‘elton of Management Cannel Stine 43 ‘coupe One The Natere of Mangement Care Sees = sree eames Among integrated ciruit manufacturers, Motorola was widely known for its design and process expertise, and it became a leader in the increasing'y popu: Case 14 Jar semicustom integrated circuits. Motorola Inc. Semicustom integrated circuits aro designed using predetermined fanc- ‘Sonal blocks. In the early 1980s, Motorola produced a version of semaieustom Cs called "gate arrays." Fach “gate” on a gate array was a transistor that per Formed a single operation. These were interconnected to produce the decired ‘set of fmtions. One chip could contain a thousand or more gates. Hach was do signed to meet the requirements ofa specific customer. Gate array customiza- tioas were relatively cheap and quick to xanufacture, and they ware desimmed oceans ‘eet eter ae me trite Sone alin poy ‘The Company sa soon became widely own fr its rags and ober ile products. By the Senicondae- Tse mmaniators equipment ad CO: tee pede eth altary throat so itba insoles, eapleyed over 88,000 eon, ici are 55 bio opment fe was coef he few Amerie COOP = search and developmen ue roduts, fom highly sophincented integrated ior elecrono proces. nowledged technological leader, CMOS gate arrays were produced in Austin, Texas, by the Mlcroprocessor Products Group. Since Motorola focused on maintaining its position in the mie croprocessor market, the CMOS gate arrays did not reesive adequate attention {im this group. As a result, Motorola had only a small share of the CMOS gave Formation of the ASIC Division 1, tae Semiconductor Products Sector produced a large line Sidered standard designs and were kept in atock. ea othe Seen od ngrand cra. ce ‘atk dacs be though ofa Teast fosotionall Organization of ASIC Division ‘The division was organized along funetictal lines (see Exhibit 1), * Product Engineering Department Product enginooring interacted with the customer and assumed the role of a seven tight Te eres Tuck ch “rs eae was prepared and copsighs by eo Fer ane Sven ht dian troubleshoster in dealing with customer complaints t was responsible for the PSstenacarensten, Daweh Coege.‘techaical aspects of ongoing prodvet manufacturing. Engineers were assigned wa served che customers products. If a ‘hat required a capital expen a feasibility stad This otady ‘unit cost of p ‘qreement of the development contract and 70 percent 8 ‘he frst provotype-anits, for identifying intial prospects and making sales to them, spartment had certain roeponsi- ‘lites for preeuct pricing and accurate forecasting of market demands,(rept One The Nature of Management Conta Stems farther manufaccuring cots. Recently, a procedure was instituted that, if a product was rejected, the whole line stopped wat QA andthe production oor ‘ould determine the cause(s) Manufacturing Departmer "The manefacturing department consisted of hourly workers, superrisors, and ability to achieve volume production rapidly were paramount in capturing the ‘business of these customers. Compared with these factors, price Was of sec- ‘ondary importance, Somo customers, such as Hewlett-Packard, were developing justin-time (IUD manufacturing eystoms and stated their needs for timely deliveries and “High quality iocoming components ‘Motorola Manufacturing and Accounting Systems ‘rior to moving, the ASIC Division was part of another corporate sector. Bipo- lar production, prior to moving, used Motorola's existing manufacturing and ‘accounting systems. Inthe plant, machines and workers were organized along fanctional lines. Each machine whose inventory was 7 stage of completion for vosting purposes, The routing ofthe produit through the factory typieally ‘This system required extensive recordkcoping. An entry wos made every time the product was moved from ane cost center to another. A frequent physi 3g systems resulted in overall dysfunctional activities to new manefacturing techniques.” was cambersomeand nat well understeod by factory employees. Factory employees hae dificalty in tying a variance toapecisopro> lem, Because a variance did not highlight the actual problem, a= appropriate solution to a variance was dificult to determine. The typical factary worker accumulation of many favorable and unfavorable activities, which variance analysed net pecially dent. Moreover, the variance reports were notCCasterOne The Nar of Management Control Sytme factory oor, the manufacturing department was halfway through another ‘ha the new plant, there was a dramatic increase in overhead costs and a cor- responding decrease in direct labor costs. The allocation of overhead by direct Jebor ne longer seemed relevant, Opportunities for Change ‘The manager ofthe newly formed ASIC Division realized that the opening ofa ‘Arrays that did not pass inspection ware mazked, and, when the wafer was ext into individual chips the marled arrays were thrown away. Next the chpn ere then no fen asuubly wl (9: 148 r EXHIBIT 2 iy and test ample, antomated fast machines atthe ond of the option ine cet Gach ofthe calls was ran by aprodoction toam, which was supervised by & ‘2am leader. Workflow sas contrilled through a pel system, with designated areas where limited inventory wae allowed between work stations. (A pull smanufecturing system is characterized by triggering production when inven- tory is removed from finished goods stock) Ifthe storage area hefore a work full, the precoding station had toCchepter ne ‘Phe Nota of Maapemane Conia Systm 4IBIT 3. 7 at ofAssombly Celt Pe ‘Wiriod [ivigne] Wien [Winbesdr] Wistad [Wcbpder 1, | sine ‘one ‘and they moved through the eel as shown by the arrows; the final operation performed in the coll was attaching lead wires in the wireboad stations. ibe eel was co desigood that the product moved in one direction along @ ‘Usshaped path ‘The Role of the Management Control System, “The controller of the ASIC Division was seately aware of the tandensy of out- Gated and combersome control aystems to hinder progress in manufacturing operations. He felt strongly that his ofise shoald not morely stand aside bat ‘hould take a positive position in promoting the changes throughout the divi- ‘sion. However, be wondered what kind of managerial control system would vent and even guide the progressive changes taking place in the divi- 1, What are the key suovess factors for Motorola's ASIC Division? 2. Does a traditional standard cost system address these Key success factoro? 3. What are good measures ofthese key success factors? 4.How would you control the plant using these measures and the eurrent ‘strcture ofthe plant? ,