IBM Engineers Advanced Supply Chain Management Solution for Analog Devices Inc.

New Solution Delivers Improved Performance and Helps ADI Predict Supply Versus Demand

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ARMONK, NY - 28 Mar 2006: IBM® and Analog Devices, Inc. (ADI), a leading semiconductor manufacturer, today announced the completion of an engineering and design collaboration on a customized, highly-integrated supply chain solution that has allowed ADI to improve order and delivery processes, achieve improved customer service levels and continuously monitor customer orders, and adjusting manufacturing plans, supplies, and inventory to match customer requirements.

As part of the project, IBM and ADI engineers worked together to customize a suite of advanced supply chain planning tools and software that enable ADI to accurately model its supply chain and to dynamically re-optimize production plans at all levels to match customer demand. By collaborating together and using sophisticated algorithms developed specifically for ADI by the IBM engineering team, the project was implemented in just 11 months, versus the typical industry standard of 18-24 months for a supply chain this complex.

The project was spearheaded by IBM engineers within the Technology Collaboration Solutions group using IBM's Operational Framework for Advanced Supply Chain Planning software solution as a platform. The engineering team also collaborated with supply chain experts from IBM's own internal supply chain, who shared best practices on how the company recently achieved historic inventory lows and improved customer satisfaction.

"Increasingly, clients are looking to collaborate with IBM on critical technology innovation to help them be more responsive to market demands, and use information systems to create and maintain distinct competitive advantages in key areas including reinventing research and development and supply chain innovation," said Anthony Yu, Vice President, Semiconductor Industry, Engineering & Technology Services, Technology Collaboration Solutions. "In the labs, warehouse and data center, IBM engineers worked side by side with ADI engineers to apply IBM's industry knowledge and intellectual property to help ADI improve their overall business processes."

ADI manufactures and ships more than 10,000 different end items to more than 60,000 customers all over the world. By using this new supply chain, ADI can more accurately match supply with demand at any given moment. Having this information readily available translates into a competitive advantage for ADI because it enables the sales team to provide aggressive yet accurate lead times to customers, while at the same time helping to optimize inventory levels.

"At ADI, our goal is to keep lead times consistently short for our customers while not sacrificing delivery performance. By collaborating with the engineers of IBM, we created a system that takes our best practices and turns them into a systematic way of operating all the time, across our entire supply chain," said Mike Errera, Director of Worldwide Planning at Analog Devices, Inc. "With the suite of tools we have in place now, ADI is raising our order and delivery performance to match the same high level of performance that our customers expect from the analog and digital signal processing products we manufacture."

The semiconductor market is historically cyclical and components have long manufacturing cycle times, typically 10 to 16 weeks, encompassing wafer fabrication, wafer test (probe), assembly, final test and packaging. Throughout the manufacturing process, the combination of flows expand as 'chips' from specific wafer designs are assembled into a variety of different packages styles which are then tested to different grades for various combinations of speed, accuracy, resolution, or power consumption. The dramatic improvements in order and delivery processing allow ADI to rapidly respond to market fluctuations and customer needs while accurately balancing supply and demand.

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