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Analog Devices Optimizes Capital Investment Using Real-Time Utilization Data One way for a company to reduce its capital expenditure (CapEx) is to optimize

its capital investment in the right test assets. That task requires a clear

understanding of how assets are utilized.

An asset is acquired with the assumption that it will maintain an expected

average utilization rate over its lifetime. If it is underutilized, its total cost of

ownership may be higher than expected. Assets used across different programs

have varying utilization curves as they go through their respective product

lifecycle; ramp, maturity, and then decline. Understanding the utilization data

of these assets in real time can help companies drive decisions to maximize

instrument efficiency, and identify instruments for test process optimization,

standardization, sharing, re-purposing, trade-in credits and cash disposal.

Analog Devices, Inc. (ADI), is a world leader in the design, manufacture, and

marketing of a broad portfolio of high-performance analog, mixed-signal, and

digital signal processing integrated circuits. They wanted to optimize their

capital investments in the right assets and needed real-time utilization data to

do that. To provide that data, ADI utilized PathWave Asset Advisor software from

Keysight Technologies, Inc.

C A S E S T U D Y

Challenge:

• Optimize capital investment as part of a 20% CapEx reduction goal

Solution:

• Monitored asset utilization in real time using PathWave Asset Advisor software

Results:

• Identified underutilized network analyzer

• Used trade-in value of network analyzer as CapEx offset for the purchase of a new instrument

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ChallengeADI’s challenge was to optimize its capital investment as part of a 20% CapEx reduction

goal set by its’ Finance organization. Test equipment seemed the logical first place to

start given that it’s typically one of the largest financial investments ADI makes. That

initiative drove the product test teams to re-evaluate how they justify decisions around

capital investments. The product test teams needed utilization facts.

SolutionTo make fact-based decisions, ADI product teams needed to identify whether any of its

assets were being underutilized. For that task it turned to Keysight, with whom it has a

long-standing relationship, and Keysight’s PathWave Asset Advisor software. PathWave

Asset Advisor has a Utilization & Health application that monitors test asset utilization

and health parameter trends in real time. It’s data-driven utilization charts highlight

opportunities for test process optimization, standardization, and capturing residual value

from underutilized equipment as soon as possible.

The PathWave Asset Advisor solution was set up across three ADI laboratories. It

was used to monitor up to 25 test instruments of high value (e.g., network analyzers,

oscilloscopes, signal generators, and spectrum analyzers), using instrument resident

Agents and Power Line Utilization Module devices.

After only 45 days of monitoring, PathWave Asset Advisor data identified an instrument

with a low utilization rate (an average of 1% utilization)—something ADI had long

suspected but could not verify by talking to engineers in the lab. The instrument, the

microwave network analyzer, had been purchased years prior when ADI’s test needs

were much different. Through the years, the instrument’s capabilities had become

outdated and subsequently, it was not being used very much. PathWave Asset Advisor

data also identified a number of other ADI test assets that were being used less

frequently than desired. These were exactly the facts ADI product teams needed for

their capital investment justifications.

Page 3This information is subject to change without notice. © Keysight Technologies, 2018, Published in USA, November 21, 2018, 5992-2772EN

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ResultsOnce the network analyzer was identified as an underutilized asset, the product

teams used fact-based decision criteria on utilization to determine what to do

with it. Keysight determined that it could provide ADI a trade-in credit toward

the purchase on a new instrument, saving over $200K. ADI product teams

described this available credit in their justification for a new capital investment.

The justification was approved and they were allowed to move ahead with the

optimized purchase. ADI’s credit was applied to the purchase of a new network

analyzer with a list price of approximately $500K, with all the modern capabilities

ADI’s engineers needed for new programs in development.

As an additional consequence, ADI also began discussions on creating a new loan

pool for underutilized equipment. It would allow engineers to share instruments,

rather than having dedicated instruments for a single purpose or lab. The shared

instrument pool will drive ADI’s test assets for better utilization and further

optimize future capital investments.

More InformationTo learn more about how Keysight Services can help you identify underutilized

assets, go to: www.keysight.com/find/AssetOptimization

The utilization data provided by Keysight’s PathWave Asset Advisor application was exactly what we needed. It provided critical information that proved vital in allowing us to justify our decisions to trade-in an instrument and significantly reduce the acquisition cost of a critical newer technology solution.

Tony GiannascaAnalog Devices Incorporated Development Site Service Manager

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