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QIP Strategic Plan Presentation

c. August 1987

by

Arthur M. Schneiderman

During the period of October 1986 to August of 1987, I continued to refine and expand the QIP presentation based on the progress we were making and the consensus that was emerging.

NOTES:  I refer you to the notes for the October 1986 QIP presentation.  I’ve added comments here on any relevant revisions and the new slides

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Our continuing efforts to define “total value” led to this expansion of the list of contributing factors.  The elements listed in the smaller font were viewed as of less current importance to customers.  Our expectations were that as the major elements were satisfied, customers would turn to the minor ones in choosing between suppliers.

See “Analog’s version of the strategy map: 1987-1990” to see how this and the following slide evolved over time. 

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Setting priorities was the requisite countermeasure for resolving the tension between the tops-down and bottoms-up approaches.  This slide was used to communicate that all divisions were required to participate in the tops-down priorities of delivery and cycle time improvement.  They could select from the rest of the list based on criticality to their business and available resources.

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This slide, created in June of 1987, depicted the relationship between the basic elements of Analog's QIP strategy.  The starting point was the Corporate Objective, created by the vision of the CEO and tempered through the top-to-bottom consensus process.  This statement of purpose was articulated in the voices of our five stakeholder groups.  The Corporate QIP Council, serving as the interface between the stakeholders and the rest of the organization, was given the job of defining initiatives and metrics that would assure stakeholder delight in Analog.  We gave these initiatives names like "Customer Service" (for the order fulfillment process), "Manufacturing Excellence" (for the manufacturing process), "Innovation" (for the product/process generation process), "HR Excellence" (for the many processes that assure recruitment and retention of the best people: e.g. recruiting process, training process, performance appraisal process, etc.), and "MIS Excellence" (for the processes associated with the timely collection and conversion of raw data into actionable information).

Many of our existing improvement efforts fit well into this framework.  On-time delivery and leadtime reduction, for example, were the most leveraged elements of improved customer service.  Cycle time reduction and product quality and yield improvement were the key drivers for achieving manufacturing excellence.  On time-to-market and automation (CAD, or computer aided design) were obvious enablers of innovation.  The last two categories, HR and MIS excellence, lacked specific initiatives at that time, but were recognized as essential for the achievement of our corporate objective.

Analog had had a Technical Council for many years.  Its primary purposes were to foster cross-divisional knowledge sharing and provide a forum for the introduction of new ideas from the broader, external technical community.  In late1986, I created and chaired Analog's first Manufacturing Council.  In partnership with the Technical Council, chaired by the Chief Technology Officer, we took on the joint challenge of improving manufacturability of Analog's leading edge products in support of both our Manufacturing Excellence and Innovation initiatives.  Our two HR committees: the HR Advisory Committee (a mixture of HR professionals and line managers) and the HR Forum (the HR managers from all business units) were assigned the task of operationalizing the concept of HR Excellence.

This cascading process, starting from the high level corporate objective, provided the proposed template for development  of our Corporate QIP Objectives.  The results of our mutual efforts was Analog's five-year QIP Goals (c. 7/12/87)

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The importance of having broad based governance of Analog’s TQM initiative was understood from the start.  In addition to the CEO and COO, the Corporate QIP Council had balanced representation both geographically (Japan, US, Europe) and functionally (general managers. sales, finance, training and TQM).

Among its responsibilities was the deployment of QIP goals which later provided the content of the first balanced scorecard.

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From the start, I recognized the need to limit the number of goals to a manageable set.  For several years, I had been a student of Hoshin Kanri, a Japanese approach to accelerated improvement, where careful analysis of organizational capacity leads to a realistic choice of at most two to three breakthrough initiatives.  Also, Juran had taught us the importance of focusing on the vital few.  So we chose the three most important stakeholder requirements as our externally focused metrics.  Given that our customers were our least satisfied stakeholders, it should be no surprise that all three were customer related.  Our internal focus was initially in the area manufacturing metrics: cycle time, pre-inspection quality and manufacturing yield, as well as product innovation as measured by time to market.  The last sentence, concerning cost management, was added at the request of one of our general managers who was concerned that increased inventory and inspection might be substituted for real process improvement to achieve these goals.

Our first challenge was in defining the current (1987) state.  I've written elsewhere about the many difficulties associated with this deceptively simple task.  I also refer you to my contemporaneous description of this chart in my transcribed.

The next challenge was in determining our 1992 goals for these metrics.  First, we used my half-life method to determine where we could be by the end of 1992 through the effective use of QIP's incremental improvement tools and methods.  The middle column is the assumed half-life or number of months required to close the gap between current and potential performance by 50%.  We then compared these projected performance levels against our customer's perceptions of their future requirements and our expectations of competitor's performance.  Fortunately, incremental improvement could get us to where we needed to be: rated #1 by our customers in total value delivered.  Had they not, we would have turned to other approaches (reengineering or outsourcing) or been forced to change our strategy.

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We recognized the need to deploy our high level goals to the lower levels of the organization, where the actual improvements would occur.  I created the above model for Divisional QIP implementation (7/12/87)

The model was straightforward.  Corporate goals were disaggregated and deployed to the division level.  Each division general manager formed a division QIP council that was modeled after the Corporate QIP Council.  They used a combination of Steering and Problem Solving QIP teams to attack each of their deployed goals.  Steering QIP teams had the job of chartering two or more problem solving QIP teams to address the largest root causes of the gap between current and potential performance.  Membership on the various QIP teams was knowledge, not hierarchical or functionally based.  In general, however, divisional staff members chaired Steering QIPs.  Each deployed goal had one (or in a few cases two) owner(s) whose job it was to assure that sufficient progress was being made toward the established goal.

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Our Corporate Objective committed us to “satisfying our customers' needs.”  One of their important needs was an acceptable level of customer service.  The major element of customer service is on time delivery.  Our steering QIP team identified double bookings as a root cause of late shipments.  To eliminate this cause, we needed a major revamp of our order entry system, which we called ATP or “available to promise.” 

To dig deeper into the other root causes of late shipments, ATP included a comprehensive set of measures including the cause of each late shipment.  One of the major causes was that the customer was on credit hold on the scheduled ship date because they had exceeded their credit limit; solution: arrange for an increase in their credit limit, if appropriate, in advance.  Another root cause was late arrival of assemblies from our facility in The Philippines.  Here the solution involved a change in the kitting process.

Both of these examples demonstrate the linkage between QIP team activities and Analog’s Corporate Objective.

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Individual ownership is essential for the achievement of aggressive scorecard objectives.  This slide showed the Sponsor/Owner of each of the QIP efforts as of August of 1987.  The red squares identified members of the Corporate QIP Council.  Not only did this slide identify the Sponsor/Owner for every QIP team, but it also showed which managers were not yet involved.

©1999-2006, Arthur M. Schneiderman  All Rights Reserved

Last modified: August 13, 2006