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Speaker of Verhaert at the 8th edition of our Innovation Day on October 21st 2011.
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INNOVATIONDAY 2011
CONFIDENTIAL
Building supply chains for innovative new products
Koen VerschraegenVerhaert – Production manager [email protected]
INNOVATIONDAY 2011
Content
• Scope of the 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
INNOVATIONDAY 2011
CONFIDENTIAL
Scope of the Problem
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 ?
INNOVATIONDAY 2011
Scope of the problem
Mature productsNew products End of life
How to build a supply chain if there are no certainties?
Uni
ts s
old
Time ?
INNOVATIONDAY 2011
Experiences – Sales prognoses / ramp-up - Sycron
ProblemHow to motivate suppliers when there are no
certainties about sales ?
INNOVATIONDAY 2011
Scope of the problem
Mature productsNew products End of life
How to build a supply chain if there are no certainties?
Uni
ts s
old
Time ?
INNOVATIONDAY 2011
Experiences – End Of Life - Niko
ProblemMass 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
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Scope of problem / New products and key valuedrivers
Maslow for new products
INNOVATIONDAY 2011
Scope of problem / New products and key valuedrivers
Maslow for new products
Price
Convenience
Reliability
Functionality
INNOVATIONDAY 2011
Sales
TimeIn
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Scope of problem / New products and key valuedrivers
Maslow for new products
INNOVATIONDAY 2011
CONFIDENTIAL
Standard Supply Chain Talk
INNOVATIONDAY 2011
Standard supply chain talk
At what stage in development do we want / need to getsuppliers involved?
invo
lvem
ent
Supplier(s)Company
time
Key issues:•How to motivate suppliers to get and stay involved ?•How to maintain independancy ?
INNOVATIONDAY 2011
Standard Supply Chain Talk
Supply Chain DefinedWhere 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……
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 throughput.• External collaboration ! Managing the win-win• Change management – Change is the standard !
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
INNOVATIONDAY 2011
1967Killed in death valley
NSU RO 80 with wankel engine
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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
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Experiences - Certification - Irex Technologies
Spin-off from PhilipsE-reader manufacturerBankrupt since June 2010Cooperation with American bookstore Barnes& Nobles
Problem : Unable to get products to the market in time due to delayed government approvals
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Supply chain & related business models
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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
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
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.
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 !!!
INNOVATIONDAY 2011
Experiences – Controll the value creation process
Case WaegenerSolutions for CryotherapyChange 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 disposablesCooling liquid recuperationTreatment protocols mgmt (Passwords, upload)Altered servicing strategy
NPI consequences:Value creation on other system elements1) Set-up certified assembly lines (coming from third party)
Cost strategy on devicesShifts towards MTBF optimisation strategyPatches outsourced
2) Set-up internal patch production line, including cleanrooms.3) Corporate focus on development and validation of treatments4) Outsourcing production towards system supplier.
INNOVATIONDAY 2011
Aspects to think about
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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
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
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Experiences - Product architecture - De Lijn
ProblemHow 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
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Experiences - Product architecture - Gymna
ProblemHow to develop medical products with long product lifecycle
knowing processor lifetime / availablity is short ?
Modular platformIntegration of 2 different processorsSustainable productarchitecture
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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 thatcustomers can utilise & absorb
Vrij naar Christensen
Aspects to think about– Product architectures & outsourcing
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
INNOVATIONDAY 2011
Experiences – Resilient supply chains- Reduct
DuctrunnerGyroscope-based inertial measurement system designed for autonomous recording of positional data of
onshore or offshore pipelines
ProblemSelection of military grade Gyro’s proved to deliver a very accurate system.Show-stopper : US government regulations prohibited the export of these components
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)
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 thatcustomers can utilise & absorb
Vrij naar ChristensenSales
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INNOVATIONDAY 2011
Aspects to think about - A phased approach
PrototypePilot seriesAlpha productsBeta productsFinal products
Product life cycle
Prototype
Pilot series
Alpha products
Beta products
Final products
time
volu
me
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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)
ImecCritical supplier (antenne + personal hub radio + processor
in stacked pcb)
ProblemHow to transform labscale production into upscaling
scenario ?How to find suitable production partners ?
INNOVATIONDAY 2011
Experiences - Obsolete products - Agfa
Problem : Humidity sensor from Siemens becomes obsolete, no second sources available
Reverse engineering (characterisation, supplier scouting, alternatives,…)Validation of Prototypes First production run
AgPd-wire breaks during coiling• Process optimisation ?• Changing Supplier ?• Alternative alloy ?
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
INNOVATIONDAY 2011
CONFIDENTIAL
Conclusions
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
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
INNOVATIONDAY 2011
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