Motorola Knowledge-Based Manufacturing Sonora Sourcing Case Study August 15, 2006 Wendy Vittori...

Motorola Knowledge-Based ManufacturingSonora Sourcing Case Study

August 15, 2006

Wendy VittoriMotorola Inc., Embedded Communications Computing

Motorola – Embedded Communications Computing - Background

The Situation

The Solution

Results

Additional Information

Agenda

Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006.

Embedded Communications ComputingOur Position in MotorolaOur Products and Solutions

Our Position in the IndustryOur Global Operations

Computers we call

“computers”

Cellular /Handheld

Computer Industry

Motorola Application-Enabling Platforms & Building Blocks

Data Switching and Transaction Processing

Embedded Embedded InfrastructureInfrastructure

Signal and Image Processing

Computers we call

“computers”

Computers we call

“computers”

Computers we call

“computers”

Cellular /HandheldCellular /Handheld

Computer Industry





Loughborough, UK

Tempe, AZ, USGroup

Headquarters

Hyderabad, India

Marlborough, MA, US

Nogales, Mexico

Bangalore, India

Munich, GermanyEuropean

Headquarters

Sunnyvale, CA, US

Loughborough, UK

Tempe, AZ, USGroup

Headquarters

Hyderabad, India

Marlborough, MA, US

Nogales, Mexico

Bangalore, India

Munich, GermanyEuropean

Headquarters

Sunnyvale, CA, US

Personal Communications

Energy Systems

Seamless Mobility Devices

Cellular Networks

MOTOwi4 Wireless Broadband

iDEN Networks

Network Services and Applications Management

Commercial, Government and Industrial Solutions

Global Relations and Resources

Embedded Communications Computing

Cable and SatelliteWireline Networks

Connected Home

Telecom Video

iRadio

Mobile DevicesConnected

Home

Motorola, Inc.Ed Zander, Chairman and Chief Executive Officer

Networks and Enterprise


Energy Systems


Cellular Networks


iDEN Networks






Connected Home

Telecom Video

iRadio


Home



The Yankee GroupStandards-Based Communications Servers for Telecommunications: Market Drivers, Inhibitors, Perceptions and RankingsJanuary, 2006

“The highest ranked vendor by the TEMs in this study, Motorola has a comprehensive portfolio of open standards-based communications server offerings, which it delivers out of its Embedded Communications Computing business unit. Motorola has been a driving force in the telco industry’s evolution to standards-based communications servers…”

Motorola Ranked #1

DRILL DOWN

DRILL DOWN DRILL DOWN

DRILL DOWN


The Situation

1981

Motorola Microsystems Inception

Today

Renamed as Motorola Computer Group (MCG)

1988

2002

2003 2004

2005

CEM Manufacturing in China (Shanghai)Key decision factor: Low labor costsRequirements: Extensive training to expedite knowledge and experience transfer “Exact replica” of ECC’s Plant in Tempe

Assessment of Shanghai OperationsResults: Late deliveries and decreasing product quality impact

customer satisfaction Rising production costsMain Causes: ECC’s highly complex products required continuous

engineering support Customized products and short production runs

increased costs High manufacturing turnover rate Time zone differences Culture and language barriers


The Solution

1981

Renamed as Motorola Computer Group (MCG)

1988

2002 2005

CEM Manufacturing in China (Shanghai)

Assessment of Shanghai Operations

Transference of Operations to Nogales (Mexico)

Critical Decision FactorsOur manufacturing process:

High Mix – Low VolumeClose working relationship

between engineering centers and manufacturing site

Production close to customers and within same trade zone

Risk reduction through diversification

Assessment of Manufacturing AlternativesKey Options:Outsource manufacturingInternal production: Tempe (AZ), Nogales (Sonora,

Mexico), AsiaEvaluation Criteria:Internal Factors: Human resources, time zone

compatibility, product complexity, costExternal Factors: Ease of imports and exports, ease of

business operations, government incentives, access to education, infrastructure, and others

Motorola Microsystems Inception

Today2003 2004


Results

Improvement in operational results, especially in product quality and TTM

Additional benefits expected from regional development initiatives:

Nogales Port of Entry -- Hours of Operation

Free and Secure Trade (FAST) Program

SENTRI Program

Nogales Arizona Development


To access the Motorola Case Study, please visit Tecnológico de Monterrey website http://www.gda.itesm.mx/cic/. After registering, access the Case Catalogue (Catálogo de Casos). The case can be found under the Information and Technology Systems (Sistemas de Información y Tecnología) section; it is available in both Spanish and English.

For further information, please contact one of the following parties:

Dr. Jorge A. González GonzálezDirector del Centro Internacional de Casos Instituto para el Desarrollo EmpresarialTecnológico de Monterrey, Campus GuadalajaraTel.: 52 (33) 3669 3000, ext. 3908. Enlace intercampus: 80-432-3908.E-mail: [email protected]

Additional Information

Carola Venot-De-SuárezStrategic PlanningOffice: (602) 438-3437, E-mail: [email protected] Motorola Inc., Embedded Communications Computing2900 S. Diablo Way, Tempe, AZ 85282 U.S.A.


Backup Slides


The Future of Communications is Seamless Mobility

The promise of converged communications

Voice and data on multiple devices, delivered uninterrupted across multiple networks

User experience will be transformed by new applications and the ability to connect to anyone, anytime, anywhere

Motorola is enabling OEMs to increase market share by providing complete communications server solutions that accelerate time-to-revenue for seamless mobility applications


Accelerating Development of Communications Server Ecosystem

Leading the efforts to define and accelerate the adoption of communications servers through key industry associations

▪ Motorola founding member of Communications Platform Trade Association

▪ Premier member of Intel Communications Alliance

Motorola Communications Server Alliance▪ Validate 3rd party products with Motorola’s communications servers

Promoting standards-based technology to encourage third-party application development and create the next generation ecosystem


Predictive Sourcing

Shows how sourcing decisions affect core values to create competitive advantage

Delivers both decreased costs and long-term growth

Core Value and Differentiators

Core Value and Differentiators

Sourcing Methodology

Sourcing Methodology Business StrategyBusiness Strategy


Four Steps To Predictive Sourcing

Consider entire value chain

Assess both internal and external elements

Environmental Assessment

Environmental Assessment

Engineering throughout product lifecycle

New, differentiating capabilities drives profit

Cost-based competitive advantage is fleeting

Avoid short-term savings that harm long-term advantage

From sourcing through delivery

Includes shipping, handling, quality, logistics management

Core CompetencyCompetitive Advantages

Core CompetencyCompetitive Advantages

InnovationInnovation

Cost ConsiderationsCost Considerations


Drill Downs


Communications Computing Solutions+ 20 Years Leading Embedded Infrastructure Computing

Computers we call

“computers”

Laptop, PC / Server

Dell, HP, IBM

Cellular /Handheld

Motorola, NokiaHP, Palm, Sony

Computer Industry


Medical Imaging, Aero, Defense, Industrial AutomationGE Medical Systems, Raytheon, Applied Materials


Networking, Telecomm, StorageNokia, Alcatel, Lucent, Motorola, Nortel



RETURN


Software building blocks

Enabling software that makes it easier to use and integrate our boards and platforms.

Macrocomponents

PMC, PrPMC, PTMC and AMC modules

Board-level building blocks

Computing and communication single-board computers and blades in VMEbus, CompactPCI, and AdvancedTCA form factors

Application-Enabling Platforms

Pre-integrated and pre-tested carrier-grade platform solutions

Platform-level building blocksCarrier-grade platforms based on open standards

+

=

++

Communications Computing SolutionsComponents

RETURN


Loughborough, UK

Tempe, AZGroup Headquarters

Hyderabad, India Marlborough, MA Nogales, Mexico

Embedded Communications ComputingGlobal Operations

Bangalore, India

Munich, GermanyECC European Headquarters

Sunnyvale, CA, USA

RETURN


Motorola Business Structure*

Aligning With Seamless Mobility

* D

oe

s no

t in

clud

e f

unc

tion

al u

nits

(H

R/F

ina

nce

/Le

gal

/Fa

cilit

ies/

Se

curi

ty)

or t

he

CT

O o

ffic

e


Energy Systems


Cellular Networks


iDEN Networks






Connected Home

Telecom Video

iRadio


Home



RETURN


“The highest ranked vendor by the TEMs in this study, Motorola has a comprehensive portfolio of open standards-based communications server offerings, which it delivers out of its Embedded Communications Computing business unit. Motorola has been a driving force in the telco industry’s evolution to standards-based communications servers…”

The Yankee GroupStandards-Based Communications Serversfor Telecommunications: Market Drivers,Inhibitors, Perceptions and RankingsJanuary, 2006

Motorola Press ReleaseMarch 22, 2006

Motorola Ranked #1

RETURN


Production Automation Types

Mix (Number of Components)

Vo

lum

e(N

umbe

r of

Pro

duct

s)

Manual Methods

Small Batch (Semi-

Automation)

Flexible Automation

Mix Automation

Mass Customization

Low Medium High

Low

Medium

High

RETURN

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