28 Dialog Semiconductor Plc | Annual report and accounts 2012 |  Section 2 | Business review Risks and their management continued Operational excellence Dialog recognises that time-to-market is a critical factor for the success of our customers. The efficiency of our internal operation is a relevant factor  to our performance. We run programmes to drive continuous improvement through all facets of the value chain from design to fulfilment. We also  test and evaluate the quality of the supporting business functions. Our business model is fuelled by the funds trusted to Dialog to run its operations. We realise that our financial transactions bring the risk of currency  and interest rate fluctuations and bad debts. We seek to have enough free cash flow to invest in growing our business and select the right financial  service providers and products.  Design capacity  Dialog develops both Application Specific  Integrated Circuits for individual customers  as well as Application Specific Standard  Products to address multiple customers in a market sector. Dialog respects that time-  to-market is of critical importance to our  customers’ success. With strong demand for new innovations and the limited capacity  of design engineers, we must balance the  allocation of our resources to both our  business models. Dialog runs a fabless model and does not  participate directly in the highly capital  intensive production environment. The  manufacturing of our products run over  multiple stages of production with multiple  suppliers. Each supplier must manage  capacity to ensure a healthy financial return,  leading to constraints in times of increasing  demand. Long-term capacity planning and  short-term fine-tuning are crucial to align  production cycle time with order lead times  for our customers. Interest earned from bank and money  market deposits can vary according to  market fluctuations and Dialog’s  cash requirements. Dialog manages its interest income using a matched investment strategy with a mix of fixed and variable interest rate facilities in highly liquid funds, which are offered by highly reputable  and rated financial institutions. This includes investing excess funds, even over the short term,  once the operating business has been financed.  During the year, the Group has held cash on deposit with a range of maturities from one week  to three months. In 2012, we have rolled out state-of-the-art Supply Chain Network Planning software, based on SAP, which supports the automated scheduling of production work orders, taking into  account the capacity constraints of our suppliers.  We keep inventory buffers to respond to unplanned demand fluctuations, but seek to manage  these to consume a minimum of working capital. Dialog carefully selects its suppliers and regularly audits their quality and performance. We keep a close relationship with our suppliers and have implemented automated feeds to ensure swift  turnaround of production orders and to manage the transition of production stages over multiple  manufacturing locations.  Dialog continues to expand its Technical Ladder, a forum of our top engineers, to share  knowledge, align design technologies and generate ideas for new products. In 2012, Dialog expanded its design capacity by 21%. We recruited engineers into our current  design centres in the UK, Germany, Austria, Japan, the Netherlands and Greece and set up new  design centres in Turkey and Italy. In-house we dedicate human resource managers to drive the further development of our  personnel and benchmark our employment terms against top industry peers.  Dialog has selected specialised outsourced agencies to support the rapid recruitment of highly  skilled personnel.  Actions Risk Supply chain Interest rates fluctuations