1. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 1 QIP Strategic Plan Proposal c. October, 1986 Arthur M. Schneiderman Title

2. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 2 c. 10/28/86-QIP-1 rev. 10/30/86 OBJECTIVES to achieve widespread consensus on, and commitment to a set of QIP goals to be achieved by the end of our next strategic planning cycle (1992) to establish an approximate 6 year plan identifying key milestones and activities to agree on a detailed 1987 QIP Plan that will: convincingly demonstrate top management's ongoing commitment to QIP clarify our current QIP status reaffirm to the entire organization the "why and what" of QIP build widespread confidence in the effectiveness of a systematic QIP generate the momentum that will be needed if we are to meet our goals ADI QIP LONG RANGE PLAN

3. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 3 10/10/86-QIP-2 rev. 10/26/86 FACILITY: 4" wafer fab and assembly of bipolar IC's built 1974, 1300 employees OVERALL GOAL: (1980) "..to have our products rated #1 in quality by more than 50% of our customers by 1985.." RESULTS: defect levels reduced to 20 PPM (WSJ, 10/3/86) average unit cost down by factor of 7 % customers rating them #1 in 1985: linear products TTL products 45% 60% WINNERS OF 1985 DEMING PRIZE "We've gone as far as we can in manufacturing. We are focusing on IC design for further defect reduction." Kimio Nonaka, Manager of TQC TEXAS INSTRUMENTS, HIJI, JAPAN

4. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 4 c. 10/13/86-QIP-3 years Source: IMPRO 86, 10/9-10/86 PPM 76543210 10,000 1000 100 10 customer measured defect levels Hiji Plant, Japan TEXAS INSTRUMENTS 50 % improvement each: 10.3 months defect levels WSJ, 10/3/86

5. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 5 c. 10/26/86-QIP-4 PHASE: QIP YEAR: ACTIVITIES/ ORGANIZATION: OUTPUTS: STARTUPROLLOUTINSTITUTIONALIZE initial QIP status survey divisional QIP Councils corp. Quality Steering Com. QSC develops goals quality manifesto policy deployment structures QSC focus on: periodic quality audits internal/external PR 123456 QIP part of each organization's culture 3-5 pilot projectsall div's involved in QIP activities success stories interest in QIP demand for QIP training GUIDING TRAINING MONITORING REWARDING heroes ADI QIP PLAN

6. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 6 c. 10/28/86-QIP-5 MANAGEMENT TOOLS autonomous div's shared resources flexibility customer focus external internal organizational development participative mgmt. innovation environment information systems personal growth RESULTS innovative product process mfg. excellence quality productivity cycle time customer driven service support responsiveness cooperativeness QP I PROPOSED ADI QIP MODEL

7. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 7 c. 10/28/86-QIP-6 1987 QIP STATUS SURVEY OBJECTIVE: to determine the current state of each division/corporate's QIP activities DIMENSIONS: is there a QIP Council? membership charter meeting frequency prospectives on QIP Organization: commitment sense of urgency are there QIP training programs? are there trained facilitators? Projects how many? how selected who participated how long use of SQC or other tools? Results quantitative measures of improvement (improvement curves) ADI QIP STATUS REPORT success storieschallenges

8. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 8 c. 10/28/86-QIP-7 ADI 1992 QIP GOALS EXTERNAL PERSPECTIVE To have our products rated #1 in TOTAL VALUE by more than 50% of our customers based on: right products performance quality/reliability lead time responsiveness cooperativeness price delivery support willingness to form partnership

9. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 9 c. 10/27/86-QIP-8 ADI 1992 QIP GOALS INTERNAL PERSPECTIVE To constantly strive for the elimination of all FORMS OF WASTE at all entities, functions and levels within ADI Manufacturing and Design < 10 PPM defect levels >99.8% on time delivery <3 weeks lead time <3 weeks mfg. cycle time <20 weeks design cycle 25X reduction in active WIP 250X reduction in changeover times Other Areas timely financial reporting reduced turnover effective meetings actionable information perfect safety records

10. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 10 c. 10/27/86-QIP-9 DATA INFORMATION KNOWLEDGE ACTION THE KNOWLEDGE PYRAMID

11. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 11 c. 10/28/86-QIP-10 Ryuzaburo Kaku, Canon waste in rejects waste in parts inventory waste in indirect labor waste in equipment and facilities waste in expenses waste in design waste in human resources waste in operations waste in production startup of new products Taiichi Ohno, Toyota (MUDA) The Nine WastesThe Seven Wastes waste in processing itself waste of time waste of making defective parts waste of motion waste of overproduction waste of inventory waste of transportation FORMS OF WASTE

12. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 12 c. 10/27/86-QIP-11 TOP MANAGEMENT'S 1987 GOALS Guide: quality manifesto overall goals (quantitative and measurable) steering committee charter incentives implications Get Trained: (on-going) Juran on Quality Improvement statistical methods quality literature Set Example: QIP projects (1-2 each) e.g.: information systems customer interviews Be Visible: regular "air time" to QIP periodic (semi-annual?) QIP Audits reward successes (non-financial) annual QIP award? integrate QIP into other activities strategic planning various Councils various Staffs 10-20% of their TIME spent on QIP activities

13. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 13 Additional slides Additional Slides Used c. late 1986/early 1987

14. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 14 12/12/85- ZD3/QIP-12 KAIZEN INNOVATION FOCUS design, production and marketing science and technology TARGETING broad: quality, cost safety, efficiency product development narrow: feature technique EXPERTISE conventional know-how leading edge, break through CAPITAL NEEDS very modest major PROGRESSsmall steps big jumps RESULTS continuous spontaneous VISABILITY not dramatic very dramatic INVOLVEMENT everyone selected few COOPERATION group activity individual RECOGNITION results effort, process EVOLUTIONREVOLUTION effort vs. investment

15. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 15 Deming Prize info 1985 Checklist for the Deming Application Prize

16. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 16 12/16/85-ADI-2 REQUIREMENTS FOR QUALITY IMPROVEMENT Top Management Commitment Sense of Urgency Systematic Method Pilot Projects Company Wide Involvement Organization/ Systems leadership changed objectives hands-on management visibility support profit opportunity competition fuel for change proven results kaizen data driven cross-functional overcome skepticism build credibility get ball rolling develop champions weakest link internal customers policy deployment vendors/customers training guiding : monitoring rewarding :

17. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 17 Phase 1: 1985-1986 Tops-down Priorities innovation processnew product cycle time standard cells/sub-cells CAD customer servicecausal/effect metrics manufacturing processmanufacturing cycle time outgoing PPM organization development process TBD MIS processTBD QIP Philosophytops-down/bottoms-up StaffingAMS QIP Organizationdivisional focus Training/Awarenessmanagement team JQI (?) c. 1986-QIP Status

18. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 18 month % on time delivery 100 90 80 70 60 50 40 30 20 10 0 Customer Service Performance ANALOG DEVICES ADSMEDADBVIPDCLD Corporate Key Key Non-Key Key Affiliates 161216 16 16 16 8/7/86-ADI-15/150

19. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 19 causes of controllable lateness improvement rate (half-life)weeks of QIP activity % of controllable lateness cause 10 cause 9cause 8cause 7cause 6cause 5cause 4cause 3cause 2cause 1 100 80 60 40 20 0 PARETO ANALYSIS weeks % late 523926130 100 10 ADS ADI CONTROLLABLE LATENESS PERFORMANCE 1 total Wilm. Nor. GOAL 10/17/86-ADI-18 rev 10/28/86

20. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 20 c. 1986-Phase II Objectives QIP OBJECTIVES Phase II 1987 Deploy goals setting & implementation Establish divisional QIP councils —quarterly reviews Identify divisional QIP priorities —metrics Train all division staffs (JQI?) —other levels Full time QIP facilitators Maintain visibility of Top Management commitment to QIP —integrate into performance evaluation

21. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 21 c. 1986-Example of written reports TITLE Daily Shipments Tracking Report Daily Delivery Statistics & Detail CB/Flash Weekly Fact. Pert Report Eval Update Est Net Sales Analysis Weekly Sales/Bkg Stat Fab info LOG NP Crit Path Stat IQC Weekly Report OQC Weekly Report Due & Overdues Thru wk____ NP Status Weekly Insp Report, ADKK Corp Strategic Summary Mask Shop Layout NP Fab Status Weekly Delivery Report Wafer Fab Slice Stats IBM SQP Summary Report Allocated Products (New Product) Turn Time Monthly Models Report Quarterly Fin Report Rep on Inq. Rec’d or Prospects Produced Trim/Probe Report Lots on Hold at Coord Jan Qual Update FREQUENCY Daily Weekly Monthly Quarterly ? SOURCE P.C. A.D. P.C. Rel. P.C. LOG Mktg. Q.C. P.C. Fab P.C. ADKK/Q.C. Corp Sales Admin Mask Fab Layout Fab P.C. P.C. Fab P.C. Q.C. Customer Service LOG Mktg. Sales/Data Processing Finance Corp Comm (73 pgs!) LOG PTDE Q.C. Coord Q.A.

22. ©1986, 2000 Arthur M. Schneiderman All Rights Reserved. Slide 22 Juran: Resp. of Qual. Council Juran Institute, Inc. Organization For Annual Improvement: Responsibilities of Quality Council