©1987-2000 Arthur M. Schneiderman All Rights Reserved. Slide 1 APICS/Babson College Presentation January 17, 1989 Arthur M. Schneiderman Title

©1987-2000 Arthur M. Schneiderman All Rights Reserved.

Slide 1

APICS/Babson College Presentation

January 17, 1989

Arthur M. Schneiderman

Title


Slide 2 c. 1989-APICS-1

ANALOG DEVICES AT A GLANCE

Headquartered in Norwood Massachusetts

Publicly Held (NYSE Symbol ADI)

$439 Million in Sales (FY1988)

49% of Sales Outside United States

5400 Employees Worldwide


Slide 3 c. 1989-PREZ-3

Serves theData Acquisition Market by

designing

manufacturing

marketing

Products Used in Precision

Measurement and

Control Applications



Types of Products

monolithic IC's

hybrid IC's

assembled products

sub-systems


Slide 5 c. 1989-PREZ-

1988 Worldwide Sales

by Geographic Area

US

AsiaEurope



R&D Investments

% of Revenues $ Millions

15

0

5

10

70

60

50

40

30

20

10

01984 1985 1986 1987 1988


Slide 7 c. 1989

Financial ModelFY 1987-FY 1992

Sales Growth 20-25 %/yr

Operating Profits

17 %

Profit after Tax 9.4 %

Return on Capital

15.0 %


Slide 8 c. 1989

CUSTOMERS

EMPLO

YEESST

OCKH

OLD

ERS

ADI's

BUSINESS

OBJECTIVES

ADI’S CONSTITUENCIES


Slide 9 5/15/88-5w_1h.doc

I keep six honest serving men

(They taught me all I knew);

Their names are WHAT and WHY

and WHEN

And HOW and WHERE and WHO

Rudyard Kipling1902


Slide 10 8/1/88-08018-1t.docrev: 8/2/88

ADI QUALITY IMPROVEMENT PROCESS WHY: Identify what's important for business success WHAT: Develop a complete set of surrogate metrics WHEN: Set goals using improvement curves / half-lives WHO: Assign responsibility / controllability HOW: Provide needed resources WHERE: Track results, quarterly, annual, 5 year

-------------------------- Generate feedback: variance -> root cause -> corrective action Incent / Reward


Slide 11 c. 1989-QIP-15

ADI CORPORATE QIP COUNCIL

Jerry Fishman

Kozo Imai

Larry LaFranchi

Bill Manning

Art Schneiderman, Chairman

Ray Stata

Graham Sterling

Tom Urwin

MEMBERS:

CHARTER:QIP Goals Deployment

QIP Organization

priorities

Training Juran

Monitoring metrics

Incenting/Rewarding

Suzanne Thomson

Executive VP

VP, Japanese Operations

Corporate Controller

Division GM

VP, Quality/Productivity Improvement

Chairman of the Board and President

VP

VP, European Operations

Director, Training & Development

Goodloe Suttler Division GM


Slide 12 c. 1989-AMS_5

ADI QIP GOALS

BUSINESS

OBJECTIVES:

MARKET LEADERSHIP (RMS)

REVENUE GROWTH

PROFITABILITY

DRIVERS: BE RATED #1 BY OUR CUSTOMERS IN TOTAL VALUE DELIVERED

EXTERNAL LEVERS: PRODUCTS

DEFECT LEVELS

ON TIME DELIVERY

LEADTIME

INTERNAL LEVERS: TIME TO MARKET

PROCESS PPM

MANUFACTURING CYCLE TIME

YIELD


Slide 13 c. 1989-QS-16B

ADI QIP GOALSIC 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 14 c. 1987-QP-4

Goals Deployment and Tracking

QIP Goals Financial Goals

External:

Internal:

On-timeResponsibilityLatenessLead time

On-timeResponsibilityLatenessLead time

TTMTTM

Revenues

Revenue Growth

Revenues

Revenue GrowthRevenue

Model

RevenueModel

Profit

ROA

Profit

ROA

NPBR

NPB

# Intros

NPBR

NPB

# Intros

Yield

Process PPM

Paperwork reduction

Turnover

Cost reduction

Cost

QUARTERLY SCORECARD

ANNUAL BENCHMARK

ANNUAL STRATEGIC REVIEW

• # NP• Peak• Time to peak• Decay

PPM

Mfg cycle time


Slide 15 c. 1989

Half Life(In Months)

Percent of Scheduled Lines Due But Not Shipped On Time

Customer Service Performance (Jan 88 Through Dec 88)

Percent

Of

LInes

Late

ADS BVADM MED CLD IPD DSP MDL ADI

25 7 11 60+ 21 12 N/A 31

100

1

10 + +

+

+++


Slide 16 c. Sept 88

Oct

86

Nov

86

Dec

86

Jan

87

Feb

87

Mar

87

Apr

87

May

87

Jun

87

Jul

87

Aug

87

Sep

87

Oct

87

Nov

87

Dec

87

Jan

88

Feb

88

Mar

88

Apr

88

May

88

Jun

88

Jul

88

Aug

88

Sep

88

half life -

mon

ths

100

1

10

ADS


Slide 17 c. 1988-bhmk-3

Q1 89ACTBHMK

Q2 89ACTBHMK

Q3 89ACTBHMKFINANCIAL

NP INTROS

NP BOOKINGS

NPBR

NP AVG. 3RD YEAR REV.

TIME TO MARKET

NEW PRODUCTS

Q4 89ACTBHMK

FY 89ACTBHMK

FY 88ACT

QIP

I.C. PRODUCTS

ASSEMBLED PRODUCTS

REVENUE

REVENUE GROWTH

PROFIT

ROA.

ON TIME DELIVERY

OUTGOING PPM

LEADTIME

COST

EMPL. PRODUCTIVITY

DIRECT TURNOVER

INDIRECT TURNOVER

PROCESS PPM

CYCLE TIME

YIELD

PROCESS PPM

CYCLE TIME

YIELD

16.4 15.4 14.5 13.617.6

94.2%

5.2

222

95.4%

4.7

176

CORPORATE SCORECARD

96.4%

4.4

140

97.1%

4.1

111

92.7%

5.8

280

2327

38.6%

6.2

1847

46.8%

5.8

1466

53.6%

5.6

1163

59.4%

4.8

NA

92.1%

3.8

NA

93.4%

3.5

NA

94.4%

2.8

2932

28.8%

6.6

NA

88.8%

4.6

NA

90.6%

4.1


Slide 18 12/12/88-CMD

Allied Signal, AiResearch

Kodak

Gould

Compugraphic

General Electric

Reliance Electric

Tektronix – FDI

Tektronix – TV

M/A COM

Eaton

Marquette Elec

Rockwell / Collins

Teradyne

Bendix, Avionics

Masscomp

Trillium

Honeywell, Mil. Av.

Hewlett Packard

Texas Inst.

Apollo

AT&T

Rockwell, Air Trans.

Perkin Elmer

On Time Delivery, Customer Measured

%

Not

On

Ti

me

Feb

87

7

Mar

87

8

Apr

87

8

May

87

9

Jun

87

9

Jul

87

8

Aug

87

10

Sep

87

10

Oct

87

9

Nov

87

11

Dec

87

10

Jan

88

15

Feb

88

16

Mar

88

17

Apr

88

15

May

88

14

Jun

88

12

Jul

88

12

Aug

88

11

Sep

88

13

Oct

88

5

Half Life = 12 Months

100

10

1Actual Data

Regressionof Data

Companies PerData Point


Slide 19 12/12/88-CMQ

Perkin Elmer (LAR)

Texas Inst. (LAR)

Honeywell, Mil Av (LAR)

Bendix, Avionics (LAR)

Rockwell, Collins (1.0-

QCI)

Marquette Elec (QUALITY)

Eaton (QUALITY)

Loral (QUALITY)

M/A-COM (QUALITY)

General Electric (LAR)

Compugraphic (LAR)

Martin Marietta (LAR)

Allied Signal, Flt Sy (LAR)

Apollo (LAR)

Kodak (LAR)

Allied-Signal, AiRes (LAR)

Quality, Customer Measured (Lot Reject Rate)

%

Lots

Rejected

Feb

87

3

Mar

87

3

Apr

87

5

May

87

5

Jun

87

5

Jul

87

5

Aug

87

7

Sep

87

7

Oct

87

6

Nov

87

8

Dec

87

7

Jan

88

12

Feb

88

13

Mar

88

13

Apr

88

12

May

88

11

Jun

88

11

Jul

88

11

Aug

88

9

Sep

88

9

Oct

88

4


100

10

1Actual Data

Regressionof Data

Companies PerData Point


Slide 20 c. Sept 88

Oct

86

Nov

86

Dec

86

Jan

87

Feb

87

Mar

87

Apr

87

May

87

Jun

87

Jul

87

Aug

87

Sep

87

Oct

87

Nov

87

Dec

87

Jan

88

Feb

88

Mar

88

Apr

88

May

88

Jun

88

Jul

88

Aug

88

Sep

88

half life -

mon

ths

100

1

10

BV


Slide 21 3/3/89-CMD

Customers in

database

Allied Signal

Apollo

AT&T

Bendix

Compugraphic

Eaton

Ford

GE

Gould

Hewlett Packard

Honeywell

Kodak

M/A-COM

Marquette Elec

Masscomp

Perkin Elmer

Reliance Elec.

Rockwell

Siemans

TI

Tektronix

Teledyne

Teradyne

Trillium

On Time Delivery, Customer Measured

%

Not

On

Ti

me

Dec

88

15

Nov

88

14

Jul

87

8

Aug

87

10

Sep

87

10

Oct

87

9

Nov

87

12

Dec

87

11

Jan

88

17

Feb

88

18

Mar

88

19

Apr

88

17

May

88

17

Jun

88

15

Jul

88

18

Aug

88

16

Sep

88

19

Oct

88

17


100

10

1 Actual data

Regression of data

Companies perdata point


Slide 22 3/3/89-CMQ

Customers indatabaseAllied SignalApolloBendixCompugraphicEatonFordGEHoneywellKodakLoralM/A-COMMarquette ElecMartin MariettaPerkin ElmerSiemansTeledyne

Quality Customer Measured (Lot Acceptance Rate)

%

Lot

Rejected

Dec

88

8

Nov

88

8

Jul

87

3

Aug

87

5

Sep

87

5

Oct

87

4

Nov

87

6

Dec

87

5

Jan

88

13

Feb

88

14

Mar

88

14

Apr

88

12

May

88

12

Jun

88

12

Jul

88

14

Aug

88

12

Sep

88

11

Oct

88

10

10

1

0.1 Actual data

Regression of data

Companies perdata point




Analog Devices Manufacturing Facilities

Wilmington, MA

Andover, MA

Norwood, MA

Greensboro, NC

Surrey, England

Limerick, Ireland

Tokyo, Japan

Manilla, Phillippines

?,?


Slide 24 C. 1989-PREZ-7

ADI Worldwide Sales Offices


Slide 25 c. 1989-PREZ-

1988 Bookings by Industry Segment

Military/Avionics

Non-Mil Commun

Computer

Industrial

Instrumentation

Other


Slide 26 c. 1989

PROJECTED WORLDWIDE GROWTH RATES

1987-1992

Electronic Equipment

Semiconductor Sales

ADI's Growth Goal0

5

10

15

20

25

avera

ge a

nn

ual gro

wth

rate

, %

/year

11%

13%

20%


Slide 27 c. 1989

Half Life(In Months)W/I CRD %

Average Excess Lead Time Without Non-Excess Lead Time Orders

Customer Service Performance (Jan 88 Through Dec 88)

Weeks

ADS BVADM MED CLD IPD DSP MDL ADI

60 17 N/A N/A 60+ 31 48 60+

100

1

10

51 67 24 13 26 21 17 43


Slide 28 c. 1989

On-Time Customer Service PerformanceQuarterly Data (1Q86 – 4Q88)

ADS ADBV MED CLD IPD DSP MDL ADI

100

1

10

31 35 35 43 41 22 81 32 HALF LIFE IN MONTHS

%

Of

LInes

Late

Documents

©1987-2000 Arthur M. Schneiderman All Rights Reserved. Slide 1 APICS/Babson College Presentation January 17, 1989 Arthur M. Schneiderman Title