PPM

4-5wks

36 mths 24 6 mths


Slide 19 C. 1989

FINANCIAL

SALES

SALES GROWTH YTY

CONTRIBUTION MARGIN

ROA (CM)

QIP

ON TIME DELIVERY (To FCD)

% CRDs NOT MATCHED

EXCESS LEADTIME

LABOR TURNOVER

MANUFACTURING METRICS: IC PRODUCTS

OUTGOING PPM

PROCESS PPM

CYCLE TIME

YIELD

MANUFACTURING METRICS: ASSEMBLED PRODUCTS

OUTGOING PPM

PLUG-IN YIELD

CYCLE TIME

% COST OF SCRAP/REWORK

FY1990 CORPORATE SCORECARD

NEW PRODUCTS

BOOKINGS POST-85 PROD

FORECAST 3rd YR BOOKINGS of new product releases

End FY89ACTUAL

Q1 90BHMK ACTUAL

Q2 90BHMK ACTUAL

Q3 90BHMK ACTUAL

Q4 90BHMK ACTUAL

FY 90BHMK ACTUAL

ACTUAL FY87 PLAN ACTUAL FY87 PLAN ACTUAL FY87 PLAN ACTUAL FY87 PLAN ACTUAL FY87 PLAN ACTUAL

FY904Q903Q902Q901Q90FY89


Slide 20 5/22/90-05220-4

GOALS

ISculture scorecard

projectsMETRICS

SOLVINGPROBLEM

PERFORMANCE MEASUREMENT

does not mean

measurement improvement

If you don't measure it,

it will not improve.


Slide 21 4/8/90-04080-3rev 5/13/90

GOAL:

IMPROVE CUSTOMER SERVICE

CUSTOMER SERVICE METRICS

ON TIME% late% early

% on time

RESPONSIBILITYfactorywarehouse

creditcustomer

LATENESS/EARLINESSshipped late, how late?shipped early, how early?still late, how late?

months to ship late backlog

LEAD TIMEcustomer requested lead time% CRD's matchedexcess lead time

RESPONSIVENESStime to schedule an order

GOALS

ISculture scorecard

projectsMETRICS

SOLVINGPROBLEM


Slide 22 4Q89-% Late

ADS MED CLD IPD DSP MDL ADIADBV

On Time Customer Service ImprovementQuarterly Data (1Q87 – 4Q89)

100

1

10

0.1Half Life

In Months

10.8 16.5 8.4 18.0 13.8 6.9 54.9 13.2


Slide 23 5/22/90-05220-2

CREDITS

Elizabeth Derwin

Jim Doscher

Wally Francis

Ira Moskowitz

Rich Lynch

Holley Murphy

Art Schneiderman

Pilot Executive Software


Slide 24 1Q90-Scorecard-1

?Analog Devices - 1990 Scorecard

ADIQtr 1 1990

12

Metric Actual Plan Variance % Variance

QIP: .00 .00 .00 .00On Time Delivery % (To FCD) 95.90 96.70 -.80 -.83% CRDs Not Matched 51.40 46.10 5.30 11.50Excess Leadtime (Weeks) 2.90 3.40 -.50 -14.71Employee Turnover % 11.10 13.00 -1.90 -14.62

IC Outgoing PPM 1023.00 1481.00 -458.00 -30.93IC Process PPM 1601.00 1966.00 -365.00 -18.57IC Cycle Time 62.60 52.10 10.50 20.15IC Yield 35.70 38.70 -3.00 -7.75

AP Outgoing PPM 5746.00 1715.00 4031.00 235.04Plug In Yield 91.70 90.50 1.20 1.33AP Cycle Time 23.90 24.20 -.30 -1.24Scrap/Rework Cost 12.50 8.80 3.70 42.05

Retrace Utilities 1989 Scorecard Commentary Return


Slide 25 1Q90-Scorecard-2

?Analog Devices - 1990 Scorecard

ADIQtr 1 1990

1

Metric Actual Plan Variance % Variance

NEW PRODUCTS: .00 .00 .00 .00Post 1985 Products .00 39.10 -39.10 -100.00Forecasted 3rd Year Bookings .00 14.20 -14.20 -100.00

FINANCIALS: .00 .00 .00 .00Sales 109.70 112.40 -2.70 -2.40Sales Growth (YTY) -3.90 -1.50 -2.40 160.00Contribution Margin 7.20 7.80 -.60 -7.69ROA (Contribution Margin) 6.90 8.60 -1.70 -19.77

Retrace Utilities 1989 Scorecard Commentary Return


Slide 26 Apr 90-OTD

CUSTOMER SERVICE METRICS – ON TIME/RESPONSIBILITYApril 1990

Early % On Time % Not Late % Division % Warehse. % Credit %

ADBV 9.94 85.55 95.49 4.38 .29 .52ADS 6.64 89.98 96.62 3.91 .34 .44CLD 30.86 66.79 97.65 4.22 .18 .30CTS 7.82 91.62 99.44 .56 .00 .00DSP 2.52 95.50 98.02 2.52 .36 .18IPD 5.67 88.20 93.87 6.87 .36 .23MDL 61.94 28.39 90.32 8.39 .00 1.29MED 20.24 78.87 99.11 2.58 .00 .10ADI 9.28 86.72 96.00 4.53 .31 .39

ALL 9.28 86.72 96.00 4.53 .31 .39

Utilities Change Metrics Return


Slide 27 Apr 90-% Late

HalfLife (In months)

Percent Of Lines Shipped Late (May 89 through Apr 90) ADBV ADS CLD DSP IPD MDL MED ADI

NA NS NS NS N/A 8 NS NS

100

10

1

0.1

+++

+

++

+


Slide 28 Apr 90-ADI half-life

ADI Half-Lives by month 5/89 to 4/905/89 9

6/89 7

7/89 7

8/89 7

9/89 8

10/89 10

11/89 11

12/89 15

1/90 47

2/90 60

3/90 60

4/90 N/A

Hlf Life

60

50

40

30

20

10

0May

89Jun Jul Aug Sep Oct Nov Dec Jan

90Feb Mar Apr


Slide 29 Apr 90-S&D-1

/ADI TYPECUSTOMERAdi Ontime ?Print

Reset Metrics Views Calendar ReturnSelect label, composite, or new key field.

TABLE: CSTBENTITY ERY_SHIP_PCT ON_TIME_PCT NOT_LATE_PC

TDIVISION_PCT

LATEST PERIOD (4/90) (4/90) (4/90) (4/90)TOTAL TOTAL TOTAL TOTAL

ADI 9.28 86.72 96.00 4.53


Slide 30 c. 1987-CS Metrics

ADI CUSTOMER SERVICE METRICS

CANCEL CLEAR DONE

?

Select label, composite, or new key field\/ END

ASAP Number Of ASAP Orders Placed During The PeriodASAP_PCT Percent Of Orders Received That Were ASAPAVG_SHIP Weighted Average Number of Shipments Per PeriodBACKLOG Total Number Of Unshipped OrdersCRD_HOLD_PCT Percent Of Lines Late Due To Credit HoldCRED_REF_PCT Percent Of Lines Late Due To Credit ReferralsCREDIT Number Of Lines Late Due To All Credit CausesCREDIT_HOLD Number Of Lines Late Due To Credit Hold CausesCREDIT_PCT Percent Of Lines Late Due To All Credit CausesCREDIT_REF Number Of Lines Late Due To Credit ReferralsCUST_STOP Number Of Lines Late Due To Customer StopsCUST_STP_PCT Percent Of Lines Late Due To Customer StopsCUSTOMER Number Of Lines Late Due To All Customer CausesCUSTOMER_LT Average Customer Requested Lead TimeCUSTOMER_PCT Percent Of Lines Late Due To All Customer CausesDISTRIBUTION Number Of Lines Late Due To All Distribution CausesDISTRN_PCT Percent Of Lines Late Due To All Distribution CausesDIV_WAREHSE Lines Late Due To Divisional Warehouse ErrorDIV_WE_PCT Percent Of Lines Late Due To Divisional Warehouse ErrorDIVISION Number Of Lines Late Due To All Divisional Causes



/ADI TYPECUSTOMERAdi Ontime ?Print


TABLE: CSTBCUSTOMER ERY_SHIP_PCT ON_TIME_PCT NOT_LATE_PC

TDIVISION_PCT

LATEST PERIOD Finished (4/90) (4/90) (4/90) (4/90)

CORPORATE KEY ACCOUNTDOMESTIC KEY ACCOUNTFOREIGN KEY ACCOUNTKEY ACCOUNTNON KEY ACCOUNTADKKALLEN BRADLEYAMOCOARMCOATTBEACKMANBENDIXBETHLEHEM STEEL \/ END



/ADI /OEM/DISTAdi Ontime ?Print

/HEWLETT PACKARD


TABLE: CSTBENTITY CUSTOMER_LTLATEST PERIOD (4/90)

TOTALDIST – ADI – HEWLETT 7.64OEM – ADI - HEWLETT 8.34


Slide 33 Apr 90-HP lead time

DIST – ADS – HEWLETT PACKARDMETRIC: CUSTOMER_LT (4/90) 5/89 N/A

6/89 7.17

7/89 3.64

8/89 N/A

9/89 6.83

10/89 8.75

11/89 8.24

12/89 9.51

1/90 6.29

2/90 6.93

3/90 8.11

4/90 7.64

12

10

8

6

4

2

0May

89Jun Jul Aug Sep Oct Nov Dec Jan

90Feb Mar Apr


Slide 34 Feb 90-Cust data base

CUSTOMERS IN VENDOR RATING DATABASEABB

AFGAAllen BradleyAllied Signal

AmetekAnalogicApolloAT&TBendix

CompugraphicEatonFord

General ElectricGECGould

Hewlett-PackardHoneywell

HughesKodakLoralLucas

M/A-COMMarquette Electric

MasscompMeasurex

Perkin ElmerRaytheon

Reliance ElectricRockwellSandersSiemensSikorskyTektronixTeledyneTeradyne

Texas InstrumentsTrillium

United TechnologiesWaters Associates

Westinghouse


Slide 35 Feb 90-CMD

ON TIME DELIVERY, CUSTOMER MEASURED

%

LATE

100.00

10.00

1.00

Fe

1987

Ap Ju Au Oc Dec Fe

1988

Ap Ju Au Oc Dec Fe

1989

Ap Ju Au Oc Dec Fe

1990

HALF-LIFE = 10 MONTHS

QIP STARTED

Actual Data

(Ave: 21 C9ompanies per point)

Trend


Slide 36 5/22/90-05220-1

HEWLETT-PACKARD VENDOR RATINGS

year ADI rank total suppliers category

linear IC suppliers

all IC suppliers

linear IC suppliers

all IC suppliers

16

8

15

12

8

5

5

1

1986

1987

1988

1989 *

*tied with one other supplier


Slide 37 5/22/90-05220-5

(E)IS LESSONS LEARNED

May 22,1990

The system MUST be:

driven by business needs

user friendly

graphical, colorful

menu/mouse driven (no acronyms)

logical,intuitive and efficient

permit drilldown/consolidation

accessible and responsive

easy to get hard copy

available in 3-6 months

start with top management

financials first, then metrics

Be prepared for user proliferation

top to bottom

err on the side of open access

Be prepared for information proliferation

EIS to DSS


Slide 38 5/22/90-05220-6

PRACTICE THE PRINCIPLES OF QIP

Break down cross-functional barriers:

"You define the needs; we'll decide thebest way to meet them".

vs.

"Let's work together to determine thebest solution to the problem".

uncover latent needsinnovate new solutions

(E)IS, THE FUEL FOR CONTINUOUS IMPROVEMENT

©1985, 2000 arthur m. schneiderman all rights reserved. slide 1 5/22/90-05220-7 (e)is...the fuel...

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