Manufacturing and innovation
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Manufacturing and Innovation. Prof. M.J. Gregory. Manufacturing and the Value Chain. Traditionally manufacturing was seen as the ‘physical’ process but increasingly it means the full cycle Research>Design>Production>Distribution>Service

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Manufacturing and Innovation

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Manufacturing and innovation

Manufacturing andInnovation

Prof. M.J. Gregory


Manufacturing and the value chain

Manufacturing and the Value Chain

Traditionally manufacturing was seen as the ‘physical’ process but increasingly it means the full cycle

Research>Design>Production>Distribution>Service

This makes it possible to be in manufacturing without owning a factory!


Manufacturing a definition

Manufacturing – a definition

“The full cycle from understanding markets through product design, production, distribution and related services within an economic and social context”


Arm microchips marketing design production distribution service

ARM – microchipsmarketing>design>production>distribution>service

  • ARM designs used in 75%of mobile phones

  • Close to global customers and OEMs

  • ‘Fabless’ business model

  • Substantial process knowledge

  • Successful - but repeatable?


Gkn automotive components marketing design production distribution service

GKN – Automotive componentsmarketing>design>production>distribution>service

  • GKN has 40% of world market for constant velocity joints

  • Leadership is enabled by production capability linked to advanced design

  • Close integration with customers

  • Local production facilities worldwide


Zara clothes marketing design production distribution service

Zara - clothesmarketing>design>production>distribution>service

  • Spanish clothes maker Zara owns all production capability

  • Products in own shops change every 2 weeks

  • Production can be flexed to respond to demand

  • Competitors can’t follow!


Solectron electronics marketing design production distribution service

Solectron – Electronics marketing>design>production>distribution>service

  • Global electronics production capability

  • Acquired and integrated OEM facilities

  • Value capture through economies of scale and flexibility

  • Moving to design and service


Rolls royce aeroengines marketing design production distribution service

Rolls-Royce – Aeroenginesmarketing>design>production>distribution>service

  • Responding to customer needs

  • Rapid growth in market share

  • ‘Totalcare’ service model ~50% of revenues

  • Implications for design and production


So for companies production may link to

So for companies, production may link to..

  • Research and Development

  • Design

  • Responsiveness

  • Value capture

  • Service

    as well as

  • Cost


Manufacturing in a global context

Manufacturing in a global context

  • Global demand is rising steadily

  • US demand for goods growing relative to services

  • ‘Disintegration’ of stages in some value chains

    BUT

  • Interdependencies between stages continue

  • Internationalisation increasing complexity

  • Markets and capabilities highly volatile

  • New processes and products demand new skills and new technologies


And at national and regional levels

and at national and regional levels..

  • Production capability may be necessary to enable scientific and technical innovation

  • Capture value from science and technology

  • Attract and anchor inward investment

    BUT

  • Company level decisions do not translate easily to industry level

  • Economic models do not readily capture linkages


So what about the eastern region

So what about the Eastern Region?

  • Strong manufacturing economy

  • Good balance of business types and sizes

  • Strong ‘nodes’ of research and production

    But

  • Do we understand global trends

  • Do we appreciate the potential of production

  • Are we developing production IPR


Opportunities and threats

Opportunities and Threats

Opportunities

  • Enhanced value capture from research base

  • Development of valuable and protectable IPR

  • Ability to co-ordinate global networks

    Threats

  • Progressive loss of high value activities

  • Difficulties in accessing global networks

  • Undermining of service base


Actions for east of england

Actions for East of England

  • Develop a sector by sector understanding of the role of production in the economy

  • Enhance ‘early stage’ production capability

  • Maintain control - not necessarily ownership - of production capacity

  • Increase skills in global production co-ordination

  • Strengthen production knowledge, capability and awareness


The opportunities

The Opportunities

  • for manufacturing to be seen as one of the best ways of capturing value from innovation

  • for the UK to be a major hub in global manufacturing networks

  • for East of England to be a model manufacturing region combining education, research and practice to grow economically and live sustainably


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