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European Research on ManufacturingEuropean Research on Manufacturing Business Model innovation and recent industrial trends

Giacomo CopaniITIA-CNRITIA CNR

MUSP, 06 March 2012

Summary

What is Manufacturing Business ModelWhat is Manufacturing Business Model

European research on new business models for machineryEuropean research on new business models for machinery

Empirical evidence on the diffusion of new business modelsEmpirical evidence on the diffusion of new business models

ConclusionsConclusions

2© Giacomo Copani ITIA-CNR

Summary






What are we talking about?

Business Model

ValueValueproposition

Supply Chain Revenue Supply C a Configuration

eve ue Model


What are we talking about?

Innovative Service-oriented Business Model

Operational servicesIntegrated solutions

Value

Customer Support ServicesRelationship-process oriented servicesValue

propositionservices Breath of services

Supply Chain Revenue Supply C a Configuration

eve ue Model

Output-related financial methodsP f b d

Networking and partnerships vs vertical integrationDedicated service units


Performance-based contracting

Dedicated service units Organization for services

Summary






EU research on new Business Models for machine tools

Mantys FP5Mantys FP5 Next FP6Next FP6 Demat FP7Demat FP7Mantys FP5ManufutureMantys FP5Manufuture

Next FP6SMERobot FP6Next FP6SMERobot FP6

Demat FP7KTRM FP7Demat FP7KTRM FP7

2001-20052001-2005 2005-20092005-2009 2010-20132010-2013


Mantys FP5

NextThematic network on manufacturing technologiesThematic network on manufacturing technologies

Growth FP5

Number of participants: 20

Budget: 2 million euro

Three pillars:


Time frame: 2001-2005

Three pillars:• Technology Watch in technological areas (Reliability, Process monitoring & Control;

"Agility - Flexibility"; Process ECO-Efficiency; Precision Engineering; Virtual Manufacturing)Manufacturing)

• Understanding the Socio-Economic Aspects of the machine tool business• Foresight Exercises to look into the future of manufacturing technologies

(Technology Roadmaps; New Business Models; etc )(Technology Roadmaps; New Business Models; etc.)

htt // t /


http://www.mantys.org/

Strategic foresight in Mantys

Define strategic factors

Define strategic factors

Identify future scenariosIdentify future scenarios

Define control factors and options for

Define control factors and options for

influencing the future of MT sector

influencing the future of MT sector

paction (business models)

paction (business models)

• Economy• Society

• Successful in global regulated market with

• Pricing policy• Offered

technology• Market• Technology• Branch of

i d t

partnerships• Successful without

partnershipsS f l i

technology• Operating

location• Financing

industry • Successful in Europe

• …

model• …

9© Giacomo Copani ITIA-CNRSource: Mantys Final Report, “Development of a Generic Business Model for the European Machine Tool Industry”, 2005

Business Models in Mantys

10© Giacomo Copani ITIA-CNRSource: Mantys Final Report, “Development of a Generic Business Model for the European Machine Tool Industry”, 2005

Manufuture European Platform

11© Giacomo Copani ITIA-CNRSource: Manufuture Strategic Research Agenda, Report of HLG, 2006

Next FP6

NextNext Generation Production SystemsNext Generation Production Systems

NMP FP6


Budget: 21 million euroBudget: 21 million euro


The biggest EU research initiative in the machine tool sector in FP6

One of the 40 most successful projects in whole FP6 funded research (selected to launch Horizon 2020 and to be presented at the EU Industrial Technologies conference 2011)Industrial Technologies conference 2011)

WP4: “New Business Concepts for Machinery”(ITIA CNR)


(ITIA-CNR)

Next FP6 results

Technical G idelines

Technical Configurator

Technical Guidelines

Methodology to select Technical Configurator

Business Modelevaluation life cycle

gyCooperation Scenarios

Financial Guidelines

OrganizionalGuidelines

software


Next cooperation scenarios

Availability/TCO guarantee

Providing personnel assistanceProviding personnel assistance for customer operations

Production service to cover peaks/spot demandsProduction service to cover peaks/spot demands

Build - (operate) - own business model

Value propositionsLean machine adaptation service

A B C D E F G H IOffering concepts

for leveling irregular and temporary

customer capacity requirements

Offering complete production service

(outsourcing)

Offering procurement management

Offering delivery management

Providing availability guarantee

Solving customer qualification

deficits

Lean machine business concepts

Continuous modernisation

concepts

Towards reconfigurable

production system

VALUE PROPOSITIONS

Business needsrequirements

Product

Process

Production

Maintenance

Procurements N

eeds

High quality

Low costs (production, logistics, etc.)

Delivery

Production

Maintenance

Procurement

Delivery

High productivityU G

ener

al B

usin

ess

Low lead time


Operative

Logistic

g p y

High flexibility

EU

Low risks

Next financial guidelines

Guide for potential financing mechanisms for machine builders, suggesting which options are suitable for different industrial and

organizational situationsorganizational situations

Availability of internal funds Name Capital TypeFirm size Bank loan Debt capital

Firm legal form Trade credits Debt capital

Decision Drivers Financial Models Suggested

Firm age Overdraft Debt capital

EU rating Operating Leasing Debt capital

Export Financial Leasing Debt capital

Financial skills Factoring Debt capital

Availability of commercial credits Forfaiting Debt capitalAvailability of commercial credits Forfaiting Debt capital

Investment value Commercial paper Debt capital

Market predictability Bank advances Debt capital

Periodicity Project financing Debt capital

Multi-product machine Bonds Debt capital

Machinery reconfigurability Stand-by lines of credit Debt capitalExistence of balance sheet constraints/fiscal benefits Syndicated lending Debt capital

Desired payment time horizon Venture leasing Service capital

Self-funding Risk capital

C it l ll I t l f d Ri k it lCapital call Internal funds Risk capital

Barter, Comp. deal, Counter-purch., Buy back Counter trade

Pay per Part New instruments

Pay per Use New instruments

Pay for Availability (exclusive right) New instruments

Delete All(Double Click)


Next technical configurator

Software to configure production systems technology fornew business models


Next organizational guidelines

Catalogue and guidelines to select suitable organizational forms to implement the business model (new company, new department, project

structure etc )structure, etc.)


Next business model financial assessment software

Software to economically and environmentally compare the performance of different business model options for machine builder

d tand customers


SMERobot FP6

SMERobotThe European Robot Initiative for Strengthening theThe European Robot Initiative for Strengthening the Competitiveness of SMEs in Manufacturing

NMP FP6

Number of participants: 21Number of participants: 21


Ti f 2005 2009

B i M d l t di d i WP “S i i ” d “E l it ti ”


Business Models studied in WPs “Socio-economics” and “Exploitation”(Faunhofer ISI)

http://www.smerobot.org/


Demat FP7

DEMATD t i li d M f t i S t A tDematerialised Manufacturing Systems: A new way to design, build, use and sell European Machine Tools

NMP FP7


Budget: 4,7 million euro


WP4: “Sustainable and innovative business models”(Fraunhofer ISI, ITIA-CNR)

http://www.dematproject.eu/


Business models in Demat

Dematerialized production systems: higher flexibility

Methods for focused-flexibility design: optimal flexibility

New business models for focused-flexibility production systems

New service-based business models

New methods for financial assessment and riskNew methods for financial assessment and risk management


KTRM FP7

KTRMKnowledge Transfer of Rapid Manufacturing

LdV FP7

Number of participants: 7Number of participants: 7

Budget: 310.000 euro


Rapid Manufacturing Business Models

http://www.rapidmanufacturing-training.eu/


KTRM FP7

Scope

To transfer companies the state of the art and latest researchTo transfer companies the state of the art and latest research results on Additive Manufacturing:

e-learning addressed to companies (especially SMEs)e learning addressed to companies (especially SMEs)

text book

TechnologiesTechnologiesWhat is a business modelWhat is a business model

TechnologiesTechnologies

D i d l iD i d l iInnovative business modelsInnovative business models

Design and analysis Design and analysis

B i M d lB i M d lPrinciples of business model designPrinciples of business model designBusiness ModelsBusiness Models designdesign

Rapid Manufacturing and business model innovationRapid Manufacturing and business model innovation


model innovationmodel innovation

Business models in KTRM

1Personalized

1Personalized

2Flexible

Customized

2Flexible

CustomizedManufacturing Business

Model

Manufacturing Business

Model

Customized Manufacturing

Business Model

Customized Manufacturing

Business ModelModelModel

3Innovation Services

3Innovation Services

4Design-

oriented B2C

4Design-

oriented B2CServices Business

Model

Services Business

Model

oriented B2CBusiness

Model

oriented B2CBusiness

Model


Summary






Empirical research ITIA-CNR 2007-2010

• 15 case studies of machine tool companies:• OEM and key-components suppliers• Large medium and small companies• Large, medium and small companies• Countries: Germany, Italy, Spain, UK, Finland, Sweden

• 16 case studies of machine builders customers:• Automotive, aeronautics, mechanicals• Large medium and small companies• Large, medium and small companies• Countries: Italy, Germany, France

• Focus groups at “Cecimo Spring meeting 2009”• Business models focus groups• 15 European Associations of machine builders• 15 European Associations of machine builders

• Econometric analysis on “European Manufacturing Survey” data:• International survey on manufacturing innovation lead by

Fraunhofer Institute ISI (ITIA-CNR is Italian partner)• 80 machine tool companies from Germany Austria Switzerland


• 80 machine tool companies from Germany, Austria, Switzerland, Spain, France

Clustering

men

t H

IGH

WILLINGPROACTIVE

INNOVATORS

com

mitm H WILLING

ra

tegi

c c

PASSIVE

rvic

e st

r

OW

PASSIVEINNOVATORS

Ser LO AVERSEUNAWARE

LOW HIGH


Service business model innovation

Clustering

men

t H

IGH

WILLINGPROACTIVE

INNOVATORS

com

mitm H WILLING

ra

tegi

c c

PASSIVETop level players with strong market culture Mainly key-components suppliers

rvic

e st

r

OW

PASSIVEINNOVATORS

Mainly key components suppliersRelying on products quality, robustness and innovationCapacity to measure and forecast benefits


p yProject management of the innovationNew organizational unit and networking

LOW HIGH Brilliant service performance Service sponsor and top management commitment


Service business model innovationRadical transformation

Clustering

Medium-big companiesm

ent

HIG

H

WILLINGPROACTIVE

INNOVATORS

Medium big companiesTraditional technology culture

com

mitm H WILLING

Defensive/reactive approachSame supply chain or t ti l dj t t

ra

tegi

c c

PASSIVE

tactical re-adjustmentsNo performance expectation neither measurement

rvic

e st

r

OW

PASSIVEINNOVATORS Disappointing performance

Incremental transformation


LOW HIGH



Clustering

Medium-big companiesGood market culture

men

t H

IGH

WILLINGPROACTIVE

INNOVATORS

Open to external stimuliGood theory, but lack of resources

com

mitm H WILLING

Internal sponsor

ra

tegi

c c

PASSIVE

rvic

e st

r

OW

PASSIVEINNOVATORS


LOW HIGH



Clustering

Small-medium companiesTraditional technolog and

Small companiesLocal business

men

t H

IGH

WILLINGPROACTIVE

INNOVATORS

Traditional technology and production cultureAggressive conservative

Conservative technology and production culture

com

mitm H WILLING

gg

approachNo trust in research and

d i

production culture“Services are a business of big

”

ra

tegi

c c

PASSIVE

academiaDisbelief in fair cooperation with customers

companies”

rvic

e st

r

OW

PASSIVEINNOVATORS Past disastrous experiences


LOW HIGH



Business model innovation paths

Path 3m

ent

HIG

H

WILLING

PROACTIVEINNOVATORS

Path 3co

mm

itm

H

rate

gic

c

PASSIVE

ervi

ce s

t

LOW

AVERSEUNAWARE

INNOVATORSPath 1

Se

L AVERSEUNAWARE

LOW HIGH




The successful supplier innovation path

NEW SERVICE ORIENTED BUSINESS MODELS

M th d

Proactive suppliers innovators

OCU

S

Methods

ATION LO

ResourcesWilling suppliers R

INNOVA

Culture

g pp

UPPLIER

Unaware and Averse suppliers

S


The environmental dimension

Government

CustomersAssociations

Machine toolcompaniescompanies

A d iAccademia

Industrial cultureIndustrial culture


Different European cultural transitions

men

t H

IGH

WILLINGPROACTIVE

INNOVATORSNORTHERN EUROPE

com

mitm H WILLING

ra

tegi

c c

PASSIVE

SPA

IN

rvic

e st

r

OW

PASSIVEINNOVATORS

ITALY, UK


LOW HIGH



Econometric analysis results

Hard product

Software servitizersm

ent

IGH

WILLING

PROACTIVEINNOVATORS product

companies 22%

servitizers23%

gic

com

mitm

H WILLING

Integrated flat

Finance servitizers

13%

vice

str

ateg

OW

PASSIVEINNOVATORS

flat servitizers

17% Operational servitizers

25%

Serv LO AVERSEUNAWARE

25% LOW HIGH


Poor service business model innovation:

Service offerings are spread, but companies rely on traditional services

No joint innovation of the three business model pillars

No flexibility-oriented business models and performance-based contracting


Specialization in some value-added services

Summary






Conclusions

EU has invested and is investing significantly in new machinery business models researchbusiness models research

Past and ongoing research made available results and new g gcompetences companies might use

However business model innovation in the machine tool sectorHowever, business model innovation in the machine tool sector seems to be in an early stage

Different cultural and environmental conditions in Europe

SMEs are currently out of the gameSMEs are currently out of the game

The transition is very complicatedy p


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