dr jagjit singh sraisingh srai - university of cambridge · approach to industrial landscape...

Centre for International Manufacturing

Dr Jagjit Singh SraiDr Jagjit Singh [email protected]

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


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


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


Service Networks

Dynamic Capability- Meta capabilities

Organisational Design

Risk Management

Sustainable NetworksIndustry Sector

Landscape Analysis-Value Chain-Value Chain perspectives


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


• Over 20 ‘shallow-dive’ applications

Manufacturer


Manufacturer



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


1. Background to IfM approach

2. The Configuration Mapping tools

3. The Capability Assessment tools

4. Examples of Applicationsp pp

5. Typical project plan


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


Research and Practice – Global Supply Networkspp y







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




Total

Collective Resource Mgmt Value Creation / Appropriation



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


� 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


/Quality





Application




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


Pack Mtls w/h

wx

primaryglobal



% Raw Returns

% PKG Returns

x weeks stock

20processblends

intermediate plants

Some common outers

buying pre-blend

Rawsw/h


Pack Mtls w/h

wx

primaryglobal



% 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


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 %


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


% 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


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%


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


AGENDA







CAPABILITY ASSESSMENT

Supplier Connectivity Customer

Connectivity





Network Analysis SC NetworkStrategic

DesignNetwork Transparency

Supplier Connectivity Customer

Connectivity





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


Lean Supply/Cost


N P d t


Collective Resource Mgmt

Value Creation / Appropriationp y

Risk Mgmt Cycle Time Optimisation/Time

Lean Supply/Cost


N P d t


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


(industry leader)

S t tiNetwork Defect

Minimisation /Quality





Product & Service

Enhancement


/QualityManufacturing core processes




Product & Service

Enhancement

� SC Processes Development/Application Baseline (Reactive)

Problem solving

Systematic development programme

Network Development


� Product & Service Enhancement Informal Functional /

FormalProject

excellencePortfolio

excellence Collaborative

key


ApplicationBusiness Strategy aligned


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


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


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







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


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


– Consider pre-blend options 1– Rationalising SKUs 2– Fewer Blending sites(not necessarily at each packing site) 1 – Packing factories rationalisation 1

AGENDA







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





OrganisaEngineering Networks


Dynamic Capability

Impact of M&As


ational DesRisk Management


Service Networks


sign

Risk Management




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


* 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


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



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


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


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



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


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


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


Supply ChainActors Plant and

Equipment Manufacturers

Contractors







Dynamic Capability

Impact of M&As




Service Networks


sign

Risk Management




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


• 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


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


• 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


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







Dynamic Capability

Impact of M&As




Service Networks


sign

Risk Management




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






Dynamic Capability

Impact of M&As




Service Networks


sign

Risk Management



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.

? % ? %






Dynamic Capability

Impact of M&As




Service Networks


sign

Risk Management



Last Mile Logistics


dr jagjit singh sraisingh srai - university of cambridge · approach to industrial landscape...

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