Advanced

Manufacturing

Presentation to DPE
Winter School

August 2009

- Confidential - 11
2
 Presenters

1. Mehleli Mpofu (Acting DDG Manufacturing Unit)

2. Jan Wessels (MD, Denel Dynamics)

3. Chart Van Der Walt (Denel Dynamics)

2
 Structure of Session

1. What is advanced manufacturing? (MM)

2. Why is it important? (JW and CvW)

3. The challenges of building an advanced manufacturing

sector in a globalised world (MM)

4. Panel Discussion (All)

2
 What is advanced manufacturing?

1. It is the production of complex machines through the application of

advancements in science in manufacturing processes and product
design

2. It is the application of advanced technologies and processes at any

stage of the value chain
a. technologies refers to productive equipment and knowledege
b. processes also includes managerial practices (e.g., lean, supply chain
management, e-commerce etc.)

3. In a nut shell building advanced manufacturing is

a. Relative to where an economies’ productive capacity are at
b. Is simply about process and technology upgrading

2
 The typical view of an industrial value chain can be misleading
Typical Metal Based
Industries
Typical Value Chain
Advanced • Assembly into complex
Manufacturing?? systems (e.g., cars)
Secondary/advanced • Assembly into
Service Industries
manufacturing components/subsystems
(braking/steering systems)
• Fabrication i.e. - casting,
Primary manufacturing
forming, machining etc.
Primary and Secondary • Reducing ores to metals
Processing to produce ingots,
plates or rolled metal
(i.e., beneficiation)
Extractive Industries • Mining ore bodies
Typical Chemical
/Pharmaceutical
Industry
• Secondary Chemical
Processing
(pharmaceuticals and
other synthetic
compounds)
• Primary Chemical
Processing (based
ingredients e.g.,
Sulphuric, Nitric and
Phosphoric Acids, basic
polymers and compounds
• Separation processes
(e.g., refinery, cryogenic
air separation, membrane
separation)
• Harvest from nature
(e.g., the air, oil well,
mineral body)
2
A simpler view of an industrial value chain helps us understand
what advanced manufacturing is about

Machines

Information Engineering
Service Industries
Parts and Components

Processed Materials

Raw Materials

But how do we apply it?

2
 Firstly, what is a machine?
My simplistic view of machines – not entirely correct
Purely mechanical Anything that uses mechanical energy only. (e.g., watches,
machines bicycles, egg beater)
Electro-mechanical Mechanical machines that use electrical sources of energy for
machines propulsion and control purposes (e.g., lawn mower, electrical
car, aircraft)
Chemo-mechanical Mechanical machines which use chemical sources of energy?? -
machines?? control is more important than propulsion??
Electro-chemical Batteries, solar panels, CDs etc.
machines
Electro-magnetic Computers, TVs (thank you Solymar), computer chips.
machines
Bio-chemical Enzymes e.g., yeast and
machines
Biological machines Bacteria, your body cells, yeast
Chemical machines Pharmaceuticals

2
 My simple observation about machines
1. All machines have some form of a control system (manual /automatic / super intelligent)
2. This control system is able to process information about what’s happening around it and use it
to tell the machine what to do
a. Need some form of a feedback loop
b. Some are naturally built in
c. Most need to be built in
3. 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.
a. CDs, DVDs, TVs etc are a result of our understanding of how to excite electrons and get
them to do or store cool things
b. 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
4. We also need more advanced manufacturing technologies to make different types
of machines
a. 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

2
 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

2
 But what about less developed countries who haven’t mastered basic
manufacturing processes

1. Advanced manufacturing is relative to a countries capabilities

o Advances in manufacturing can be made in processes rather than at a
technology level, but
o Technology can also be bought (or donated)

2. It is possible to leap frog technologies

o In fact in some case, new technologies have lower barriers to entry,
than old technologies (e.g., wireless internet vs. cable based internet
access).
o Malaysia’s vision 2020

2
 Therefore the suggested definition of advanced manufacturing?

1. It is the production of complex machines through the application of

advancements in science in manufacturing processes and product design

2. It is the application of advanced technologies and processes at any stage

of the value chain
a. technologies refers to productive equipment and knowledege
b. processes also includes managerial practices (e.g., lean, supply chain
management, e-commerce etc.)

3. In a nut shell building advanced manufacturing is

a. Relative to where an economies’ productive capacity are at
b. Is simply about process and technology upgrading

2
 Structure of Presentation

1. What is advanced manufacturing? (MM)

2. Why is it important? (JW and CvW)

3. The challenges of building an advanced manufacturing

sector in a globalised world (MM)

4. Panel Discussion (All)

2
 Structure of Presentation

1. What is advanced manufacturing? (MM)

2. Why is it important? (JW and CvW)

3. The challenges of building an advanced manufacturing

sector in a globalised world (MM)

4. Panel Discussion (All)

2
 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.

2
 Frameworks to assess how firms in a global
industry compete (1/2)
Porters Diamond

Regulatory
environment

Factors of Competitive Demanding

productions industry customers

If you don’t have

this locally, get it
Business globally
Environment

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

Name Value Chain Production Network

Definition Sequence of productive (i.e. Two or more value chains
value-added) activities leading that share at least one actor
to end use (network linkage)

Other Names Supply Chain, Commodity Value network, Input-output

Chain, Production Chain, matrix, Supply Base
Activities Chain, Pipeline

Benefits Focuses on the essential steps Allows the capturing of the

taken to get a product to dynamism and complexity of
market and thus makes the role productive activities
of the key players more
explicit.

2
 Application of the global value chain approach

Key postulates of the Global Value Chain Approach

o competitive advantage can be gained by developing linkages with distinct kinds

of lead firms in global industries

o these lead firms are the ones that control access to major resources that
generate the most profitable returns in the industry E.g.,
o product design, new technologies, brand names or consumer demand

o 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.

2
Examples of where this is happening in the world around us

o Automotive sector
o Aerospace sector
o Pharmaceutical sector
o Defence sector
o
o
o
o
o
o
Clothing sector
Agro-processing
Beverages
Appliances
Media
Etc. etc.
?
Can we leave
anything out

2
 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

2
 Structure of Presentation

1. What is advanced manufacturing? (MM)

2. Why is it important? (JW and CvW)

3. The challenges of building an advanced manufacturing

sector in a globalised world (MM)

4. Panel Discussion (All)