By David Walters, given during the 2nd TCI Australasian Cluster Conference, Sydney, 16-17 April 2015.

1. Advanced Manufacturing - Opportunities and Risks
David Walters
17 April 2015

2. Advanced Manufacturing - Opportunities and Risks for Specialist Organisations
David Walters
Jeffrey Newton
Value Chain Network

3. Identify the Value-Create the Value-Produce the Value- Communicate the Value- Distribute the Value- Service the Value
Customer RD&D Components Message and Media Transactions Channels Service Support
Expectations Assembly Coordinated Interactions Physical/Digital Channels “Service Networks”
“Applications” Re-Use/Recycle
Deliver the
Value
Deliver the
Value
Global Value Chain
Networks can decrease
time and cost and increase
performance , by working
with MMM/SMMM/S-SMEs
while Adding Value for
End-User Customers
2
Added Value (Improved Performance, Cost and Time Management)
Greater Added Value (Improved Performance, Cost and Time Management)
Business Model Transformation
MMM/S-SMEs
Customer Value
Expectations
Customer Value
Expectations
A Networked Approach to Stakeholder Management
Produce
The Value
Opportunities for Australian
Knowledge-Led MMM/S-MMM/S-
SMEs

4. Innovation in Advanced Manufacturing Technology ….
…. Automated factories, Machine-to-Machine Internet 3D
printing and the ‘Connected’ Home.

5. Barkai and Manenti (2011) argued that current market trends, together with
the digitisation of manufacturing, require the future production environment
to be highly adaptable and reconfigurable to respond to rapid changes in
market demand, technology innovation and changing regulations.
“Factories of the future will be a global network of production facilities
managed as single virtual factory. This type of manufacturing network
consolidates multiple resources and capabilities to form an end-to-end
fulfillment network that we call fulfillment execution system (FES).”

6. Satellite
Production
Facility 1
Components and
Service Parts
International
Component
Suppliers (Delphi)
Satellite
Production
Facility 3
Satellite
Production
Facility 2
Local
“Commodity’
Suppliers
Local
Transactions
Local
“Commodity’
Suppliers
Product-Service
Specification
Process
Specification
Platform
Components
Component Suppliers
•Parts specifications
•Volumes
Purchase
Orders
Fulfillment Execution System (FES)
Centralised Production Management
•Research Design & Development
•Product-Service Design
•Process Design/Specifications
•Procurement •Platform Production
Decentralised Production Management
•Manufacturing
•Local Transactions
•Performance Monitoring & Reporting
Performance
Reporting
Global Operators are developing Regional Manufacturing Hubs … Some will have
Centralised Production Management
Product/ Materials Flows
Information/Cash Flows

7. GE Pioneering Advanced Manufacturing Technology
In February 2015 General Electric invested over $200 million in a new
“flexible factory” that will produce diverse products, from jet engine parts
to locomotive components, for four different GE businesses all ‘under one
roof’ for the first time.
The ‘Brilliant Factory’ is one of GE's most advanced facilities bringing
together automation, the Industrial Internet and 3D printing. It is built on
the concept of flexibility, allowing for the manufacturing of a diverse set of
products and catering to GE’s broad range of businesses, including aviation,
oil & gas and rail. It will also serve both domestic and export markets,
working on the principle of a ‘Shared Centre of Excellence’ on process,
capability and human capital aimed at driving economies of scale.
The idea to build the first iteration of such a plant in India made sense to
GE, because the company wanted to harmonise its operations there, gain
size and scale quickly, and support its suppliers.

8. Industrie 4.0 (Siemens)
The Australian Financial Review visited the German company’s flagship Industrie
4.0 facility in Arnberg, and was told that now was a “watershed moment” for
manufacturers.
The reason staying up-to-date with Industrie 4.0 was the need for Australian
companies to play a role in the supply chains (global value chains) of
multinational companies, who have applied connectivity to processes to all
stages of their products’ lifecycles and expect the same from their suppliers.
According to Siemens’ head of factory automation, Ralf-Michael Franke, this
could cost as much as 2 – 3 per cent of revenue. Siemens is one of the leading
companies among those in Germany’s Industrie 4.0, which its government
initiated in 2011. An Australian journalist described the movement as a
“headlong rush to combine three things: automated factories, machine-to-
machine internet and 3D printing”.
AFR/Manufacturers’ Monthly April 2015

9. Robotics
Another influence on the industry’s “reinvention” would be increasingly
affordable general-purpose robotics, the small and flexible Baxter machine is an
example.
Such robots would be within the reach of smaller businesses, and would see the
more basic parts of manufacturing be handed over to automated processes.
“By 2016, manufacturing jobs will start to shift around more intricate work,
including the training and maintaining of robots, as well as working on
optimising manufacturing processes,” said Bieber (Citrix).
The trend towards automation is an employment concern for some in the
industry, especially on the production line. Sales for factory robots are at their
highest, and in 2013 more than half of those sold worldwide were installed in
this region.
Manufactures’ Monthly, April 2015

10. Platform Technology
Volkswagen has had a reputation for producing over-engineered products.
It is reportedly trying to reduce product complexity through what it calls a
modular toolkit programme, or Modularer Querbaukasten (MQB,) used in
the new Audi A3 and now the VW Golf model launched in April 2013. As
well as reducing product complexity the aim is to cut unit manufacturing
costs by 20 per cent. This involves hefty upfront costs – one reason
investment in the automotive division is projected to be €60bn between
2012 and 2016.
“When fully deployed across its factories in the US, Europe and China,
Volkswagen will be able to manufacture any vehicle that local customers
want close to where they live, and to do so faster, better and more cost-
effectively”. Radjou and Prabhu: 2015.

11. Continuous Manufacturing
MIT together with Novartis is pioneering a continuous manufacturing process
in the pharmaceutical industry. It is producing a copy of a standard Novartis
drug, for future use; the system is still five to ten years away from commercial
operation.
The number of discrete operations involved in producing the drug has been
cut from 22 to 13; the processing time has been decreased from 300 hours to
40; every pill being made is monitored to ensure it meets the required
specification.
Continuous manufacturing could transform the pharmaceuticals industry by
replacing large, purpose-built plants supplying the global market, with
smaller, regionalised plants, that could respond more rapidly to local demand,
especially if a pandemic were to occur. The pilot line can fit into a shipping
container, facilitating rapid deployment anywhere.

12. The Circular Economy/Value Chain Network
Another pressing reason for considering a coordinated approach is the
interest in environmental sustainability. The circular economy/value chain
network (Nguyen et al: 2014) aims to eradicate waste, not just from
manufacturing processes, as lean management aspires to do, but
systematically, throughout the life cycles and uses of products and their
components.
Indeed, tight component and product cycles of use and reuse, aided by
product design, help define the concept of a circular economy and
distinguish it from the linear take–make–dispose economy, which wastes
large amounts of embedded materials, energy, and labour.
Given the additional focus of the circular economy/value chain two
considerations immediately come to mind; one, a far more comprehensive
perspective of the network relationships is required as the life span of the
processes are extended, and two, the issue of resource management
sustainability assumes significance.

13. Reverse Innovation - Market Centricity
GE introduced reverse innovation because it found that the traditional approach
of developing sophisticated products in domestic markets and simplifying them
for emerging markets was not effective primarily because of declining growth
rates in developed markets and innovative competitors in the emerging markets.
•GE introduced a business model based upon four fundamental principles:
•Local Growth Teams (LGTs) were established in India and China.
•The LGT management model was created featuring; delegated product-
service strategy shifting decision making to sourcing/consumption markets
•LGT structures can respond to local circumstances in planning processes;
opportunities and constraints, and reflect local market, finance and operations
realities, and whose objectives and strategies become ‘customised’ to meet
local (realistic) possibilities and constraints.
•By localising the entire RD&D-manufacturing-marketing activities, products
that were very expensive when produced for domestic markets, were made
accessible to health care practitioners in the emerging markets.

14. Data Collection, Analysis and Management Increases Operating Efficiency
GE is transforming its operations with big data and other advanced technologies.
The company has introduced the term "Brilliant Factory" to represent how it is
generating and analysing data to optimize operations at its 400 factories around
the world.
Research by Boston Consulting Group identifies five technology tools that have
the "greatest potential to influence the manufacturing landscape" and improve
productivity. They are; autonomous robots, integrated computational materials
engineering, digital manufacturing, the industrial Internet and flexible
automation, and additive manufacturing.
GE's use of big data is changing how it serves its customers as well as its
manufacturing operations. At its Monitoring & Diagnostics Center in Atlanta, a
team of more than 50 engineers analyses the data that flows in every hour of
every day from gas turbines and generators in 58 countries. What they are finding
saved the company's customers $70 million last year.

15. Using this data, GE can provide predictive maintenance services for its
customers so that they can keep equipment running longer and more
safely. Since 2009, GE has been able to reduce the trip rates -- the rate
per 1,000 hours of unforced outages in which turbines stop generating
power -- by 25% for its 7F and 9F turbines.
"As we get better at doing predictive maintenance, we are able to extend
the life of individual components and also extend the maintenance
intervals on the unit," This data also contribute to product development
efforts. GE's design teams use the data both to improve existing products
and to design new models.
The changes in GE's business are not happening overnight and BCG
cautions that it will take time for these new technologies to take hold in
manufacturing widely, but it forecasts that a combination of these tools
could reduce production costs by 20% to 40% and "radically redefine the
dynamics of global competition in many industries.“
IW reporting on BCG Research 100415

16. A Review of Applications of Advanced Manufacturing …
Customer Expectations
Value Proposition
Value Delivery
Manufacturing Response
Suppliers
Data Monitoring
and Diagnostics

17. 16
Specialist engineering DTO/ PRODUCT-service/product-SERVICE
Codan and Bishops Technology Caterpillar’s Lane Strategy
Customised/ Mass customised The manufacturing plant is focused into production
cells Automotive components, Dell Computers, High Value Consumer Products
Flexible Response Systems: Manufacturing systems capable of meeting volume and
product variety requirements by designing product models to be assembled in the
same plant. Ford /GM/Chrysler
Agile Response Systems: Supplier networks capable of meeting specification,
volume and order cycle variation at short notice – “HealthCare” surgical operations
packs, “Fast fashion” Zara, Uniqlo
The organization sells a range of standard products, but in high volume. “FMCG”
and “Consumer durable” products
Low/Medium Impact on Competitive Advantage Position
The role of manufacturing technology in the dynamics of customer response expectations Adapted from Brown et al
Operations Process
Alternatives
Nano-Products
“Multi-modal plant
flexible factories”
Digital/Additive
Manufacturing
Project/
Job
Batch
Flexible
Manufacturing
Agile
Production
Line and
Process Flow
Additive Manufacturing CAD/CAM techniques used to manufacture a ‘one-off’
product infinite flexibility, complexity and volume GE Aero-Space
High Impact on Competitive Advantage Position
Value Proposition based on
selective customer preferences
Unique Customised Solutions and Products
offering S-T Unique Value Proposition
Mixed industry portfolio PRODUCT-
service/product-SERVICE for four
different GE businesses
Fully Customised Value Propositions
“Instant Delivery”/High “Fit4 Purpose”
Value Proposition
PRODUCT-service Customised DTO/MTO
Value Proposition or product-SERVICE
Customised DTO Value Proposition
Mass Customised PRODUCT-service
Value Propositions, Customised/Mass
Customised DTO/MTO
Enhanced Mass Customisation Value
Propositions Wider Choices and
Shortened Delivery Times
“Quick Response” Based
Value Propositions, Current Designs and a
Rapid Response Value Proposition
“Standard” or “Commoditised”
Price/Time/Quality Based Value
Proposition
Manufacturing Responses
Nanotechnology, is the engineering of functional systems at the molecular scale to
create many new materials and devices resulting in a vast range of performance
benefits; faster, cheaper, lighter, stronger with applications in medicine,
electronics, biomaterials, energy production, and consumer products.
Multi-modal facilities permits rapid adjustment or production across a diverse range
of industry demand using the same people and space GE Pune, India
Data Monitoring and Diagnostics
Data Monitoring and Diagnostics

18. Specialist- MMM/S-SMEs in the Global Value Chain

19. The favoured emerging model is based upon the
successful German Mittelstand ….
18

20. 19
The Mittelstand is an unconventional MMM/S-SME with its origin in
Germany; it is essentially a family business with a tradition of
stakeholder commitment. Its stakeholder focus believes that a primary
concern for customers and concern for employee, partners, and the
community are essential in generating profitable operations.
Mittelstand organisations make a major contribution to Germany’s GDP
and value added to the German economy.

21. Focus on International Business
Broad international reach and focus heavily on
exports
Niche Focus
Create ‘knowledge advantage’ and
compete on Value-Added rather than Price
German Mittelstand Model
Long-Term Capital Returns Perspective
Investment in Assets, Retained Earnings etc.
are made for L-T and M-T Returns
“Make Machines that Make Products”
Typically in Capital Goods Rather than Services
A Dominant Role for Quality
A commitment to well-built products that
are designed to customers’ expectations
Long-term Vision
‘Multi-Generational Thinking’ on
Sustainable Business
Dominant in Value Chain Positioning
Acknowledged and accepted leadership in
selected network position
Expert Workers
Apprentice system combines skills with
classroom education. T/O 2.7%
Company Culture
Job Security and Company Success
Customer Centricity
Close to their largest and most demanding
customers, locating near them and following
them to new markets
Institut fűr Mittelstandforschung
20

22. Typical German Mittelstand MMM/S-SMEs
EWS: Design and manufacture of
tooling solutions for CNC machines.
Employees: 180
Group Employees: 352
Company Turnover: €44m
Balluff: As a specialist for industrial
automation, offers a full portfolio of
industrial sensors, systems and
solutions.
Employees: 819
Group Employees: 2,600
Turnover: €335 million (2013)
DORMA: produces door
technology systems and allied
products Founded, in 1908.
Has companies in more than 50
different countries.
Employees: 6738 (2011/2)
Turnover: €1001.8 mill
Pöschl (Est 1902): The world’s largest
producer of snuff tobacco and the
leading independent German
manufacturer of tobacco products
Employees 400/800
Turnover €462 Mill (2013)
RUD Group: A global producer offering future-oriented
solutions with chain systems and components for a wide
range of applications; conveyor & drive systems, lifting &
lashing, and tyre protection chains.
Employees 1700
Turnover €190 mill
Aeroxon: Environmentally friendly and
efficient insecticides are what Aeroxon Insect
Control GmbH, a family business, has stood for
over 100 years. The range consists of more
than 30 products for controlling flying and
crawling insects as well as moths.
Employees 85
Turnover$21 mill
Utsch: Vehicle license plate and
registry systems technologies.
operates in over 130 countries on all
continents worldwide – participating in
more than 80 investments and joint
ventures in over 50 nations.
Employees 550 worldwide, the
Turnover €275 million (2012)
STIHL specialist chain saw and out door power tools. Eighty nine
percent of sales are offshore. Financing based upon retained
earnings (no debt). Production strategy based upon vertical
integration-R&D/manufacturing for premium quality products at
premium prices uses STIHL dedicated sales/service outlets.
Employees: 11000+ (3800 in Germany)
Turnover: €236 million (2010)
21

23. Successful Australian MMM/S-SMEs

24. Successful Australian MMM/S-SMEs
Anatomics occupies a demanding niche, providing
custom products that help surgeons do their job, and
exports to 20 countries. It dates back to 1996 and the
commercialisation of Brisbane-based PhD research.
Anatomics uses stereolithographic biomodelling, the
technology uses 3D printing for these purposes
including its patented BioModel process (which
converts CT scans into plastic surgical models of things
such as organs)
“ One of our key strengths is being able to be very responsive to individual
surgeon’s requests,” explained Meeting the demands of a profession synonymous
with precision is vital to the company’s continued success. “We have an electronic
system that enables customers to give us their exact requirements, and basically
we can use that to satisfy most of our order details,” explained Thompson,.
“But if we need to get input from surgeons regarding difficult cases and detailed
designs and things like that, we can engage in online surgery planning as well with
them and design the implant online and surgeons really like that - it gives them a
chance to see the implants being designed.”
Robert Thompson the company’s technology and product manager.
B Bucolo, S., King, P. (2013), Design for Future
Manufacturing, Competitiveness, Australian
Design Integration Network (ADIN).
23

25. 24
B Bucolo, S., King, P. (2013), Design for Future
Manufacturing, Competitiveness, Australian Design
Integration Network (ADIN). And
www.codan.com.au
Codan Limited designs, manufactures and markets a diversified range of high value added electronics
products for global government, business, humanitarian aid , and sophisticated consumer markets.
Codan’s core products are; radio communications systems, metal detectors, and mining technology
solutions. Codan’s success has been driven by its ability to optimise the development and manufacture
of sophisticated electronics products and associated software; this has enabled them to deliver cost-
effective solutions to a range of customers in the communications and metal detection markets. Codan
staff foster the unique culture of the organisation, where challenging the status quo and giving and
receiving feedback are critical.
At Codan, we seek to build a group of "clever products" businesses
to address global markets. We will continue to design and
manufacture our own core products. Our proven ability to maintain
technological competitiveness, bring new products to market, and
to enhance our current products to meet customers' needs is vital
to our success. Accordingly, Codan is committed to research, design
and product development and maintains a substantial team of
research, engineering and technical staff for this purpose.
- Donald McGurk, Managing Director & CEO
Successful Australian MMM/S-SMEs

26. 25
The company manufactures advanced composite fibre components for the aerospace
and military, such as doors and panels for the JSF and composite wing flaps for the
Hercules transport, where it is the sole supplier. Carbon-fibre structures are highly
desired for their strength and lightness and are used in a wide array of military and
commercial purposes. Quickstep process innovation could cure those parts in three or
four hours, potentially generating substantial cost savings in stretched military
budgets. "About 15 per cent can be saved under this method for existing programs and
we estimate up to 30 per cent for new projects, which could mean millions in savings,"
"We are doing world-class manufacturing and we have world-leading innovation in the
Quickstep process, all from Australia," -Tony Quick, Chairman
Quickstep is the largest independent aerospace-grade advanced composite
manufacturer in Australia. The Company manufacture using both traditional
autoclave and leading edge out-of-autoclave production technologies for aerospace
and automotive. Alongside our manufacturing headquarters in Australia, Quickstep
also has a Quickstep Process development facility in Europe. They are currently
partnering with some of the world’s largest aerospace/defence organisations,
including the US Department of Defense, Lockheed Martin, Northrop Grumman,
Airbus, Thales and BAE.
Successful Australian MMM/S-SMEs
Quickstep steps up JSF program with Lockheed Martin
Jason Clout AFR, 05 Mar 2015
www.quickstep.com.au

27. Considerations for Success for the Small Specialist Organisation in the GVCN …

28. Changes are Occurring: China Shifts its Emphasis: “Factory Asia” - Opportunities or Threats?
In 1990 it produced less than three per cent of global output by value. “Factory Asia” now
manufactures almost half the world’s goods. “Factory Asia” comprises China and its regional
(ASEAN) “supplier economies” e.g. Vietnam, Indonesia, Cambodia and Malaysia. Three
formidable advantages in manufacturing are emerging.
•Chinese imports of components have fallen from a 1990’s volume of 60 per cent to
around 35 per cent.
•As China begins to exploit higher-value activities it’s efficient “supplier economies” are
undertaking he production of low-cost items. As Samsung, Microsoft, Toyota and other
multi-nationals support production in Myanmar and the Philippines they are reinforcing
this emerging regional supply chain with China as its hub.
•As China’s middle class incomes increase so too is its discretionary spending – on locally
produced, “Factory Asia”, higher-margin ‘branded’ items.
An ASEAN “single market” would create a market for complex goods and services and would
expand the network of manufacturing capabilities across participating countries.
Economist 170315

29. Value Chain Responses to Customers’ Value Expectation
Adapted from: Melnyk S et al “Outcome-Driven Supply Chains”, MIT
Sloan Management Review, Winter, 2010
B2B Value Drivers
28
“Performance”
Management
Time
Management
Cost
Management
Responses to
Critical
Customer Value
Drivers

30. “VALUE BENEFITS” THE “SPECIALIST MMM/S-SME” CAN BRING TO AN OEM VALUE
CHAIN
•Complementing the GVCN’s core capabilities (Performance Management)
•Focused RD&D; providing creativity in product-service
and process design (Performance/Cost Management)
•Reduced Investment and operating costs (Cost Management)
•Elimination of unnecessary inventory and reductions in work in progress –
improved cash flow thru’ JIT, VMI (Cost and Time Management)
•Improved manufacturing lead times (Time Management)
•Flexible capacity, up and down, reducing the need for costly sub-contract
labour as a reaction to increase in build requirements. Not having to manage
redundancy or some form of “lay offs” when demand decreases
(Performance/Cost/Time Management)

31. Critical Capabilities
Matching MMM/S-SME’s Capabilities
with OEM and Market Expectations
“Niché Opportunities”
Fragmented and immature
market segments (niché) in
growth and stable industries
Focus on International Business
Broad international reach: focus
on export markets using exclusive
capabilities
Market/Customer Centricity
Focus on the critical
customer value drivers
Dominate a Vital Location in the Value Chain
Develop an acknowledged and accepted
leadership role in selected network position
Company Culture
Job Security and Company Success
Managerial Expertise
RD&D is problem solving and
relevant to industry needs
matched with workforce skills and
training
Long-Term Vision: Industry
Sustainability of profitability and
viability. Direction and value
delivery strategy
Long-Term Vision: Organisational Resources
Assets, Capabilities, Capacities, Processes
(Effectiveness & Efficiency)
Long-Term Vision: Organisational Funding
Risk perspective, Capital intensity, Financial &
Operational gearing. Sources and access costs
Summary of Industry and Organisational “Requirements”
Employee Requirements
Technological literacy.
STEM proficient
Strategic I.P. Management
Networked inter-locking
patents – layers of patents
around a product to deter
competition
Patent ‘Leap Frogging’
Developing competitors
patented IP by licencing
High Added-Value Content
Product-Service and/or
Process innovation
Exploit Uniqueness
Brand, Tradition, Region

32. OEMs/S-MMM/S-SMEs Collaboration
Considerations
Maintaining Margin Management
•Value Captured in “after-markets”
•OEMs have delegated/abdicated RD&D to S-SEMs
•Hence long-term margins are decreasing
• Issues of control
Technological Change
•Demand Technology Life Cycles’ effectiveness
are decreasing as sequential life span replacement increases
•OEMs have distanced themselves from RD&D and
developing knowledge by relying upon S-MMM/S-SME
suppliers for technological advancement
•Development of critical systems and components will
create shifts in competitive advantage sensitivity profiles
Control of the Experience Curve
•Component and Module suppliers (S-SEMs) develop
cost-efficiencies over time and retain benefits from
advances in RD&D
•Usually 2nd and 3rd generation Experience Curves are
more cost-efficient
Operational Complexity
•Fixed costs of integration and coordination of
manufacturing systems increases with system complexity
•Working capital increases (inventory SKUs and item costs’
•Delays occur in RD&D
•Risk increases with complexity – increasing “returns
spread” expectations (ROI less WACC)
Components
and
‘Services’
OEM/S-
MMM/S-SME
Supplier
Considerations
Procurement,
“Production”
Process (es),
Manufacturing
Model,
Assembly and
Service Support
OEM’s
Value
Proposition
End-User
Expectations
End-User
Expectations
Delivered
OEM’s
Assembly
Operations
BCG February 2015

33. Thank you for your time ….

34. •Short and Long-Term Vision: Organisational
Resources (Assets, capabilities, capacities,
and processes)
•Company/Network ‘Culture Fit’
•Collaborative RD&D: shared efforts & rewards
•Dominate a Vital Location in the Value Chain
•Long-Term Vision: Organisational Funding
(Capital intensity, financial , strategic, and
operational gearing. Sources and access. Risk
perspective)
•Organisational relationships (‘Performance’,
Time, and Cost Management)
•Competitor profiles
•Rewards equity and margin management
•Technology Change and Ownership
•Relationships management (SRM/CRM)
•Information flows/transparency
•VCN logistics: Effectiveness and efficiency
33
Components of the MMM/S-SME Business Model
•Identify and pursue Niché Opportunities
•Customer/Market Centricity
•Relevant Value Proposition
•Capabilities: Relevant and Current
•Strategic IP Management (Networked and
interlocking/layers of patents around a
product to deter competition
•Patent ‘Leap Frogging’ (developing
competitors’ IP by licencing
•Focus on International Business
•Develop a Long-Term Vision of the Industry
(Sustainability of profitability and resources: a
clear direction of value delivery strategy)
Strategic Choices Value Network
Creating Value
•Stakeholder Value Manangement
•Managerial expertise and experience
• Value migration •Value reward
•Network interactions strengthened by
transparency and trust
Value Capture

35. "IDC Manufacturing Insights sees a number of important industry drivers that
will shape the manufacturing industry for the next few years, including
complex value chains (relationship management), support for continuing
emerging market growth (relationship management), customer centricity
(relationship management), ubiquitous connectivity (knowledge and
technology management), and data-driven insights (knowledge and process
management); these drivers inform … the imperatives for 2015 and beyond,“
Simon Ellis, Practice Director, IDC Manufacturing Insights (2015)

36. INDUSTRY VALUE/PERFORMANCE DRIVERS
It is becoming necessary to identify key industry or marketplace
drivers. It is suggested that such a framework revolves around the
four generic, but focused industry value driver frameworks
identified above as: knowledge management, technology
management, process management and relationship management.
Industry Performance Drivers
35

37. Industry Performance Drivers
36
Knowledge
Management
Process
Management
Technology
Management
Relationship
Management
’
Identifying Industry Value Drivers and their Components
Questions?
•Impact on CA?
•Location in GVCN?
•Role adopted?
•IP, Patents?
•Invest or Leverage?
•Risk?
Competitive
Advantage

38. Industry Performance Drivers : Knowledge Management
37
Data Insight
Analytics
Competitive Advantage – can be increased
if the organisation can increase the
integration and coordination of all three
components (RD&D, ICT driven Customer
Loyalty programs e g., Tesco Loyalty Card)
Managing the “Knowledge Gap”
Knowledge Management: can be
defined as: the organisational
capability which identifies, locates
(creates or acquires), transfers,
converts and distributes knowledge
into competitive advantage.
Competitive
Advantage

39. Industry Performance Drivers: Relationship Management
38
Relevant
Partnerships Realistic &
Shared
Objectives
Rewards Equity
Competitive Advantage – can be
increased if the organisation can
increase the integration and
coordination of all three components
(Long-term Trust; Wal-Mart/P&G)
Managing the “Relationship Gap”
Relationship Management: is the
managerial activity which
identifies, establishes, maintains
and reinforces economic
relationships with customers,
suppliers and other partners with
complementary (and
supplementary) capabilities and
capacities.
Competitive
Advantage

40. Information
Communications
Technology
Distribution
Technology
Manufacturing
Process
Technology
Competitive Advantage – can be
increased if the organisation can increase
the integration and coordination of all
three components (EDI and M2M
connectivity/mobility)
Boeing attempted this with the 787. They assumed their
suppliers R&D could solve problems that it could not!!!
Industry Performance Drivers: Technology Management
39
Technology Management: the
integration, coordination and
implementation of technological
capabilities and capacities to
meet the strategic and
operational objectives of an
organisation or combination of
organisations.
Managing the “Technology Gap”
Competitive
Advantage

41. Industry Performance Drivers: Process Management
40
Information
Transparency
Process
Synergy
Intra-Organisational
Process Management
Competitive Advantage – can be
increased if the organisation can
increase the integration and
coordination of all three components
Value Overlap (continuous production,
parallel production, construction
industry – IKEA and Skanska have j/v
Bloklok that “manufactures” housing
and hotels)
Managing the “Process Gap”
Processes have defined business
outcomes for which there are
recipients that may be either
internal or external to the
organisation. They cross
organisational boundaries.
Organisations work together to
identify core processes. The scope of
process management is such that it
may be applied to strategic and
operational tasks and structures
Competitive
Advantage

42. “Performance”
Management
Time
Management
Cost
Management
The Value
Proposition A
Response to
Critical
Customer Value
Drivers
Value Chain Responses to Customers’ Value Expectation
Adapted from: Melnyk S et al “Outcome-Driven Supply Chains”, MIT
Sloan Management Review, Winter, 2010
B2B Value Drivers

43. “Performance”
Management
Cost
Management
Time
Management
The Value
Proposition
Response

44. “Performance”
Management
•Absolute commitment to innovation
Reliable and consistent products
•Ability to quickly adapt to our clients’ needs
Cost
Management
•Introduced smaller foundries
where they can maintain low
costs
Time
Management
The Value
Proposition
Response
An interpretation could be seen as …..