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Verhaert Innovation Day 2011 – Koen Verschraegen (VERHAERT) - Building supply chains for innovative new products

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Speaker of Verhaert at the 8th edition of our Innovation Day on October 21st 2011.

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Verhaert Innovation Day 2011 – Koen Verschraegen (VERHAERT) - Building supply chains for innovative new products

  1. 1. INNOVATIONDAY 2011 BUILDING SUPPLY CHAINS FOR INNOVATIVE NEW PRODUCTS CONFIDENTI AL Koen Verschraegen Production manager Koen.verschraegen@verhaert.com
  2. 2. INNOVATIONDAY 2011 Content • Scope of problem • Standard Supply Chain Talk • Supply Chain Defined • Where it fails • What is at risk? • Expected know-how • Supply Chain & Business Models • Aspects to think about • Product architectures • Resilient Supply Chains • Building supply chains for NPI • Preferred organisation model evolves over time • A phased approach • Obsolete products • Component choices • Some conclusions
  3. 3. INNOVATIONDAY 2011 CONFIDENTIAL Scope of Problem
  4. 4. INNOVATIONDAY 2011 Scope of the problem Investments in innovation are great but…. Things have to be made / delivered …. Best practices on supply chain management are usually tailored on mature products How to built a supply chain for Innovative New Products when certainties on key parameters do not exist ? • Volumes / ramp up ? • Timing (time to market, lifecycle,…) ? • Market expectations (functionality, quality, ergonomics,…) ? • Losses (during production, return from the market) ? Innovation is a learning process! This is thrue for NPD but also for NPI Typical questions : • At what stage in development do we want / need to get suppliers involved ? • Do we want to select suppliers locally or internationally ? • Is it safe to get involved with suppliers that do not (yet) belong to the “establishment” ? • Who is taking overall responsability ? Is a split in responsabilities manageable ?
  5. 5. INNOVATIONDAY 2011 Scope of problem Mature productsNew products End of life How to build a supply chain if there are no certainties? Unitssold Time ?
  6. 6. INNOVATIONDAY 2011 Experiences – Sales prognoses / ramp-up - Sycron Problem How to motivate suppliers when there are no certainties about sales ?
  7. 7. INNOVATIONDAY 2011 Scope of problem Mature productsNew products End of life How to build a supply chain if there are no certainties? Unitssold Time ?
  8. 8. INNOVATIONDAY 2011 Experiences – End Of Life - Niko Problem Mass production of telephone sockets needs to be converted into batch-sized production while keeping sufficient margin and delivery reliability. Sourcing in China leads to • new moulds • new learning curve
  9. 9. INNOVATIONDAY 2011 Sales Time Introduction Saturation Maturity Growth Scope of problem / New products and key value drivers Maslow for new products Price Convenience Reliability Functionality
  10. 10. INNOVATIONDAY 2011 CONFIDENTIAL Standard Supply Chain Talk
  11. 11. INNOVATIONDAY 2011 Standard supply chain talk At what stage in development do we want / need to get suppliers involved? involvement Supplier(s)Company time Key issues: •How to motivate suppliers to get and stay involved ? •How to maintain independancy ?
  12. 12. INNOVATIONDAY 2011 Standard Supply Chain Talk Supply Chain Defined Where does it begin and where does it end? These definitions may help: • The Supply Chain Council definition: Plan, Source, Make, Deliver, Return • The down-and-dirty definition: The sequence of events and processes that extend from your suppliers' suppliers to your customers' customers • The Council of Supply Chain Management Professionals definition: Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion and all logistics management activities, including coordinating and collaborating with channel partners, including suppliers, intermediaries, third parties and customers. Our presentation focusses on the delivery side not the demand side. 5 pillars of excellence: (J.Paul Dittmann, University of Tennessee) • Talent - They have the right people in place. • Technology - They ‘re focused and employ leading-edge technologies. • Internal collaboration. • External collaboration. • Change management - Supply chain projects have more complexity than others and as a result have a tendency "to get off track," Those aspects seem to be appropriate however……
  13. 13. INNOVATIONDAY 2011 Standard supply chain - Where it fails Why the standard talk fails when it comes to Innovative New Products ?  New business typically get killed from lack on business not lack on margin ! • Talent – The right people understand NPD and are open and flexible ! • Technology – They ‘re multi-disciplinary ! • Internal collaboration ! Often disturbing thoughput. • External collaboration ! Managing the win-win • Change management – Change is the standard !
  14. 14. INNOVATIONDAY 2011 Standard supply chain - What is at risk? “Valley of death in innovation” After inital market introduction (lead users & early adopters), sales drops due to: • Quality issues • Cost issues / perceived value. • Delivery issues Time NPD Initial sales Euro Investment
  15. 15. INNOVATIONDAY 2011 1967 Killed in death valley NSU RO 80 with wankel engine
  16. 16. INNOVATIONDAY 2011 Expected know-how  Design capabilities • Understanding the design baseline • Design for manufacturing • Design for assembly • Design for testing  Certification  Testing capabilities • Design & automation of testing procedures and equipment  Documentation  Scale up
  17. 17. INNOVATIONDAY 2011 Experiences - Certification - Irex Technologies  Spin-off from Philips  E-reader manufacturer  Bankrupt since June 2010  Cooperation with American bookstore Barnes & Nobles Problem : Unable to get products to the market in time due to delayed government approvals
  18. 18. INNOVATIONDAY 2011 Supply chain & related business models
  19. 19. INNOVATIONDAY 2011 Supply chain models • ODM (Original design manufacturer) • Customers : Brand & marketing company • is a company which designs and manufactures a product which is specified and eventually branded by another firm for sale • Example : 82,6 % of all notebooks is produced in Taiwan by ODM’s • Quanta Computer Inc = largest notebook manufacturer for Dell, Compaq, Apple,HP, IBM, Sony, Fujitsu Siemens, Toshiba, Acer, Sharp, Maxdata • System Supplier • Customers : OEM’s (Original Equipment Manufacturers) can focus on their core compentences • Services : • Project management • Process management • Development & Engineering • Logistics & Procurement (SCM) • Production & Assembly • Testing • Value engineering • Life Cycle Management • Aftersales
  20. 20. INNOVATIONDAY 2011 Supply chain models • Contract manufacturer • Outsourcing manufacturing, often of a sub-systel e.g. EMS Electronics Manufacturing services. • Benefits : • Cost Savings –cost of capital, labor costs (wages, training and benefits), low-cost countries • Mutual Benefit to Contract Site – contract may last several years • Advanced Skills –skills that they may not possess • Quality –own methods of quality control • Focus– core competences • Economies of scale –multiple customers ,reduced costs in acquiring raw materials • Risks • Lack of Control • Relationships • Quality concerns –standards are in line with their own, test methods are of good quality • Intellectual Property Loss –not give out any of its core competences, integrity of the employees. • Outsourcing Risks –language barriers, cultural differences, long lead times • Capacity Constraints –de-prioritized over other companies during high production periods • Loss of Flexibility and Responsiveness - disruptions in the supply chain, demand fluctuations. • Component Supplier / jobbers
  21. 21. INNOVATIONDAY 2011 Experiences – Supply Chain models - Vitalsys Zenio : Fall detector for elderly at home sends text message via bluetooth and mobile phone to alarm relatives in case of emergency Problem • Supply chain set-up for minimum 15K units • Collaboration with system supplier • Underestimated the need for small series and product adaptations to deliver pilot project and “clinical” validation. • Finally role system supplier reduced to electronics contract manufacturing.
  22. 22. INNOVATIONDAY 2011 Supply Chain Models- How to select? Strategy: • Control the value creation process, now and in the future. • Bargaining position • Potential market entrants • Link to innovation process • Link to market channel / region, ….. Tactics: • Manage the win-win relationship • Competences to manage the subcontracted processes. • Flexibility • Focus on core competences • Management attention available • Risk management, redundancy,… Operations: • Competences available at supplier • Cost structure • Capacity available • Communication, …. Strategy Tactics Operations Only win-win relationships are sustainable. In each collaboration model parties have their own business case. Manage the potential conflicts and diverging motivations in these relationships !!!
  23. 23. INNOVATIONDAY 2011 Experiences – Controll the value creation process Case Waegener  Solutions for Cryotherapy  Change in business model Waegener througout the NPD process: • selling devices -> leasing devices / prefinancing (C-server) -> selling treatments (C-treatment) -> selling disposables (C-patch) NPD consequences:  Integration of RFID-tags in disposables  Cooling liquid recuperation  Treatment protocols mgmt (Passwords, upload)  Altered servicing strategy NPI consequences: Value creation on other system elements 1) Set-up certified assembly lines (coming from third party)  Cost strategy on devices  Shifts towards MTBF optimisation strategy  Patches outsourced 2) Set-up internal patch production line, including cleanrooms. 3) Corporate focus on development and validation of treatments 4) Outsourcing production towards system supplier.
  24. 24. INNOVATIONDAY 2011 Aspects to think about
  25. 25. INNOVATIONDAY 2011  Inherently linked to partnerships in innovation  From Porter’s Five (competing) Forces model : • Strategic partners (Commercialisation) • Manufacturers • IP driven • Contract innovations and development • Contract resourcing • Research institutes & universities Aspects to think about - Link to innovation process
  26. 26. INNOVATIONDAY 2011 Aspects to think about– Product architectures Modularity to improve economy of scale  Aim for modular products  Aim to work with COTS components 2 parts x 1 1 part x 8
  27. 27. INNOVATIONDAY 2011 Experiences - Product architecture - De Lijn Problem How to combine low order quantities with low cost / high volume custom components ?  Information panel housing : Aluminium sheet metal (100’s)  Led cluster indicator : • Polycarbonate injection moulding (1000’s) • Sourcing in China
  28. 28. INNOVATIONDAY 2011 Experiences - Product architecture - Gymna Problem How to develop medical products with long product lifecycle knowing processor lifetime / availablity is short ?  Modular platform  Integration of 2 different processors  Sustainable productarchitecture
  29. 29. INNOVATIONDAY 2011 Control the value creation process, now and in the future.  Preferably outsource development of disruptive innovations (integrated design) integrally or not at all  Outsourcing modular design sounds attractive but be aware of where the added value revenues are created  Future added value goes to the weakest link  Weakest link in the value chain has the opportunity to create added customer value Product performance Time Performance that customers can utilise & absorb Vrij naar Christensen Aspects to think about– Product architectures & outsourcing
  30. 30. INNOVATIONDAY 2011 Aspects to think about - Resilient Supply Chains Building Resilient Supply Chains requires : • risk management & analytics (potential impact of a disruption, 'maximum revenue exposure' ) • mitigation plans & strategies (tools : crisis dashboard, business continuity dashboard, global component risk manager) Measures : • Redundancy (temporary and expensive measure) • Flexibility : • Adopt standardized processes • Use concurrent instead of sequential processes • Plan to postpone • Align procurement strategy with supplier relationships • Change Corporate culture : • Continuous communication among informed employees • Distributed power so that teams and individuals are empowered to take necessary actions • Passion for work • Conditioning for disruptions
  31. 31. INNOVATIONDAY 2011 Experiences – Resilient supply chains- Reduct Ductrunner Gyroscope-based inertial measurement system designed for autonomous recording of positional data of onshore or offshore pipelines Problem Selection of military grade Gyro’s proved to deliver a very accurate system. Show-stopper : US government regulations prohibited the export of these components
  32. 32. INNOVATIONDAY 2011 Building supply chains for NPI Success is based on linking : • Cross functional planning • Agile execution Agile supply chain : • Market sensitive (reading and responding to real demand ; demand-driven vs forecast-driven) • Virtual (information based rather than inventory based) • Process integration (collaborative working between buyers and suppliers, joint product development, common systems and shared information)
  33. 33. INNOVATIONDAY 2011 Integrated design & manufacturing Manufacturing Outsourcing / Modularity Integration in Distribution Aspects to think about- Preferred organisation model evolves over time Time Product performance Performance that customers can utilise & absorb Vrij naar Christensen Sales Time Introduction Saturation Maturity Growth
  34. 34. INNOVATIONDAY 2011 Aspects to think about - A phased approach  Prototype  Pilot series  Alpha products  Beta products  Final products Product life cycle Prototype Pilot series Alpha products Beta products Final products time volume
  35. 35. INNOVATIONDAY 2011 Experiences – lack on Phased approach- Vectronix Swans : 3D-motion capture device (3D-oriëntation) Key features : • Miniature • Wireless • Single sensor/ sensor network • Low budget (3,5K) Application fields : • Healthcare (revalidation, activity monitor, fall detection, ergonomics) • Animation (game controller, virtual reality controller, motion data capturing) • Security (pedestrian navigation, asset track & trace) • Sports (training, technique improvement, activity monitor) Inertial sensor combining : • 2D- MEMS-gyroscope (2x) • 3D- MEMS-accelerometer (1x) • 2D- MEMS-magnetometer (2x) Imec Critical supplier (antenne + personal hub radio + processor in stacked pcb) Problem How to transform labscale production into upscaling scenario ? How to find suitable production partners ?
  36. 36. INNOVATIONDAY 2011 Experiences - Obsolete products - Agfa Problem : Humidity sensor from Siemens becomes obsolete, no second sources available  Reverse engineering (caracterisation, supplier scouting, alternatives,…)  Validation of Prototypes  First production run  AgPd-wire breaks during coiling • Process optimisation ? • Changing Supplier ? • Alternative alloy ?
  37. 37. INNOVATIONDAY 2011 Experiences - Component choices - Chromascope  Aluminium die casting • Small quantities • Look & feel • Sourcing in China  Obsolete components : • PMT Photo Multiplier Tube • Display – identical footprint  UV-leds : • Binning • Coupling (Intensity + Wavelength) • Spectrography
  38. 38. INNOVATIONDAY 2011 CONFIDENTIAL Conclusions
  39. 39. INNOVATIONDAY 2011 Some conclusions • Think in scenarios to manage uncertainty • Set your criteria ifv Maslow • Scale-up in phases, step by step • Motivate partners in a sustainable way • Choose the business model ifo strategic positioning in the value chain and maturity of the product. • Select partners that can manage / cover the dynamics • Determine your product architecture also ifo outsourcing models
  40. 40. INNOVATIONDAY 2011 Our NPI services Industrialisation • DFM Design For Manufacturing • Testing & validation • Documentation • Qualification • QA and risk Testing & Advanced (Test) Equipment • Test procedures • Industrial metrology • Custom test equipment • Feasibilities • Technology selection • Solutions Supply chain management • Process selections • Supplier evaluation • Production management • Trouble shooting • Quality controll Prototyping • Functional prototypes • Alpha series Audits ODM • ICT-user terminals
  41. 41. INNOVATIONDAY 2011 Hogenakkerhoekstraat 21 9150 Kruibeke (B) tel +32 (0)3 250 19 00 fax +32 (0)3 254 10 08 info@verhaert.com More at www.verhaert.com helps companies and governments to innovate. We design products and systems for organizations looking for new ways to provide value for their customers. We are a leading integrated product innovation center; creating technology platforms, developing new products and business in parallel, hence facilitating new- growth strategies for our clients.

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