Beruflich Dokumente
Kultur Dokumente
Part A
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
Problems faced in mid 80s Growing inventory Increase in defect level of product ADIs strategy in 2nd half of 80s Emphasis on quality QIP : Half-life by implementing TQM Scorecard
Plan
Act
Do
Check
TQM OUTCOME
Parameter On time delivery Cycle time Measured improvement Increased from 70% to 96% Decreased from 15 weeks to 8 weeks Increased from 26% to 51%
Average yield
Diagnostic tool
IMPLEMENTATION OF HALF-LIFE
Learning Curve With doubling of cumulative experience the unit cost drops by a constant percentage Concept generally deals with cost
Defect reduction owing to Cost reduction owing to a root cause being the same action being eliminated and performed repeatedly subsequent tackling of the next root cause
Q3A. IDENTIFY THE CONFLICTS THAT EXIST BETWEEN QIP MEASURES AND THAT REPORTED BY FINANCIAL SYSTEMS? Q3B. WHICH NUMBERS SHOULD WE BELIEVE ? Q3C. CAN THEY BE RECONCILED ?
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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Scorecard is a blend of financial v/s non-financial 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 operational and human resource effectiveness of ADI ADI
Non-financial measures are used at low levels for task control Financial measures are used at high levels for management control
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Q5. EVALUATE THE MANAGEMENT PLANNING & CONTROL SYSTEMS AT ADI DURING 1990-95 IN LIGHT OF ADIS STRATEGY IN 1ST HALF OF 1990S
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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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. DESCRIBE ADIS STRATEGY AS OF 1996. Q7B.HOW SHOULD SCORECARD & OTHER MANAGEMENT SYSTEMS CHANGE IN 1996 TO BEST FIT THE STRATEGIC NEEDS OF THE COMPANY?
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FINANCE
1.Growth 2.Growth through old & new customer 3. EBIT 4. Profit margin 5. Operating result
ADI Inc.
INTERNAL PROCESS
1. Contractual conflicts. 2. Deviation from budget. 3. Update web report. 4. Procurement
LEARNING
1. Training 2. Employee development 3. Personal turnover. 4. Customer base
THANK YOU
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