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Centre for International Manufacturing
Dr Jagjit Singh SraiDr Jagjit Singh Sraijss46@cam.ac.uk
Centre for International ManufacturingInstitute for ManufacturingInstitute for Manufacturing, University of Cambridge
© Copyright Institute for Manufacturing 1
International Networks
3 4 Supply Chain
InternationalSupply Chain
Networkswo
rk
1
Factory / Plant2
pply
Netw
Factory / PlantManagement
InternationallyDispersed
Factory
Sup
Factory Network
G h E t iI t ti li ti
© Copyright Institute for Manufacturing 2
Geography ExtensionInternationalisation
Approach to network design and operation- turning ideas into reality!
Industry Sector Characteristics‐Industry structure
Learning ‐ Capability ‐Capability Development‐Fitness for transfer/mobility‐Performance Management
CorporateInternationalStrategy Network NetworkRe‐configurationCorporate
and/or SBUStrategy
StrategyFormulation
‐Manufacturing Value Network perspective
Analysis & Design‐Value creation‐Value capture
Operation‐Operational processes‐Network integration
‐network creationor re‐configuration‐ Risk management
Country CharacteristicsNational capabilities
Learning – Context
Products and Services
Ideasand Opportunities
‐ National capabilities ‐Business context‐On‐the‐ground realities
© Copyright Institute for Manufacturing 3
CIM Product Portfolio
RADAR PIPELINE TOOLS MATURE TOOLSETS
Manufacturing Footprint Strategy
Engineering Networks
Internationalisation
Dynamic Capability
Impact of M&As
GSN Configuration& Capability
Risk Management
Engineering Networks
Service Networks
Dynamic Capability- Meta capabilities
Organisational Design
Risk Management
Sustainable NetworksIndustry Sector
Landscape Analysis-Value Chain-Value Chain perspectives
© Copyright Institute for Manufacturing 4
INDUSTRIAL APPLICATIONS – IfM Global Network Tools
SERVICESENGINEERINGSUPPLY CHAINMANUFACTURING
• Initial co-development with US Heavy
Equipment Manufacturer
• Initial co-development with leading FMCG major
• Initial co-development with UK Military Systems
Manufacturer
• Initial co-development with UK Military Systems
ManufacturerEquipment Manufacturer
• 12 major applications 2003-2012
• 12 major applications 2005-2012
• Over 20 ‘shallow-dive’ applications
Manufacturer
• 4 major applications 2006-2012
Manufacturer
• 6 major applications 2006-2012
© Copyright Institute for Manufacturing 5
applications
OutputsIndustry Sector
Business Tools
Industry Sector Characteristics
Country Characteristics
Corporateand/or SBUStrategy
InternationalStrategy
Formulation
NetworkAnalysis & Design
NetworkOperation
Learning ‐ Capability
Learning Context
Re‐configuration‐
Products and Services
Ideasand Opportunities
Network Design Projects
Executive Education
Learning – Context and Services
Executive Education
Publications
+ Practical process‐support guides
+ Annual Symposium
+ Events
GLOBAL SUPPLY NETWORKS
Analysis and Process Overview
© Copyright Institute for Manufacturing 7
1. Background to IfM approach
2. The Configuration Mapping tools
3. The Capability Assessment tools
4. Examples of Applicationsp pp
5. Typical project plan
© Copyright Institute for Manufacturing 8
OVERVIEW OF IfM GLOBAL NETWORK TOOLS
STRATEGIC CONTEXT
ANALYSIS –CURRENT NETWORK
DESIGN – FUTURE NETWORK
STRATEGY INTO ACTION
• Business & technology drivers
St t i
• Configuration mapping
C bilit
• Design principles
• Future fi ti ( )
• Executable projects
I l t ti• Strategic imperatives
• Capability assessment
configuration(s)
• Future capabilities
• Implementation competences
PRODUCTION
ENGINEERING
SUPPLY CHAINTools
tailored to fit 4 areas of focus
SERVICES
© Copyright Institute for Manufacturing 9
Research and Practice – Global Supply Networkspp y
1. Background to IfM approach
2. The Configuration Mapping tools
3. The Capability Assessment tools
4. Examples of Applicationsp pp
5. Typical project plan
© Copyright Institute for Manufacturing 10
IfM TOOLS FOR GLOBAL SUPPLY NETWORKS
Supplier Connectivity
Customer Connectivity
Internal FirmConnectivity
SC NetworkConnectivity
Cycle Time Optimisation/Time
Total
Collective Resource Mgmt Value Creation / Appropriation
Collaborative CapabilityNetwork Selection Options
Network LeadershipNetwork Integration
Network Analysis
SC NetworkStrategic Design Ne
twork TranRisk Mgmt
Supplier Connectivity
Customer Connectivity
Internal FirmConnectivity
SC NetworkConnectivity
Cycle Time Optimisation/Time
Total
Collective Resource Mgmt Value Creation / Appropriation
Collaborative CapabilityNetwork Selection Options
Network LeadershipNetwork Integration
Network Analysis
SC NetworkStrategic Design Ne
twork TranRisk Mgmt
Cluster Summary
Maturity level 1 2 3 4 5
� Supply Network Strategic Design
Accidental / Initial Repeatable Defined Managed Mastered / Optimised
� Supply Network Connectivity
No coherent strategy
Piecemeal coordination
Systematic coordination
Network coordination
Cross Enterprise alignment & collaboration
� Total Network Efficiency Baseline
Functional integration
Internal integration
External integration
Cross Enterprise collaboration
(industry leader)
� SC Processes Development/Application Baseline (Reactive)
Problem solving
Systematic development programme
Network Development
Cross Enterprise collaboration
� Product & Service Functional / Project Portfolio
>500>300
75
25a global %b regional %c local %
Tier 2 Tier 1 supply sites 50
+xxminor
RDC’s
buying Rawsx weeks stock25 intermediate
>500>300
75
25a global %b regional %c local %
Tier 2 Tier 1 supply sites 50
+xxminor
RDC’s
buying Rawsx weeks stock25 intermediatebuying Rawsx weeks stock25 intermediate
Lean Supply/Cost
Network Defect Minimisation
/Quality
Total NetworkEfficiency
Manufacturing core processes
Transport & Logistics core processesSupplier DevelopmentProcesses
SC ProcessesDevelopment/
Application
New BusinessDevelopment
New ProductDevelopment
Product & Service Features
Product & Service
Enhancement
sparency
Lean Supply/Cost
Network Defect Minimisation
/Quality
Total NetworkEfficiency
Manufacturing core processes
Transport & Logistics core processesSupplier DevelopmentProcesses
SC ProcessesDevelopment/
Application
New BusinessDevelopment
New ProductDevelopment
Product & Service Features
Product & Service
Enhancement
sparency
� Product & Service Enhancement Informal
Functional / Formal
Project excellence
Portfolio excellence Collaborative
keyachieved level
current maturity level
business SC target
higher levels of maturity
buying pre-blend
Rawsw/h
RDC FG w/hFill 2ndry packing
Pack Mtls w/h
wx
primaryglobal
Processing 90% supply to stock10% supply to order
Replenishment modelProduct modularity
% Raw Returns
% PKG Returns
x weeks stock
20processblends
intermediate plants
Some common outers
buying pre-blend
Rawsw/h
RDC FG w/hFill 2ndry packing
Pack Mtls w/h
wx
primaryglobal
Processing 90% supply to stock10% supply to order
Replenishment modelProduct modularity
% Raw Returns
% PKG Returns
x weeks stock
20processblends
intermediate plants
Some common outers
buying pre-blend
Rawsw/h
RDC FG w/hFill 2ndry packing
Pack Mtls w/h
wx
primaryglobal
Processing 90% supply to stock10% supply to order
Replenishment modelProduct modularity
% Raw Returns
% PKG Returns
x weeks stock
20processblends
intermediate plants
Some common outers
C fi i i ApplicationBusiness Strategy aligned
ApplicationBusiness Strategy alignedCapability assessmentConfiguration mapping
CONFIGURATION MAPPING CAPABILITY ASSESSMENT• Visualisation tools for analysing the current global supply network
• Consists of four maps1. Supply network structure
• Structured questionnaire and scoring matrix for analysing the maturity of business processes associated with managing the global supply networkpp y
2. Unit operations process map3. Product value structure4. Supply network relationships
• Builds a deep level of understanding and insight di th d i d d f th l b l
network• Assesses where we are today, and where we need to be in the future (aligned with business strategy objectives)
• Helps to identify high priority areas for optimisingregarding the dynamics and needs of the global supply configuration, and helps identify optimisation opportunities
• Created via a mix of data mapping, stakeholder i t i d ti
Helps to identify high priority areas for optimising both business processes and supply chain configuration
• Created via stakeholder interviews and workshop activities
© Copyright Institute for Manufacturing 11
interviews and meetings activities
Ti 3 Ti 2 Ti 1 S l it RDC’
CONFIGURATION MAPPING - 1. Supply Network Structure
N
Tier 3 Tier 2 Tier 1 Supply sites RDC’s
%COGS%
rdc %npsEur n a%NA n b%
Multi-regional
yz
Na global x%b regional x%c local x% M
x % rawx % 1ry packx % 2ry packx% productionx% 3rd Ptyx% Distribution
NA n b%LA n c%Africa n d%Asia n e%
6 Eur2 NA1 LA2 Africa3 AsiaTactical
xx% Others100
n globaln regionaln local 1ry
Tactical
r aw
1r y pack
2r y pack
P r oduct i on
FactoryCo-ordination
Mode:
ln local 1ryn local 2ry 3r d pt y
di st r b
scm
SN COST structure (yr04) as a % SalesSupply Network Shape A / T / V / X
Inventory days of supply n days
Cash to Cash cycle time Tier1-RDC n days
% input materials x % (sourcing cost)
% factory conversion x % (3rd Pty y%)
% distribution x %
Fulfilment lead time Tier2-RDC n days
Cust service F-RDC x% OTIF
Cust-service RDC- retail x% OTIF
% other (e.g. trade) x%
% service fees x%
% SC costs/sales x %
© Copyright Institute for Manufacturing 12
Pipeline (Tier 2 to RDC) x days
x prod origins (n prod items)hi i t
CONFIGURATION MAPPING - 2. Network Dynamics (Operations Process)
Focal firm Production sitex% product salesy% service sales
Product offeringn weeks stock
y shipping portsz business group hubs
n stage 2 plants
RM buying sorting
RM x% supply to stocky% supply to order
Replenishment modelProduct modularity
% Raw Returns
nvariants
Some common comps
RDC FG w/hStage 1 Stage 2
PrimaryGlobal (x% pkg spend)
Mix% PKG Returns
y% returnsx% returns
PMComp 1Comp 2
y
Secondary n weeks stock call-offComp 3
Comp 4Local (z%)
Factory Network efficiency (OE) x%
Asset Intensity (NBV %NPS) x%
Comp 5Regional (y%) Comp 8
Comp 9% FG Returns
Comp 4
Comp 6 y ( )
Asset Utilisation (24/7-365) x %
Prodn Flexibility VolumeMix (range/total wk)
x %x %
Comp 7
© Copyright Institute for Manufacturing 13
Mfg lead time x days (y days shipping)
On Time In Full (OTIF) ; returns x% y % FG returns
CONFIGURATION MAPPING – 3. Product Value Structure
Product Modularity
Shape of Product Structure
None/ single unit/ sub-unit/ factory unit/w/h unit
A, T, V, X
Product mix – SKUs – by SBU Eur NA LA Afr Asia totalProd 1 a b c d e ΣProd 2 a b c d e ΣProd 3 a b c d e ΣProd 4 a b c d e ΣProd 5 a b c d e ΣTotals ΣΣ
Innovation churn New variant/extension a yrs yNew product form b yrs
Product life cycle x months trade, y wk customer; max: z years
Offering Product only, mainly product, mainly serviceRaw MatsPrimary Pkg
Forecast accuracy and planning horizon Aggregate level: ~ a% ; n months outSKU level (wt avg): ~ b% ; m months out
Fulfilment process & lead time – key customers- Key suppliers
Supply to stock; n months rolling orderSupply to stock/forecast: m month rolling/call-off
Primary PkgSecondary PkgManufacturing
- Key suppliers Supply to stock/forecast: m month rolling/call-off
Product value intensity vs. Transport Cost Products Euros/tonne /x te/TEU Tonnes/TEU
% SC Cost /sales x%
© Copyright Institute for Manufacturing 14
CONFIGURATION MAPPING – 4. Supply Network Relationships
Network Governance Contracts Value Sharing (Obligational), Price/Task Based (Arms Length)
Relationship Task/Results Oriented, Shared Objectives/Goodwill Based
Network Role Leader, Equal Partner, Subordinate, Non-participant
Intra firm C di ti C li d Sh d Di dIntra-firm Co-ordination Centralised, Shared, Dispersed
Factory Network Closely Integrated (Few Sites), Linked, IndependentS&OP Process Global, Regional, LocalFactory Network Owner Fully Owned, Partially Owned, Outsourceacto y et o O e u y O ed, a a y O ed, Ou sou ceR&D Co-ordination Centralised, Shared, Dispersed
Inter-firm Key Suppliers Real-time / Co-located, Integrated, Remote
Key Customers Real-time/Co-located, Integrated, RemoteGeog. Dispersed Yes , Partial , NoIntegrated Network Yes , Partial , NoSatisfaction MeasuresSatisfaction Measures
Customers Yes , Partial , No
Suppliers Yes , Partial , No
© Copyright Institute for Manufacturing 15
AGENDA
1. Background to IfM approach
2. The Configuration Mapping tools
3. The Capability Assessment tools
4. Examples of Applicationsp pp
5. Typical project plan
© Copyright Institute for Manufacturing 16
CAPABILITY ASSESSMENT
Supplier Connectivity Customer
Connectivity
Internal FirmConnectivity
SC NetworkConnectivity
Collaborative CapabilityNetwork Selection Options
Network LeadershipNetwork Integration
Network Analysis SC NetworkStrategic
DesignNetwork Transparency
Supplier Connectivity Customer
Connectivity
Internal FirmConnectivity
SC NetworkConnectivity
Collaborative CapabilityNetwork Selection Options
Network LeadershipNetwork Integration
Network Analysis SC NetworkStrategic
DesignNetwork Transparency
Cluster Summary
Maturity level 1 2 3 4 5
� Supply Network Strategic Design Accidental / Initial Repeatable Defined Managed Mastered /
Optimised
Cycle Time Optimisation/Time
Lean Supply/Cost
Total NetworkEfficiency
N P d t
Product & Service Features
Collective Resource Mgmt
Value Creation / Appropriationp y
Risk Mgmt Cycle Time Optimisation/Time
Lean Supply/Cost
Total NetworkEfficiency
N P d t
Product & Service Features
Collective Resource Mgmt
Value Creation / Appropriationp y
Risk Mgmt � Supply Network Connectivity
No coherent strategy
Piecemeal coordination
Systematic coordination
Network coordination
Cross Enterprise alignment & collaboration
� Total Network Efficiency Baseline Functional
integrationInternal
integrationExternal
integration
Cross Enterprise collaboration
(industry leader)
S t tiNetwork Defect
Minimisation /Quality
Manufacturing core processes
Transport & Logistics core processesSupplier DevelopmentProcesses
New BusinessDevelopment
New ProductDevelopment
Product & Service
Enhancement
Network Defect Minimisation
/QualityManufacturing core processes
Transport & Logistics core processesSupplier DevelopmentProcesses
New BusinessDevelopment
New ProductDevelopment
Product & Service
Enhancement
� SC Processes Development/Application Baseline (Reactive)
Problem solving
Systematic development programme
Network Development
Cross Enterprise collaboration
� Product & Service Enhancement Informal Functional /
FormalProject
excellencePortfolio
excellence Collaborative
key
SC ProcessesDevelopment/
ApplicationBusiness Strategy aligned
SC ProcessesDevelopment/
ApplicationBusiness Strategy aligned
yachieved level
current maturity level
business SC target
higher levels of maturity
Detailed Analysis High Level SummaryDetailed Analysis High Level Summary
• Detailed questionnaire and calibrated scoring matrix• Covers five key categories of supply chain practice• Each category consists of a number of defined business processes
© Copyright Institute for Manufacturing 17
SN Capability Cl t
Processes from Maturity Model t f id ti
SN Configuration
BRINGING CONFIGURATION & CAPABILITY TOGETHER
Cluster assessment for consideration Facilitating factors
Supply Network Review overall alignment with business modelSN Pipeline studies incl. inventory tracking & protocolsImplement S&OP – from local to regional/global level
Supplier base simplification / clustering ;Gl./Reg./Tactical->Rationalize XXXX origins, blend sites, factories regionallyCommon SKU database for top 15
Strategic Design Top 15 SKU transfer pricingNetwork Leader – Collaboration with key partnersTotal supply network value analysis & appropriation
Common SKU database for top 15Change role to SC Network leaderShared objectives and value sharing with Network Partners
Frequent interaction with manageable supplier base creating value based collaboration Build direct relationships with Customers & Suppliers
Supply NetworkConnectivity
value based collaborationDrive for CRM Excellence with key customers Full S&OP with collaborative planning where appropriateApply Value Stream Mapping analysisDevelop Kanban philosophy with appropriate make-to-stock
XXXX located at XXX origins/with suppliers?XXXX closer to customers – CRM focus?
Rationalize/ consolidate partnersExtend KPIs to Network level (Suppliers & Customers)
Total Network Efficiency
Move more to a purchase & make to cust. order processExtend factory kanban to a lean SC enterpriseQuality improvement; move to network wide standards and specification and network defect focus e.g. fines
Extend S-Flexibility through modularity/ rationalize SKUsPull based SCN from factory; review push/pull pointDevelop Network KPIs to a rationalized SNEnsure early adoption of Best Pr. from lead factories
R ti li f t it
SC Processes Development & Application
Develop TPM from level 1 to level 2/3 across Lead sites Invest in S&OP and utilise APS modelling
from subjective planning to pull based replenishmentProduction Plans to be shared with key partners Invest in hard core logistics capabilities to improve both
Rationalize factory sites;Maintain cost performance comparisons & margin focusFactory classification; strategic priorities, and manage accordingly including skill base evolutionAPS in target sites; fewer more sophisticated RDCs??
Application Invest in hard core logistics capabilities to improve both responsiveness and flexibility Manage RDCs holistically (from customer orders to
replenishment)
Product & Service
Incremental innovator – move to an innovation leaderMove from a Sales focus to a Customer Service focusNPD: Functional Excellence -> X-functional Excellence
Increase R&D & SC influence in business/product teams-Not sufficiently multi-functional-Strengthen supply network linkages esp Pkg Suppliers
© Copyright Institute for Manufacturing 18
Service Enhancement
NPD: Functional Excellence X functional Excellencewith a Project Management focus
NBD: ad-hoc studies -> multi-functional project teams
Strengthen supply network linkages esp Pkg Suppliers Strengthen Network awareness – intra/inter-firmProject teams should include key network partners
© J.Srai, IfM
AGENDA
1. Background to IfM approach
2. The Configuration Mapping tools
3. The Capability Assessment tools
4. Examples of Applicationsp pp
5. Typical project plan
© Copyright Institute for Manufacturing 19
EXAMPLES OF APPLICATIONS• More than 20 applications to-date (at varying levels of depth)
• Growing data source for peer to peer comparison• Growing data source for peer-to-peer comparison
Case Configuration Descriptor Performance Discriminator
Medical Devices Centralised Global SN serving mass-customisation reqmts responsiveness/NPDPersonal Care* Global scale focused factory production network – OEM new product intro’nJ h El t i t k ‘ l t ’ ti ff ti d i l k b i & JITJohnson Electric network ‘cluster’ operating effective and simple kanban responsiveness & JIT Meters Bonwe Network integrator managing multiple-tiers -fabless model supplier connectivity IKEA Vertically integrated - right through to domestic Retail network integrationTCL Global scale manufacturing with multi-domestic footprint supply cluster /scaleGP Electronics Local OEM and contract manufacturer none /balanced China Detergents* Supply network cluster supporting regional production s-network cluster Poly Group Multi-domestic mfr and supply of packaging to fmcg MNCs customer serviceH-Magnetics Global scale manufacturer on a single integrated site network integrationBeverages Global* Multi-Regional network supplying international markets manufacturing focusFoods/Consumables Sub-Regional Production network supplying local markets responsivenessFoods/Consumables Sub Regional Production network supplying local markets responsivenessRegional Pharma* Regional scale multi-tier supply network + 3rd Party Mfr none/balanced New Products Pharma A few mega-scale multi-tier sites supporting and R&D new product intro PepsiCo International Mixed sourcing model with outsourcing in mature markets 3rd party management Younger Group Vertically integrated multi-tier (harvest to market) model process integrationYi W T d Cit R i l l ti l b l l i t ti l t il t k h b t tYi Wu Trade City Regional supply supporting global scale international retail network hub structure ZTE Network cluster (shared risk) supporting agile telecoms mfr. risk pooling Midea Contract Manufacturer Services in local network cluster supplier integration Aerospace & Defence* Conglomerate migrating from Equipment Mfr to Services product design
© Copyright Institute for Manufacturing 20
STRATEGIC THRUSTSST1 Build Global SC Leadership Team
Establish Global management structure with XXX Programmes 1– Establish Global management structure with XXX Programmes 1– Co-ordinating location 2– Improvement projects programme management 1
ST2 Build External Strategic Partnerships– Identify & build links with our strategic partners 1
I l ti hi ith t (‘ C ’) 1– Improve relationships with our customers (‘one-Company’) 1– Simplify the Raws Supplier base 1– Cluster Raw origins 1– Extend KPIs to Network level 1– Apply selected Value Stream Mapping Tools – post tools review 2
ST3 Implement Advanced Planning Systems for Regional & Global SupplyST3 Implement Advanced Planning Systems for Regional & Global Supply– Visibility of stocks in RDCs 1– SC Pipeline studies to improve stocks transparency 1– Implement effective regional/global S&OP processes with APS Modelling 1– Change responsibility of logistics shipment of raw material 1– Hard-core logistics – Warehouse & Transport 1– Share production plans with key suppliers 2– Share production plans with key suppliers 2
ST4 Integrate Bus. Strategy/Ops, SC and R&D teams for improved Innovation– Shared business objectives 1
(Business model integrated with SC Strategy/Operations and with R&D Technology Strategy/Operations)– Dialogue with regional/global customers e.g. 1
C f ti l t i l di t l t 1– Cross-functional teams including external partners e. .. 1
ST5 Improve SC Processes– Transfer prices for top 15 SKUs 1– Review upstream SC on Make-to-Order model, and downstream SC on a Make-to-Stock model 2
Opportunities for product modularity, Establish ‘de-coupling’ points, process flexibility, move to more pull/customer order process)– TPM roll-out 1– TPM roll-out 1 – Move to network wide standards (internal SC) – re-visit existing standards and re-confirm 2– Best Practice adoption/roll-out (Incl. QA) - web-site 1– KPIs/Draft out Supply Network KPIs 1
ST6 Streamline Internal Supply Network– Consider pre-blend options 1
© Copyright Institute for Manufacturing 21
– Consider pre-blend options 1– Rationalising SKUs 2– Fewer Blending sites(not necessarily at each packing site) 1 – Packing factories rationalisation 1
AGENDA
1. Background to IfM approach
2. The Configuration Mapping tools
3. The Capability Assessment tools
4. Examples of Applicationsp pp
5. Typical project plan
© Copyright Institute for Manufacturing 22
TYPICAL PROJECT PLAN
Approximate time in months
1 2 3 4
1. SCOPING, DATA MAPPING, INTERVIEWS, MEETINGS 2. STAKEHOLDER WORKSHOP
3. VALIDATION OF WORKSHOP OUTPUTS
4. STAKEHOLDER PLAYBACK
BUSINESS STRATEGYImperatives
CONFIGURATION MAPPING
TARGET CONFIGURATION &
CAPABILITY
STRATEGIC THRUSTS
STRATEGY PROPOSITION
CAPABILITYASSESSMENT
© Copyright Institute for Manufacturing 23
CIM Product Portfolio
RADAR PIPELINE TOOLS MATURE TOOLSETS
Manufacturing Footprint Strategy
OrganisaEngineering Networks
Internationalisation
Dynamic Capability
Impact of M&As
GSN Configuration& Capability
ational DesRisk Management
Engineering Networks
Service Networks
Dynamic Capability- Meta capabilities
sign
Risk Management
Sustainable NetworksIndustry Sector
Landscape Analysis-Value Chain-Value Chain perspectives
© Copyright Institute for Manufacturing 24
Approach to Industrial Landscape Mapping
• Sector Institutional Players– research, industry development, specialist firms
• Supply Chain Process Map – Production Processes and unit Operations
• Supply chain actors– Organisational types, linkages between organisations, – Material, information and value flows
• Substrates, Process Technology, Products– Substrate map
• Mapped across the ‘manufacturing value chain’; – and the four end‐user product categories
By productManufacturing
© Institute for Manufacturing, J.S. Srai 2010© Institute for Manufacturing, J.S. Srai 2010
categoryValue Chain
Industrial Biotechnology (UK) Supply Chain Map: Production Process Stages and Unit OperationsProduction Process Stages and Unit Operations
Seed manufacturer Collection Distribution Distribution
Feedstock substrate Grow Physical Chemical End use
Unit Operations
•Solid bio‐fuel (eg wood, elephant‐grass)•Liquid biofuels
•Aero
Equipment manufacturers Bio‐Fuels
•Existing multi‐use (eg Palm)•Existing single‐use (eg Lavender)•Novel multi‐use (eg Algae)•Novel single‐use (eg Jetropha)
Farming •Intensive (eg large plantations)•Non‐intensive (eg small farms)
•Extraction•Crushing•Filtration•Water degumming•Solvent extraction
•Feedstock development (traditional)•Feedstock devel’t (GMO)
Aero•Auto•Power
•Food traditional•Processed food•Natural flavours
Food &Drink
small farms)• Underglass
Solvent extraction devel t (GMO)•Extraction•Bio‐refining•bio‐catalysis•Fermentation
•Fragrance/perfumes•Skin enhancement•Cleansing•Non‐bulk chemicals
Fine Chemicals
Personal‐Care
© Institute for Manufacturing, J.S. Srai 2010© Institute for Manufacturing, J.S. Srai 2010
* Extraction may involve multiple separation processes e.g. purification, distillation, etc
Industrial Biotechnology (UK) Supply Chain Map: Industrial actor sub-groupsIndustrial actor sub groups
Diagnostic FirmsSector
Bio‐Fuels
Equipment Mfr’s ServicesSector Specialists
Grow Physical Chemical End use
Seed manufacturer Collection Distribution
Feedstock substrate
Bio FuelsFood & DrinkPersonal‐CareFine ChemicalsOther
Distribution
Agro‐industry Bio‐ChemicalIndustry
Industrial users
Feedstock Suppliers
ConsumersFeedstock Developers Plant & Equipment Industry usersSuppliersDevelopers q p
Technology Supply ChainA gy
Developers
Global
Actors
© Institute for Manufacturing, J.S. Srai 2010© Institute for Manufacturing, J.S. Srai 2010
Global Firms
5 IB University IB Leadership Forum( EPSRC) (BBRC) SemtaCogentRDAs TSB
InstitutionalPlayers
Research Govt. & PolicyUniversities Agencies Skills Councils Diagnostic Firms BiotraceBiozymeC l i
Industrial Biotechnology ‐ UK
yDepartments
p( ) ( )Research Councils
Micro & Nano Tech Centres (MNTs)
g
Charis Technology LtdDavy process TechnologyEKB Technology LtdNITECH
National IB (N‐East)Demonstrators
Demonstrator FacilitiesEquipment Mfr’sSector
Specialists
CelsisCommercial MicrobiologyCrown Bio SystemsKnight ScientificLumoraLux BiotechnologyNewTec
Services
BioInnovelCara TechnologyCharis Technology NCIMB
VCs
CeBio3
PBLTate & Lyle Ventures
Grow Physical Chemical End use
Seed manufacturer Collection Distribution
Feedstock substrate
NITECH NewTecOria Protein TechnOxford Bio SensorsRandox
Bio‐Fuels
Distribution
Core IB Products
SUBSTRATESStarch, CelluloseOils, Proteins, Algae
BIOPROCESSINGFermentationBio‐catalysis, Bio‐refiningMicro‐organisms, GMO
INTERMEDIATESAlcohols, Acids, VitaminsSugars
Food & DrinkPersonal‐CareFine ChemicalsOther
GROWIntensive Farming ‐ plantationsNon‐Intensive ‐ small farms Underglass
AesicaAlmac GrpAZAtlantic Res ChemBoots
Agro‐industry Bio‐ChemicalIndustry
Industrial users
Feedstock Suppliers
ConsumersFeedstock Developers
Biotal LtdCambridge PolymersD1 Oils plc
UK, Overseas
BotanixAbengoa BioenergyA t E (UK) Ltd
Plant & Equipment
•Solid bio‐fuel (e.g. wood, grass)•Liquid biofuels
Technology Developers
h d BIOZYMEBritish SugarCadburyCampden BRICiba Specialty ChemCrodaCSS AlbachemDairy CrestDaniscoDupontEnsusF
Core IBFirms
D1 Oils plc FrontierIBERSIndustrial copolymersInnovia FilmsNovactaPhytatec (UK) LtdProvexis Ltd
BP/British Sugar/DupontBritish SugarCroda InternationalD1 Oils plc (biofuels)Ensus GroupHygieia HealthcareIndustrial copolymers
Argent Energy (UK) LtdBP/British Sugar/DupontBritish SugarCroda InternationalEnsus GroupExcelsyn LtdFervent LtdHygieia Healthcare limited
Global
•Aero•Auto•Power
•Food traditional•Processed food•Natural flavours
Aquapharm BiodiversityBiocaldolBeocartaBiocatalystsBiofilmBiotica TechnologyC‐Tech InnovationE i Frutarom
GSKGreen BiologicalsInnoviajnjKerry GroupKimberly ClarkMuller DairyNPIL Pharma UKNovactaNovozymeNovartis
Provexis LtdSyngenta
p yInnovia FilmsISP AlginatesNeem BiotechNew Holland ExtractionPhytatec (UK) LtdProvexis LtdRoquette UK
Hygieia Healthcare limitedIggesund PaperboardInnovia FilmsISP AlginatesNeem BiotechNew Holland ExtractionPhytatec (UK) LtdProvexis Ltd
•Fragrance/perfumes•Skin enhancement•Cleansing
•Fine/pure chemicals•Speciality chemicals
EnzomicsEquatechExcelsynGlycoMarGreen BiologicsHypha Discovery IngenzaI t i Ad d Bi t
BASF Catalysis BayerBP Biofuels Cargill Codexis Dow ChemicalsDSM Dupont
© Institute for Manufacturing, J.S. Srai 2010© Institute for Manufacturing, J.S. Srai 2010
NovartisOxford Chemicals PatheonRhom & HassSea salter (walney) LtdSyngentaTate & LyleUnileverWyeth
qTexon Non Woven ltdVireol (biofuels)
Provexis LtdRoquette UKTexon Non Woven ltdVireol (biofuels)
•Bulk Chemicals•Biopolymers
Integrin Advanced Biosyst.Novacta BiosystemsOxyraneTMO Biotec /RenewablesXstalbio Ltd
DSM Dupont Evonik Degussa GenecorGenzyme Invista Lonza Novozyme Shell Syngenta
Industrial Landscape Sector AnalysisInstitutional Research Govt. & PolicyUniversities Agencies Skills Councils Diagnostic Firms Biotrace
Industrial Biotechnology ‐ UKValue Chain Map example for domestic retrofit market
Built Environment
Grow Physical Chemical End use
Seed manufacturer Collection Distribution
Feedstock substrate
5 IB University Departments
IB Leadership Forum( EPSRC) (BBRC)Research Councils
Micro & Nano Tech Centres (MNTs)
SemtaCogent
Charis Technology LtdDavy process TechnologyEKB Technology LtdNITECH
National IB (N‐East)Demonstrators
RDAs TSBPlayers
y
Demonstrator FacilitiesEquipment Mfr’sSector
Specialists
Core IB SUBSTRATES
BiotraceBiozymeCelsisCommercial MicrobiologyCrown Bio SystemsKnight ScientificLumoraLux BiotechnologyNewTecOria Protein TechnOxford Bio SensorsRandox
Services
BioInnovelCara TechnologyCharis Technology NCIMB
INTERMEDIATES
Bio‐FuelsFood & DrinkPersonal‐Care
VCs
CeBio3
PBLTate & Lyle Ventures
Distribution
GROW
Value Chain Map example for domestic retrofit market
Domestic
Statutory RequirementsRegulations
( BRE) (BSRIA)
ResearchCouncils
IMechEICERICS
ConstructionSkillsSEMTA
CIBSEIETRIBA
EA
Research
Govt. & Policy
Institutes
Equipment Mfr’s
Agencies Skills Councils
Developers
Designers
LDA, SEEDA, NWDA
AesicaAlmac GrpAZAtlantic Res ChemBootsBIOZYMEBritish SugarCadburyCampden BRICiba Specialty ChemCrodaCSS AlbachemDairy CrestDaniscoDupont
Core IB Products
Core IBFirms
Agro‐industry Bio‐ChemicalIndustry
Industrial users
Feedstock Suppliers
ConsumersFeedstock Developers
Biotal LtdCambridge PolymersD1 Oils plc FrontierIBERSIndustrial copolymersInnovia FilmsNovactaPhytatec (UK) Ltd
UK, Overseas
BotanixBP/British Sugar/DupontBritish SugarCroda InternationalD1 Oils plc (biofuels)Ensus GroupHygieia Healthcare
AbengoaBioenergyArgent Energy (UK) LtdBP/British Sugar/DupontBritish SugarCroda InternationalEnsusGroupExcelsyn LtdFervent LtdGlobal
SUBSTRATESStarch, CelluloseOils, Proteins, Algae
Plant & Equipment
BIOPROCESSINGFermentationBio‐catalysis, Bio‐refiningMicro‐organisms, GMO
INTERMEDIATESAlcohols, Acids, VitaminsSugars
Personal CareFine ChemicalsOther
•Solid bio‐fuel (e.g. wood, grass)•Liquid biofuels
•Aero•Auto•Power
•Food traditional•Processed foodN l fl
Technology Developers
Aquapharm BiodiversityBiocaldolBeocartaBiocatalystsBiofilmBiotica TechnologyC T h I ti
GROWIntensive Farming ‐plantationsNon‐Intensive ‐ small farms Underglass
Domestic Buildings Commercial BuildingsPublic Buildings
Research Councils
Investors
Building Value Chain
Research &
DevelopmentDesign & Finance Construction Occupation Maintenance End of
life
Component and Parts
Owner / O i
Material Distributors and
Building Material
Prime Contractors
Trade C t t
Material Production
Construction End use
Design & Specification
Occupation & Reconfiguration
Prelim/Concept Design
Material Procurement
pEnsusFrutaromGSKGreen BiologicalsInnoviajnjKerry GroupKimberly ClarkMuller DairyNPIL PharmaUKNovactaNovozymeNovartisOxford Chemicals PatheonRhom & HassSea salter (walney) LtdSyngentaTate & LyleUnileverWyeth
Phytatec (UK) LtdProvexis LtdSyngenta
ygIndustrial copolymersInnovia FilmsISP AlginatesNeem BiotechNew Holland ExtractionPhytatec (UK) LtdProvexis LtdRoquetteUKTexon Non Woven ltdVireol (biofuels)
Fervent LtdHygieia Healthcare limitedIggesund PaperboardInnovia FilmsISP AlginatesNeem BiotechNew Holland ExtractionPhytatec (UK) LtdProvexis LtdRoquetteUKTexon Non Woven ltdVireol (biofuels)
Global •Natural flavours
•Fragrance/perfumes•Skin enhancement•Cleansing
•Fine/pure chemicals•Speciality chemicals
•Bulk Chemicals•Biopolymers
C‐Tech InnovationEnzomicsEquatechExcelsynGlycoMarGreen BiologicsHyphaDiscovery IngenzaIntegrin Advanced Biosyst.Novacta BiosystemsOxyraneTMO Biotec /RenewablesXstalbio Ltd
BASF Catalysis BayerBP Biofuels Cargill Codexis Dow ChemicalsDSM Dupont Evonik Degussa GenecorGenzyme Invista Lonza Novozyme Shell Syngenta
© CIM, Institute for Manufacturing
Parts Manufacturers
OccupierDistributors and Suppliers
MaterialProducers
Contractors
Technology Developers
Supply ChainActors Plant and
Equipment Manufacturers
Contractors
© CIM, Institute for Manufacturing
CIM Product Portfolio
RADAR PIPELINE TOOLS MATURE TOOLSETS
Manufacturing Footprint Strategy
OrganisaEngineering Networks
Internationalisation
Dynamic Capability
Impact of M&As
GSN Configuration& Capability
ational DesRisk Management
Engineering Networks
Service Networks
Dynamic Capability- Meta capabilities
sign
Risk Management
Sustainable NetworksIndustry Sector
Landscape Analysis-Value Chain-Value Chain perspectives
© Institute for Manufacturing, J.S. Srai 2010© Institute for Manufacturing, J.S. Srai 2010
Case studiesCASES
• 3 perspectives INDUSTRIES– Production perspective
• 16 mergers by 11companies
– Supply chain perspective
• Aerospace components• Automotive brand owner• Automotive parts • Bricks
• 4 mergers by 4 companies
– Product and brand perspective• 13 mergers by 9 companies
• Computers• Confectionary• Drinks• Electronics
• Emphasis on horizontal international M&A
Electronics• FMCG• Foods• Household appliances• Ink jet printingInk jet printing• Pharmaceuticals• Polymer films• Power generation• PumpsPumps• Security packaging • Semiconductor eqpt • Shelving and racking • Waste disposal
© Copyright Institute for Manufacturing 31
• Waste disposal
(Source: UNCTAD, 2000, p.102)
Understanding the Overall M&A process – Operational perspectives
Selection Assessment Execution
OwnershipAgreement Exclusivity
Strategy formulation Negotiation
Initial O i
Develop Operations
Compare plan with Objectives & Operations strategy
Value Delivery IdentifyValue Operations
Assessment -
Short, focused
investigation
Strategy
• Value delivery plan• Risk assessment• Cost / benefit model
F l D diliTarget reviewand Screening
Focusedreview
PlanCreation
Implement’nPlan & Team
100 Day Plan
Year 1 Value delivery plan StrategicObjectives
Value Creation Drivers
investigation & validation
• Formal Due diligence and Screening
Compare outcomes toobjectives & drivers
Financialbackers
Commercial
Embedding business as usual
objectives & drivers
Shareholders
Market
Financial
Negotiated adjustments
Calibrate management
Compare delivery plan vs. objectives
Technical
LegalCross-functional data exchange
© Copyright Institute for Manufacturing 32
Environment
Four key operational stages observedy p g
Three high-level business processesThree high level business processes• Selection• Assessment Selection Assessment Execution
OwnershipAgreement Exclusivity
Strategy formulation Negotiation
Compare plan with Objectives & Operations strategy
• Execution
Four principal operational stages;
Initial Operations
Assessment -
Short, focused
investigation & validation
Develop Operations Strategy
• Value delivery plan• Risk assessment• Cost / benefit model• Formal Due diligence
Target reviewand Screening
Focusedreview
PlanCreation
Implement’nPlan & Team
Compare plan with Objectives & Operations strategy
Value Delivery 100 Day Plan
Year 1 Value delivery plan
Embedding business as usual
StrategicObjectives
IdentifyValue
Creation Drivers
Four principal operational stages;• Identify value creation drivers• Initial operations assessment
Compare delivery plan vs. objectives
Compare outcomes toobjectives & drivers
Financialbackers
Shareholders
Commercial
Legal
Market
Financial
Cross functional
Negotiated adjustments
Calibrate management
• Develop operations strategy• Value delivery
p y p j
TechnicalCross-functional data exchange
Environment
© Copyright Institute for Manufacturing 33
CIM Product Portfolio
RADAR PIPELINE TOOLS MATURE TOOLSETS
Manufacturing Footprint Strategy
OrganisaEngineering Networks
Internationalisation
Dynamic Capability
Impact of M&As
GSN Configuration& Capability
ational DesRisk Management
Engineering Networks
Service Networks
Dynamic Capability- Meta capabilities
sign
Risk Management
Sustainable NetworksIndustry Sector
Landscape Analysis-Value Chain-Value Chain perspectives
© Copyright Institute for Manufacturing 34
The world is changingThe world is changing …• Original Equipment Manufacturers• … are going back to their core business to serve globally competing markets (Farm Out)… are going back to their core business to serve globally competing markets (Farm Out)• … grow the outsourcing volume and level of complexity• … increase their cost price pressure
Technology develops fast
Implications for the futureEnvironment is unpredictable
Technology develops fast… many disruptive
technologies
… energy sources and … supply chains are more complex
… competition now is between global value chainsinstead of individual companies
uncertainty is bigger than ever
unpredictableBlack Swans occur
… political instability and economic crises
gyconsumption change
… product life cycle management is
increasingly important
Suppliers & Subcontractors
… uncertainty is bigger than ever… customers are very well informed, demanding en
lack loyalty
some raw materials Suppliers & Subcontractors… see product, process & coordination requirements increase
… are involved in product development, specialization is essential
… some raw materialsare getting scarce
35… take their share of the risk in new business models
CIM, Survey 2011CIM, Survey 2011
Importance of supply chain risks
A Typical Supply Chain Network – Narrow View of Risk Exposure
P j t M t & St ffi
Quality Assurance
Business Model Development, Financing & Funding
1. Research & D l t 3. Procurement 4. Production 5. Distribution
6. Sales/Mkt & S i
2. Design & E i i
Process Development
Project Management & Staffing
Development 3. Procurement 5. Distribution Service
1st Tier
Engineering
Sourcing & Life Cycle Management
Supply Chain Management
2nd Tier
3rd Tier
37
Tools for Practitioners
Industrial Investment Risk Management
Supply Chain Net ork RiskRisk Management
• Based on PhD researchD l d th h
Network Risk Management
• Developed through Industrial Partner
• Based on previous RM tool• Key factors derived from
Industrial SurveyIndustrial Survey• Currently in testing phase
CIM Product Portfolio
RADAR PIPELINE TOOLS MATURE TOOLSETS
Manufacturing Footprint Strategy
OrganisaEngineering Networks
Internationalisation
Dynamic Capability
Impact of M&As
GSN Configuration& Capability
ational DesRisk Management
Engineering Networks
Service Networks
Dynamic Capability- Meta capabilities
sign
Risk Management
Sustainable NetworksIndustry Sector
Landscape Analysis-Value Chain-Value Chain perspectives
InitiationDynamic Capabilities
Initiationy p
The new environmentThe new environment
•The new environment described as rapidly changing and highly dynamic (Teece et al 1997)The new environment described as rapidly changing and highly dynamic (Teece et al., 1997),hypercompetitive (D’Aveni, 1994) and high velocity (Eisenhardt and Martin, 2000)
•The average period for which firms are able to sustain competitive advantage in such anenvironment has decreased over time
•Decline in average of firms life expectancy60
40
1930 1950 1970 1980 1990 2010
20
0
Dynamic CapabilitiesAuthor(s)/Year Nature Role Context Creation Outcome Heterogeneity
Teece, Pisano and Shuen 1997
Ability/Capacity
To integrate (or coordinate), build, and reconfigure internal and external
Rapidly changing environmentsorganisational processes that are
shaped by firms’ asset positions and Sustained competitive advantage Heterogeneous across the firms
y p
Shuen, 1997 Capacity internal and external competencies
the evolutionary pathacross the firms
Eisenhardt and Martin, 2000
Firms processesTo integrate, reconfigure, gain and release resources
High‐velocity moderately dynamic markets
Repeated practice and consequent experience,
DCs are necessary but not sufficient conditions for competitive advantage
commonalities across firms
T t d dif i
Ability/Capacity
To integrate, BuildZollo and Winter,
2002A learned and stable pattern
of collective activity
To generate and modifying organisation operating
routines
More value in rapidly changing environments,
The role of learning mechanisms in creation DCs
A direct link between DCs and superior performance
Heterogeneous across the firms
Winter, 2003 Capability (routine)To extend, modify or create
ordinary capabilitiesMore value in rapidly changing
environmentsLearning mechanisms
Costs make DCs not necessarily advantageous
Not mentioned
To integrate, Build and Reconfigure Resources and Capabilities
Zahra, et al., 2006Ability/Capacity
To reconfigure firms’ resources and routines / To
solve problems
Volatile and changing environment is not a necessary
component
Learning from experience, trial and error and improvisation processes
The relationship between DCs and performance is indirect
Not mentioned
W d Ah d Fi ’To integrate,fi d
developed over time through S t i bl titi ifi i t f t it l t
Highly Changing Environments
Wang and Ahmed, 2007
Firm’sbehavioural orientation
reconfigure, renew and recreate its resources
and capabilities
Changing environmentp g
complex interactionsbetween the firm’s resources
Sustainable competitive advantage
specific in terms of tacit elements associated with explicit processes
Teece, 2007Ability/
To sense and shape opportunities and threats, Highly changing and
Process, position and pathSustained competitive advantage (DCs lies at the core of enterprise Essentially firm specific and unique
Process, Position, path
Sustained Teece, 2007Capacity seize opportunities and
maintain competitivenessunpredictable markets
Process, position and path (DCs lies at the core of enterprise success (and failure)
Essentially firm specific and unique
Mulders and Romme, 2009
Capabilities
To convey deliberate knowledge on how to
question effectiveness of the resource base
Changing environments invoked on a repeated basis Firm performance does not automatically increases as a result of developing DCs
Heterogeneous across the firms
Competitive Advantage
resource base
Barreto, 2010 PotentialTo systematically solve
problems
More relevant to changing environments due to the
timely decisions
Formed by firms ‘propensity to sense opportunity and threats and
to make timely decisions
Link between dynamic capabilities and performance
(Competitive advantage)commonalities across firms
Heterogeneous
ConceptulisationConceptulisation
The ability to utilise own and network capabilities to continually identify createSensing
The ability to utilise own and network capabilities to continually identify, create, and anticipate the trends across the focal firm’s network and to disseminateidentified, created and anticipated trends within the network
DesigningThe ability to utilise own and network capabilities to continually deviseplausible responses to the sensed trends through modifying existing, developing new and/or exploring new contexts for existing business, configuration and routinesg
DecisionMaking
The ability to utilise own and network capabilities to continually prioritiseand select shaped opportunities, and allocate resources (investment decisions)
Making to capture opportunities developed
The ability to utilise own and network capabilities to continually implementTransforming
The ability to utilise own and network capabilities to continually implementthe seized opportunities
OperationalisationProcesses and Routines Configuration (Intra‐Inter)
Activities Sequence frequency Resources Arrangement
Sensing
e.g. Structure Relationship Product Architecture
Sensing
Designing
DecisionMaking
Implementing
Process Maturity Model Configuration Mapping
Summary and DiscussionSummary and Discussion
DC Profile
• Industrial Context Maturity
DC Process DC Configuration
• Industrial Context• Business Context• Various aspects of the
business with different level of dynamism
Maturity
• Level of process formality
• Activities
The studies suggested that in addition to process
maturitylevel of dynamism • Activities
• Sequence of activities• Frequency of activities
• configuration plays a critical role in the operationalisation of DCs.DCs.
? % ? %
CIM Product Portfolio
RADAR PIPELINE TOOLS MATURE TOOLSETS
Manufacturing Footprint Strategy
OrganisaEngineering Networks
Internationalisation
Dynamic Capability
Impact of M&As
GSN Configuration& Capability
ational DesRisk Management
Engineering Networks
Service Networks
Dynamic Capability- Meta capabilities
sign
Risk Management
Sustainable NetworksIndustry Sector
Landscape Analysis-Value Chain-Value Chain perspectives
Last Mile Logistics
© CIM, Institute for Manufacturing
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