Revolutions in the supply chain

MidtVind Supplier networkJakob Lau Holst

COO, Danish Wind Industry Association

DENMARK – WIND POWER HUB

MidtVind - a supplier network projectProject period: 2008-2011

The project network “MidtVind” has been supported by European Union's Regional Structural Fund and the two Danish regions, Northern Danish Region and Central Danish Region.

DENMARK – WIND POWER HUB

What are/were the objectives?

• Recruitment of new, highly trained staff • Training of existing staff• To create common R&D for new and existing products• To explore integrated system solutions• Cooperation and partnerships with relevant research and educational

institutions in the field, including the engineering College of Aarhus, Aalborg University and the Technical University of Denmark, including Risø.

• ……and then: Financial crisis

DENMARK – WIND POWER HUB

Past

OEM

Supplier

Future

Utility

OEM

Systems

Components

Sub-suppliers

?

The changing supply chain structure

DENMARK – WIND POWER HUB

DENMARK – WIND POWER HUB

Demands to the supply chain (1/2)

• Price reductions (Cost of Energy)• Fluctuating demand• More competition – from other sectors?• Strong focus on quality and realiability

- Especially focus on failure rates- Suppliers assume more responsibility / risc related to their

system/component

DENMARK – WIND POWER HUB

Demands to the supply chain (2/2)

• Globalisation – OEMs cannot gaurantee preferred supplier status when locating production in new markets

• No longer fized quantities, but fixed shares• Shorter lead times on delivery• Longer credit, 30 days -> 90 days• ”kitting”/ modular supply / systems supply

– not necessarily at increased margins

This increases capital requirements for the supply chain

DENMARK – WIND POWER HUB

Risc sharing vs. profit sharing

OEM

System suppliers, tier 1

Component supplier, tier 2

Risc Contributing Margin

DENMARK – WIND POWER HUB

Supply chain

Value creation

Manufacturing After marketRD&D

DENMARK – WIND POWER HUB

Supply chain

Value creation

Manufacturing After marketRD&D

DENMARK – WIND POWER HUB

Objectives vs. lessons

• Recruitment • Training• R&D• Systems solutions

• Network contributes to awareness and readiness• Builds confidence and closer ties

DENMARK – WIND POWER HUB