Advanced Manufacturing

1. Advanced Manufacturing Presentation to DPE Winter School August 2009 - Confidential -

2. Presenters • Mehleli Mpofu (Acting DDG Manufacturing Unit) • Jan Wessels (MD, Denel Dynamics) • Chart Van Der Walt (Denel Dynamics)

3. Structure of Session • What is advanced manufacturing? (MM) • Why is it important? (JW and CvW) • The challenges of building an advanced manufacturing sector in a globalised world (MM) • Panel Discussion (All)

4. What is advanced manufacturing? • It is the production of complex machines through the application of advancements in science in manufacturing processes and product design • It is the application of advanced technologies and processes at any stage of the value chain • technologies refers to productive equipment and knowledege • processes also includes managerial practices (e.g., lean, supply chain management, e-commerce etc.) • In a nut shell building advanced manufacturing is • Relative to where an economies’ productive capacity are at • Is simply about process and technology upgrading

5. The typical view of an industrial value chain can be misleading Typical Chemical /Pharmaceutical Industry Typical Metal Based Industries Typical Value Chain • Secondary Chemical Processing (pharmaceuticals and other synthetic compounds) Advanced Manufacturing?? • Assembly into complex systems (e.g., cars) Secondary/advanced manufacturing • Assembly into components/subsystems (braking/steering systems) • Primary Chemical Processing (based ingredients e.g., Sulphuric, Nitric and Phosphoric Acids, basic polymers and compounds Primary manufacturing Service Industries • Fabrication i.e. - casting, forming, machining etc. • Separation processes (e.g., refinery, cryogenic air separation, membrane separation) Primary and Secondary Processing (i.e., beneficiation) • Reducing ores to metals to produce ingots, plates or rolled metal Extractive Industries • Mining ore bodies • Harvest from nature (e.g., the air, oil well, mineral body)

6. A simpler view of an industrial value chain helps us understand what advanced manufacturing is about Machines Parts and Components Service Industries Information Engineering Processed Materials Raw Materials But how do we apply it?

7. Firstly, what is a machine?

8. My simple observation about machines • All machines have some form of a control system (manual /automatic / super intelligent) • This control system is able to process information about what’s happening around it and use it to tell the machine what to do • Need some form of a feedback loop • Some are naturally built in • Most need to be built in • Advanced manufacturing is about understanding how these control systems work or work along side other systems so that we can use these machines for our own ends. • CDs, DVDs, TVs etc are a result of our understanding of how to excite electrons and get them to do or store cool things • A bomb is not a machine cause we can’t control the release of energy, but a rocket or a nuclear reactor is a machine • We also need more advanced manufacturing technologies to make different types of machines • You can’t make micro-processors with simple tools, outside of a clean room Advanced manufacturing is the production of complex machines through the application of advancements in science in manufacturing processes and product design

9. Secondly what have been the recent advances in science (including mgt. science) and their impact on manufacturing Recent advances in science Impact on manufacturing process and products E-Commerce Supply chain management and ??? Nano-technology Product engineering vs. process engineering Miniaturization Cell phones Increased Computational Power Visit any control room during a factory visitor Bio-technology Consistent quality in beer production, new drugs Composites Lighter cars, light planes, lighter missiles Space/Cellular Technologies Productivity of vehicles working in mines Advanced manufacturing is also about the application of advanced technologies and processes at any stage of the value chain

10. But what about less developed countries who haven’t mastered basic manufacturing processes • Advanced manufacturing is relative to a countries capabilities • Advances in manufacturing can be made in processes rather than at a technology level, but • Technology can also be bought (or donated) • It is possible to leap frog technologies • In fact in some case, new technologies have lower barriers to entry, than old technologies (e.g., wireless internet vs. cable based internet access). • Malaysia’s vision 2020

11. Therefore the suggested definition of advanced manufacturing? • It is the production of complex machines through the application of advancements in science in manufacturing processes and product design • It is the application of advanced technologies and processes at any stage of the value chain • technologies refers to productive equipment and knowledege • processes also includes managerial practices (e.g., lean, supply chain management, e-commerce etc.) • In a nut shell building advanced manufacturing is • Relative to where an economies’ productive capacity are at • Is simply about process and technology upgrading

12. Structure of Presentation • What is advanced manufacturing? (MM) • Why is it important? (JW and CvW) • The challenges of building an advanced manufacturing sector in a globalised world (MM) • Panel Discussion (All)

13. Structure of Presentation • What is advanced manufacturing? (MM) • Why is it important? (JW and CvW) • The challenges of building an advanced manufacturing sector in a globalised world (MM) • Panel Discussion (All)

14. How to build an advanced manufacturing sector in a globalised world? Key Message • Markets, markets, markets (B2B or B2C, local vs. global) • There are big firms out there who control access to key resources – we are not alone • Competitive advantage can be gained by developing linkages with lead firms in a global value chain • Organisations can use their relationship with other members of their network to develop their competencies.

15. Porters Diamond Regulatory environment Competitive industry Business Environment Frameworks to assess how firms in a global industry compete (1/2) Factors of productions Demanding customers If you don’t have this locally, get it globally

16. What are Global Value Chains? Frameworks to assess how firms in a global industry compete (2/2)

17. Application of the global value chain approach • competitive advantage can be gained by developing linkages with distinct kinds of lead firms in global industries • these lead firms are the ones that control access to major resources that generate the most profitable returns in the industry E.g., • product design, new technologies, brand names or consumer demand • An alternative approach for gaining competitiveness within the GVC framework is for a firm to leverage its relationship with other members of its network to develop its competencies. Key postulates of the Global Value Chain Approach

18. ? Can we leave anything out Examples of where this is happening in the world around us • Automotive sector • Aerospace sector • Pharmaceutical sector • Defence sector • Clothing sector • Agro-processing • Beverages • Appliances • Media • Etc. etc.

19. Conclusion If you believe the above, an understanding of how lead firms manage their global value chains should provide some insights into how South African can become part of the global manufacturing industry

20. Structure of Presentation • What is advanced manufacturing? (MM) • Why is it important? (JW and CvW) • The challenges of building an advanced manufacturing sector in a globalised world (MM) • Panel Discussion (All)