crac One The Nature of Monagenent a case 1-4 Motorola Inc. “The controller of Motorola's newly foamed Application Specie Integrated C1 i rd that he and his staff could play seiSctormining the success of what promised to be an import 1 ee fe cision competing in anew and dynamic market with Taide was radically changing the way it delivered ‘estes Mow should it be measured? Who sbould measure 17 and, For ‘whom should it be measured? ‘The Company ‘Founded in 1928, Motarela soon became widely known for Cenuuiner electrical and eleetronie products. By the 1960s, ter eroducts, communications equipment, and component ustrel companies, and the military throughout the world, udgeariered in Schoumburg, Mini, in 1964, Motorola achieved ves go bbltpain cles, employed over 9,00 people, and apent $411 millon #1 eeseh and development. It was one of the fow American ated a wide range of electronic products, from highly eophist Greaits to consumer electronic prodocts adios and other old semicondue- ‘consumers, in- perl CMOS ely For ann the ena MOS Erray was expected to grow more rapily than that for bipolar gat arrays in Ted, CMOS eapared $0 percent of thw murkat Tis was expel This waa expected #0 rapid changes in technology. Arcordingly, SPS wap evelopment program in advanced semiconductor technology Formation of the ASIC Division 1h the early 1980s, the Semiconductor Products Sector produced large ine of Tear ienete semicondtuctor components and integrated cirel roan ee Its) can be thought of (at least functionally) as miniaturs ‘boards. Yor example the designer. 1g" « 12" creut bo “al its individual components with a sing! integrated circuit oF tion. By 1985, wor! Organization of ASIC Division na.aichip, saving space and reducing power cons¥™P" ales of jategrated circuits reached $20.2 bil ‘The division was organized along functiohal lines (see Exhibit 1). * Product Engineering Department the customer and astumed the rele of a somplaints. It was responsible for the troubleshooter in dealing withManagemen Contre Stems "The production planning and customer cervice department fom the customer This department told mansfacturing when to start produc ned. Since Bfotorola did not have(Opt ane The Nature of Management Conte Syetems further manufacturing ly, @ procedure wa Manufacturing Department ‘The manufacturing department enesisted of hourly workers, supervisors production machinery and inspecting work-in-provess. Manisfac- gineering was cherged with sustaining the production processes and methods used in the assembly and test operations. ‘The group's Tocus waa oa the manafactaring procase, rather than on apecifie products ASIC Market ‘The managers ofthe new division realaod that cuit business had different requirements for su ‘business from whieh it grew, omicustom integrated elr- ‘than the commodity-type ‘The customers ofthe ASIC division were typically computer manufacturers, such as DEC, Apple Computer, Unisys, Cray, and Prime Cor « primary concern for them. High quality, quick development time, and the ability t achieve volume production rapidly were paramount in capturing the Dasiness of these customers. Compared with these factors, price was of sec ondary importance Some customers, such as Hewlett Packard, were developing (JIT) manufacturing systems and stated their needs for Umely del ras part of another corporate sector. Bipo- Motorola's existing manufacturing and ines and workers were organized along fonetional lines, Bach machine wa controlled as part ofa functional group, ‘and was in close physical proximity with other machines that performed a sim. flar function. This functional design resulted in large physical movamants of product over relatively large distances on the factory floor. Exch manufactured ‘parthad a designated routing through the factory. In this factory design, there were 29 enst centers, whose inventory was valued at standard cost ‘The inventory was grouped hy stage of completion for costing purposes. The routing of the product through the factory typically ‘Chapter The Nature of Monagement Contra Stns 47 the various raw materiale ‘customer specifications; an ts were packaged for shipping. extensive recordkesping. An entry was made every ‘aa moved from one cost center to ancther.A frequent paysi- cal audit of inventories waa required to track and verily product amounts ) nished goods, ‘The bonus was largely 1s to standard labor hours point the cause of an unfavorat 2 j@ and unfavorable activtice, whith variance An additional seven working days were required to generate actual and the variance report, By the time the reports were received in the Se EEL(Chapter One ‘he Nature of Manage factory floor, the manufacturing department was halfway through enother accounting period, Because ofthe dynamic esvironment facing a chip manufacturer, the deter. being out of data, Since the variances were afer crease an individual variance we ‘used and produce large lot sizes, WIP inventory between the work stations and prov ‘volume, in many cases the way to de ‘not immediately required by a customer. At the same time, products required bye responding decroase in direct labor costs, The alloction of overhead by direct labor no longer seamed relevant, Opportunities for Change substantial changes in the divisions manufacturing operations. Accordingly, the now plant's feor layout was designed to be particularly suited to the JIT of the plant. One manage: ‘needed to be made tothe chip. In the assembly co ‘to the chip were made, Inthe ealing, mech EXHIBIT 2 Layout of Chandler Plant (Chote The Mature of Masagersnt Corl Sytem 48 |)! || Bef Agee me | fe Y Bre, | sontiom | | Shipring Warshoose ‘The focus ofthis option line was fast tarnaround time; for new ICs, a dozen or ‘0 unite could be shipped within three weeks from the time the design wes ae ‘cepted. Higher-volume ICs were routed through the remaining cella As note, ‘aot all ICs were sent to the heat sink and burn-in eels, but all went throug the testing, warehousing, and shipping coll. ‘Most ofthe processes were machine-paced, and most ofthe machinery was ‘omplex and expensive. This was particularly true of the assembly and test cells For example, automated test machines atthe end of the option line ast over $2 million exch, Bach ofthe cells was run by a production tearo, which was supervised by a team leader. Work fow was controlled through a pull system, with designated areas where limited inventory was allowed between work stations. (A pall ‘manufacturing system is characterized by triggering production when invery tory is removed from finished goods stock) Ifthe storage area before a work station was full, the preceding station had to remain idle, One of the assem bly calls is dingrammed in Exhibit 8, In thia cell, chips were attached to the bottom portion of the permanent enclosure (package) in the die bond station, ~chapar One The Nature of Monapenent Control Stent soit 3 ot of Assembly Cell, ‘snd [Wenhgode] Wid ‘azsat | Wintond [Wiretenier econ | “oie [8 arroms; the final operation the wirebond stations in one direstion along & U-shaped path. ‘The Role of the Management Control System jon was acutely aware ofthe tondency of out ce ehould not merely stand aside but should take « postive postion in promoting the changes th jover, he Wondered what lind of managerial cont and even guide the progressive changes taking Questions 4, What are the Key suocess factors for Motorola's ASIC Division? 2, Does a traditional standard coat aystem address these key success factors? 3. What are good me: a? 4. How would you control the plant using these measures and the current structure ofthe plant?