THE GLOBAL PLANT THE GLOBAL PLANT FLOORFLOOR

Planetary Ecosystems for Planetary Ecosystems for Designing & Making ThingsDesigning & Making Things

Presented By:Presented By:LaPortia JamesLaPortia James

Jonathan CullumJonathan CullumKelly PowellKelly Powell

FAB LABFAB LAB

http://www.principalvoices.com/2007/http://www.principalvoices.com/2007/technology.innovation/video/neil.gershenfeld/technology.innovation/video/neil.gershenfeld/

Peer Production of Physical ThingsPeer Production of Physical Things

Adoption of Wikinomics: openness, Adoption of Wikinomics: openness, peering, sharing, and acting globalpeering, sharing, and acting global

End of multinational productionEnd of multinational production

Lower costsLower costs

Receding trade barriers allow for goods, Receding trade barriers allow for goods, knowledge, capital, and people to circulate knowledge, capital, and people to circulate freely in the marketfreely in the market

Out with the OLD, in with the NEW!Out with the OLD, in with the NEW!

Out withOut with:: National silosNational silos Insufficient knowledge transferInsufficient knowledge transfer

In withIn with:: Global resources and capabilitiesGlobal resources and capabilities Human capital across borders and Human capital across borders and

organizational boundariesorganizational boundaries

““The emerging globally integrated enterprise The emerging globally integrated enterprise fashions its strategy, its management, and fashions its strategy, its management, and its operations in pursuit of a new goal: the its operations in pursuit of a new goal: the integration of production and value integration of production and value delivery worldwide.”delivery worldwide.”

Sam Palmisano, IBM CEO and ChairSam Palmisano, IBM CEO and Chair

Managing the EcosystemManaging the Ecosystem

Partners

Customers

Suppliers

ExpertiseC

apab

ilitiesOp

erat

ion

s

Innovation…is more about orchestrating and coordinating good ideas.

Part IIPart II

The Modular Motorcycle GangThe Modular Motorcycle Gang

China’s Motorcycle IndustryChina’s Motorcycle Industry

China’s motorcycle industry illustrates China’s motorcycle industry illustrates peer collaboration and production at its peer collaboration and production at its finestfinest

Their collaboration has led to competitive Their collaboration has led to competitive advantages by means of efficiency and advantages by means of efficiency and quality controlquality control

Motor cycle production has tripled since Motor cycle production has tripled since the mid 1990s in Chinathe mid 1990s in China

HistoryHistory

Yin Mingshan set up a motorcycle repair Yin Mingshan set up a motorcycle repair shop with 14 employees in Chongqingshop with 14 employees in Chongqing

That was over 14 years ago. Today, his That was over 14 years ago. Today, his company, Lifan, has 9,000 employeescompany, Lifan, has 9,000 employees

Lifan produces over 700,000 motorcycles Lifan produces over 700,000 motorcycles a year in 112 countriesa year in 112 countries

http://www.lifanmc.co.nz/

Future of LifanFuture of Lifan

Lifan plans to double its workforce to 20,000 in Lifan plans to double its workforce to 20,000 in five yearsfive years

Lifan wants to be a worldwide brandLifan wants to be a worldwide brand

Hopes to be instrumental in building up China’s Hopes to be instrumental in building up China’s automobile industryautomobile industry

Makes mid-size cars in Asia, Middle East, and Makes mid-size cars in Asia, Middle East, and CaribbeanCaribbean

The Lifan 520 has leather seats, air bags, a The Lifan 520 has leather seats, air bags, a spacious trunk, and a DVD system for $9,700spacious trunk, and a DVD system for $9,700

Peer ProductionPeer Production

Current thinking: Peer production can only Current thinking: Peer production can only be utilized to make information-based be utilized to make information-based goods (composed of bits, inexpensive to goods (composed of bits, inexpensive to make, and easily subdivided).make, and easily subdivided).

More people are beginning to believe that More people are beginning to believe that peer production can be applied to the peer production can be applied to the production of actual productsproduction of actual products

ModularModular

If products are made to be modular then, If products are made to be modular then, like Wikipedia, producers should be able like Wikipedia, producers should be able to add to and modify product components to add to and modify product components and designsand designs

Modular means consisting of Modular means consisting of interchangeable parts that can be interchangeable parts that can be swapped without hindering the swapped without hindering the performance of the productperformance of the product

CollaborationCollaboration

Chinese motorcycle producers collaborate on Chinese motorcycle producers collaborate on manufacturing and designs (hundreds of manufacturing and designs (hundreds of companies)companies)

In less than ten years, Honda, Suzuki, and In less than ten years, Honda, Suzuki, and Yamaha have lost 40% of their market to Yamaha have lost 40% of their market to Chinese firmsChinese firms

This seems to be proof that peer collaboration This seems to be proof that peer collaboration and production has been a successful approach and production has been a successful approach for the Chinese Motorcycle industryfor the Chinese Motorcycle industry

Other Reasons for Success in Other Reasons for Success in ChinaChina

China’s transition from communist central China’s transition from communist central planning to a market economyplanning to a market economy

Long history of making Japanese productsLong history of making Japanese products

Some argue that there is no real Some argue that there is no real innovation in China; they knocked off the innovation in China; they knocked off the Japanese's designJapanese's design

China has made reverse engineering more China has made reverse engineering more collaborative and organizedcollaborative and organized

China’s ApproachChina’s Approach

Loosely defined specifications to amend and Loosely defined specifications to amend and improve performance (this is usually achieved improve performance (this is usually achieved through collaboration with other suppliers)through collaboration with other suppliers)

Exchange of knowledge and skills among firmsExchange of knowledge and skills among firms

Face-to-face interaction encourages trust, and Face-to-face interaction encourages trust, and problem solvingproblem solving

Increased specializationIncreased specialization

This is referred to localized modularizationThis is referred to localized modularization

Risks to this ApproachRisks to this Approach

Gap in supply and demand caused by a Gap in supply and demand caused by a lack of coordination between suppliers and lack of coordination between suppliers and producers when gauging the marketproducers when gauging the market

Mismatched Parts- This can arise from a Mismatched Parts- This can arise from a lack of integrationlack of integration

The Lego Block AirplaneThe Lego Block Airplane

Boeing’s ApproachBoeing’s Approach

Planes are composed of “Lego” parts Planes are composed of “Lego” parts made from many different manufacturersmade from many different manufacturers

Economic factors, including 9/11, caused Economic factors, including 9/11, caused Boeing to have to change the way it does Boeing to have to change the way it does businessbusiness

New approach, mass collaboration, to New approach, mass collaboration, to control costs and get new planes to control costs and get new planes to market more quicklymarket more quickly

Boeing ContinuedBoeing Continued

Participants design and build the aircraft in ways similar Participants design and build the aircraft in ways similar to those who built the Linux operating systemto those who built the Linux operating systemFrom this process came the 787 Dreamliner, From this process came the 787 Dreamliner, IMPORTANT FOR THE COMPANY’S SUCCESSIMPORTANT FOR THE COMPANY’S SUCCESSBuilt among hundreds of suppliers in six different Built among hundreds of suppliers in six different countriescountriesBoeing’s new model treats suppliers as partners and Boeing’s new model treats suppliers as partners and peers, and their involvement in the process begins much peers, and their involvement in the process begins much earlierearlierFuture passengers were also involved in the design Future passengers were also involved in the design processprocessThe final assembly process cut from 13-17 days to as The final assembly process cut from 13-17 days to as few as three daysfew as three days

Collaboration SystemCollaboration System

Boeing created a collaboration system called Boeing created a collaboration system called Global Collaborative EnvironmentGlobal Collaborative EnvironmentAllows for collaboration in respect to design and Allows for collaboration in respect to design and product life-cycle managementproduct life-cycle managementEngineer drawings and other important data can Engineer drawings and other important data can be accessed, reviewed, and revised using the be accessed, reviewed, and revised using the system by all partners all over the world. system by all partners all over the world. There is also a sophisticated virtual design There is also a sophisticated virtual design program, so suppliers can see how their parts program, so suppliers can see how their parts will act together in real situations (at this stage will act together in real situations (at this stage benefits and problems can be seen)benefits and problems can be seen)

RisksRisks

Some worry that Boeing’s sharing of Some worry that Boeing’s sharing of intellectual knowledge will cause them to intellectual knowledge will cause them to lose its engineering edgelose its engineering edge

““Leaky knowledge”Leaky knowledge”

MicromanageMicromanage

BMWBMW

German carmaker with a long-term German carmaker with a long-term reputation for quality car engineering.reputation for quality car engineering.

Large international company that has Large international company that has sales to people in many countries around sales to people in many countries around the world.the world.

BMWBMW

BMW undergoing a shift from an emphasis BMW undergoing a shift from an emphasis on mechanical engineering to perfecting on mechanical engineering to perfecting the driving experience.the driving experience.

BMW focusing on more collaboration with BMW focusing on more collaboration with their suppliers, and a shift to their their suppliers, and a shift to their suppliers doing more R&D, design suppliers doing more R&D, design building, and assembly of their cars.building, and assembly of their cars.

How BMW harnesses the Global plant floorHow BMW harnesses the Global plant floor

BMW estimates that 90% of its new BMW estimates that 90% of its new innovations will come in the fields of innovations will come in the fields of electronics and software.electronics and software.Suppliers already develop and build 65% Suppliers already develop and build 65% of new vehicles.of new vehicles.Many of BMW’s key innovations were from Many of BMW’s key innovations were from supplierssuppliers

Opportunities to explore: develop more Opportunities to explore: develop more customer co-creation using the internetcustomer co-creation using the internet

BMW Car ModelsBMW Car Models

528xi Sedan528xi Sedan 335i Sedan 335i Sedan M3 Sedan M3 Sedan

6 Series Convertible X5 xDrive486 Series Convertible X5 xDrive48 Z4 Roadster Z4 Roadster

BMW WebsiteBMW Website

http://www.bmw.com/

http://www.bmwusa.com/Default.aspx

BMW Efficient DynamicsBMW Efficient Dynamics

More driving pleasureMore driving pleasure

Less emissionsLess emissions

Hybrids/Clean energyHybrids/Clean energy

BMW – Efficient TechnologiesBMW – Efficient Technologies

The engines

Auto Start Stop function

Brake Energy Regeneration

Electric Power Steering Electric Power Steering

Air vent control Air vent control

Gear shift indicator Gear shift indicator

Tyres with reduced rolling resistance Tyres with reduced rolling resistance

SummarySummary

7 Lessons on how to harness the Global 7 Lessons on how to harness the Global Plant floor:Plant floor:1- Focus on the critical value drivers1- Focus on the critical value drivers

2- Add value through orchestration2- Add value through orchestration

3- Instill rapid, iterative design processes3- Instill rapid, iterative design processes

4- Harness modular architectures4- Harness modular architectures

5- Create a transparent & egalitarian ecosystem5- Create a transparent & egalitarian ecosystem

6- Share the costs and risks6- Share the costs and risks

7- Keep a keen futures watch7- Keep a keen futures watch

The EndThe End

Jiangsu 125cc MotorcycleJiangsu 125cc Motorcycle BMW 750Li BMW 750Li

Boeing 747Boeing 747