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Manufacturing and Innovation

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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  1. Manufacturing andInnovation Prof. M.J. Gregory

  2. 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!

  3. Manufacturing – a definition “The full cycle from understanding markets through product design, production, distribution and related services within an economic and social context”

  4. 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?

  5. 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

  6. 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!

  7. 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

  8. 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

  9. So for companies, production may link to.. • Research and Development • Design • Responsiveness • Value capture • Service as well as • Cost

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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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