Analog Devices Strategy
Analog Devices’ strategy in the second half of the 1980s: (1985-1990)
In 1983, Ray Stata recognized that ADI was having problems with the quality of its production, so he implemented the concept of total quality management into the company management control system. He hired Schneiderman, an expert in practicing TQM and implemented the “half-life” concept and corporate scorecard into the control system.
The “half-life” concept
Evaluation of the “half-life” concept in light of Analog Devices’ strategy
Before
After
On-time delivery
70%
96%
Cycle time
15 weeks
8 weeks
Average yield
26%
51%
Defects in products
500 PPM
50 PPM
Potential benefits
- Improvements quality of production
- Reducing waste
- Reducing cost per unit
Limitations
It is a cost reduction tool not a wealth creation tool. It has little say about business strategy. It deals with defects, not cost.
How would a company develop the half-life for difference processes?
The half-life is not the same for all processes. It depends on the complexity of the process. The complexity of the process can either be technical or organizational. The basis for the half-life dynamic is the interactive learning loop at the heart of TQM. Half-life starts identifying the root causes of defects, rank them in order of importance, then propose, design, test and implement solutions using the Plan-Do-Check-Act or ‘PDCA’ cycle. For less complex processes, the root cause is often larger and the improvement cycle time shorter, accounting for the shorter half-lives. For more complex processes, there tend to be many more causes so that the root cause is smaller while the improvement cycle time is longer. Organizations should attack less complex processes at the beginning when developing half-live.
Differences between half-life concept and the experience curve concept
Half-life Concept
Experience curve concept
A performance measures tools
As a result of increasing experience or proficiency in doing
In 1983, Ray Stata recognized that ADI was having problems with the quality of its production, so he implemented the concept of total quality management into the company management control system. He hired Schneiderman, an expert in practicing TQM and implemented the “half-life” concept and corporate scorecard into the control system.
The “half-life” concept
Evaluation of the “half-life” concept in light of Analog Devices’ strategy
Before
After
On-time delivery
70%
96%
Cycle time
15 weeks
8 weeks
Average yield
26%
51%
Defects in products
500 PPM
50 PPM
Potential benefits
- Improvements quality of production
- Reducing waste
- Reducing cost per unit
Limitations
It is a cost reduction tool not a wealth creation tool. It has little say about business strategy. It deals with defects, not cost.
How would a company develop the half-life for difference processes?
The half-life is not the same for all processes. It depends on the complexity of the process. The complexity of the process can either be technical or organizational. The basis for the half-life dynamic is the interactive learning loop at the heart of TQM. Half-life starts identifying the root causes of defects, rank them in order of importance, then propose, design, test and implement solutions using the Plan-Do-Check-Act or ‘PDCA’ cycle. For less complex processes, the root cause is often larger and the improvement cycle time shorter, accounting for the shorter half-lives. For more complex processes, there tend to be many more causes so that the root cause is smaller while the improvement cycle time is longer. Organizations should attack less complex processes at the beginning when developing half-live.
Differences between half-life concept and the experience curve concept
Half-life Concept
Experience curve concept
A performance measures tools
As a result of increasing experience or proficiency in doing