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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

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


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


  • 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


  • 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


  • Do we understand global trends
  • Do we appreciate the potential of production
  • Are we developing production IPR
opportunities and threats
Opportunities and Threats


  • Enhanced value capture from research base
  • Development of valuable and protectable IPR
  • Ability to co-ordinate global networks


  • 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