21

Advanced Manufacturing

Presentation to DPE Winter School

August 2009

1- Confidential -

2

Presenters

1. Mehleli Mpofu (Acting DDG Manufacturing Unit)

2. Jan Wessels (MD, Denel Dynamics)

3. Chart Van Der Walt (Denel Dynamics)

2

Structure of Session

1. What is advanced manufacturing? (MM)

2. Why is it important? (JW and CvW)

3. The challenges of building an advanced manufacturing sector in a globalised world (MM)

4. Panel Discussion (All)

2

What is advanced manufacturing?

1. It is the production of complex machines through the application of advancements in science in manufacturing processes and product design

2. It is the application of advanced technologies and processes at any stage of the value chain

a. technologies refers to productive equipment and knowledegeb. processes also includes managerial practices (e.g., lean, supply chain management, e-

commerce etc.)

3. In a nut shell building advanced manufacturing isa. Relative to where an economies’ productive capacity are atb. Is simply about process and technology upgrading

2

The typical view of an industrial value chain can be misleading

Typical Value Chain

Extractive Industries

Primary and Secondary Processing

(i.e., beneficiation)

Primary manufacturing

Secondary/advanced manufacturing

Advanced Manufacturing??

Ser

vice

Ind

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Typical Metal Based Industries

• Mining ore bodies

Typical Chemical /Pharmaceutical

Industry

• Harvest from nature (e.g., the air, oil well, mineral body)

• Reducing ores to metals to produce ingots, plates or rolled metal

• Fabrication i.e. - casting, forming, machining etc.

• Assembly into components/subsystems (braking/steering systems)

• Assembly into complex systems (e.g., cars)

• Separation processes (e.g., refinery, cryogenic air separation, membrane separation)

• Primary Chemical Processing (based ingredients e.g., Sulphuric, Nitric and Phosphoric Acids, basic polymers and compounds

• Secondary Chemical Processing (pharmaceuticals and other synthetic compounds)

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A simpler view of an industrial value chain helps us understand what advanced manufacturing is about

But how do we apply it?

Raw Materials

Processed Materials

Parts and Components

Machines

Ser

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Ind

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Info

rmat

ion

Eng

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ring

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Firstly, what is a machine? My simplistic view of machines – not entirely correct

Purely mechanical machines

Anything that uses mechanical energy only. (e.g., watches, bicycles, egg beater)

Electro-mechanical machines

Mechanical machines that use electrical sources of energy for propulsion and control purposes (e.g., lawn mower, electrical car, aircraft)

Chemo-mechanical machines??

Mechanical machines which use chemical sources of energy?? - control is more important than propulsion??

Electro-chemical machines

Batteries, solar panels, CDs etc.

Electro-magnetic machines

Computers, TVs (thank you Solymar), computer chips.

Bio-chemical machines

Enzymes e.g., yeast and

Biological machines Bacteria, your body cells, yeast

Chemical machines Pharmaceuticals

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My simple observation about machines 1. All machines have some form of a control system (manual /automatic / super intelligent)2. This control system is able to process information about what’s happening around it and use it

to tell the machine what to do a. Need some form of a feedback loopb. Some are naturally built in c. Most need to be built in

3. Advanced manufacturing is about understanding how these control systems work or work along side other systems so that we can use these machines for our own ends.

a. CDs, DVDs, TVs etc are a result of our understanding of how to excite electrons and get them to do or store cool things

b. A bomb is not a machine cause we can’t control the release of energy, but a rocket or a nuclear reactor is a machine

4. We also need more advanced manufacturing technologies to make different types of machines

a. You can’t make micro-processors with simple tools, outside of a clean room

Advanced manufacturing is the production of complex machines through the application of advancements in science in manufacturing processes and

product design

2

Secondly what have been the recent advances in science (including mgt. science) and their impact on manufacturing

Recent advances in science Impact on manufacturing process and products

E-Commerce Supply chain management and ???

Nano-technology Product engineering vs. process engineering

Miniaturization Cell phones

Increased Computational Power Visit any control room during a factory visitor

Bio-technology Consistent quality in beer production, new drugs

Composites Lighter cars, light planes, lighter missiles

Space/Cellular Technologies Productivity of vehicles working in mines

Advanced manufacturing is also about the application of advanced technologies and processes at any stage of the value chain

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But what about less developed countries who haven’t mastered basic manufacturing processes

1. Advanced manufacturing is relative to a countries capabilitieso Advances in manufacturing can be made in processes rather than at a

technology level, buto Technology can also be bought (or donated)

2. It is possible to leap frog technologieso In fact in some case, new technologies have lower barriers to entry,

than old technologies (e.g., wireless internet vs. cable based internet access).

o Malaysia’s vision 2020

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Therefore the suggested definition of advanced manufacturing?

1. It is the production of complex machines through the application of advancements in science in manufacturing processes and product design

2. It is the application of advanced technologies and processes at any stage of the value chain

a. technologies refers to productive equipment and knowledegeb. processes also includes managerial practices (e.g., lean, supply chain management, e-

commerce etc.)

3. In a nut shell building advanced manufacturing isa. Relative to where an economies’ productive capacity are atb. Is simply about process and technology upgrading

2

Structure of Presentation

1. What is advanced manufacturing? (MM)

2. Why is it important? (JW and CvW)

3. The challenges of building an advanced manufacturing sector in a globalised world (MM)

4. Panel Discussion (All)

2

Structure of Presentation

1. What is advanced manufacturing? (MM)

2. Why is it important? (JW and CvW)

3. The challenges of building an advanced manufacturing sector in a globalised world (MM)

4. Panel Discussion (All)

2

How to build an advanced manufacturing sector in a globalised world?

Key Message• Markets, markets, markets (B2B or B2C, local vs. global)

• There are big firms out there who control access to key resources – we are not alone

• Competitive advantage can be gained by developing linkages with lead firms in a global value chain

• Organisations can use their relationship with other members of their network to develop their competencies.

2

Frameworks to assess how firms in a global industry compete (1/2)

Porters Diamond

Factors of productions

Demanding customers

Business Environment

Regulatory environment

Competitive industry

If you don’t have this locally, get it

globally

2

Frameworks to assess how firms in a global industry compete (2/2)

What are Global Value Chains?

Name Value Chain Production Network

Definition Sequence of productive (i.e. value-added) activities leading to end use

Two or more value chains that share at least one actor (network linkage)

Other Names Supply Chain, Commodity Chain, Production Chain, Activities Chain, Pipeline

Value network, Input-output matrix, Supply Base

Benefits Focuses on the essential steps taken to get a product to market and thus makes the role of the key players more explicit.

Allows the capturing of the dynamism and complexity of productive activities

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o competitive advantage can be gained by developing linkages with distinct kinds of lead firms in global industries

o these lead firms are the ones that control access to major resources that generate the most profitable returns in the industry E.g.,

o product design, new technologies, brand names or consumer demand

o An alternative approach for gaining competitiveness within the GVC framework is for a firm to leverage its relationship with other members of its network to develop its competencies.

Application of the global value chain approach

Key postulates of the Global Value Chain Approach

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o Automotive sector

o Aerospace sector

o Pharmaceutical sector

o Defence sector

o Clothing sector

o Agro-processing

o Beverages

o Appliances

o Media

o Etc. etc.

Examples of where this is happening in the world around us

?Can we leave anything out

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If you believe the above, an understanding of how lead firms manage their global value chains should provide some insights into how South African can become part of the global manufacturing industry

Conclusion

2

Structure of Presentation

1. What is advanced manufacturing? (MM)

2. Why is it important? (JW and CvW)

3. The challenges of building an advanced manufacturing sector in a globalised world (MM)

4. Panel Discussion (All)