IDENTIFY THE VALUE IN AN ENTERPRISE-WIDE DEPLOYMENT OF ADDITIVE - - PowerPoint PPT Presentation

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IDENTIFY THE VALUE IN AN ENTERPRISE-WIDE DEPLOYMENT OF ADDITIVE MANUFACTURING

Chris Krampitz, P.E. Stratasys Consulting Principal Consultant - Americas

TRANSPORTATION & INDUSTRIAL MACHINERY

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Identify industry challenges addressed by Additive Manufacturing (AM) Define the potential benefits from enterprise-wide AM deployment Explain approaches to identify and define enterprise-wide AM value

OBJECTIVES

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OUR EXPERTISE

Section One

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STRATASYS AT THE FOREFRONT OF DIGITAL MANUFACTURING FOR OVER 25 YEARS

Innovation

• Over 1,200 granted
• r pending AM

patents globally

• Over 30 technology

and leadership awards

AM Solution Ecosystem

Industrial Machines Industrial AM Contract Manufacturer Deep Vertical Market Expertise Materials Development AM Software Prototyping Machines Technical & Commercial Consulting Services

Global AM Leadership

Deployment

• $696 MILLION in

revenue (2015)

• Over 150,000

systems sold

• Comprehensive

ecosystem to facilitate the adoption and integration

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DEPTH & EXPERTISE TO ADDRESS KEY OBSTACLES IN AM ADOPTION & INTEGRATION

Team of technical and commercial people ready for deployment … …to apply their expertise to capture the maximum value from AM

Advanced Design & Simulation 3D Printing Materials 3D Printing Technologies Post Processing Testing & Inspection Regulations & Standards Quality Management Supply Chain Management Strategic Management

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AM-ENABLED MANUFACTURING TRANSFORMATION

Section Two

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TRANSFORMATION IN PRODUCT COMMERCIALIZATION

Mass Production Economies

• f Scale

Product Distribution Mass Customization Economies

• f Scope

Distributed Manufacturing Design for Manufacturing

Current State: Mass Production and Centralized Manufacturing Emerging State: Mass Complexity and Distributed Manufacturing

Design for Use

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RISE OF MASS COMPLEXITY AND DISTRIBUTED MANUFACTURING

5,000 10,000 15,000 20,000 25,000

50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 2008 2010 2012 2014 2016F 2018F 2020F 2022F

# of installed machines

$- $20,000 $40,000 $60,000 $80,000 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F

(USD million) Expected 30% CAGR

$30B $ 9B $ 8B $ 10B $ 11B

AM technology is fueling the creation of distributed manufacturing networks Elements of the Manufacturing Network …fueled by the growth in manufacturing Manufacturing networks are allowing mass complexity and better designs

U.S. 38% Germany 9% Japan 9% China 9% N.A. 40% Europe 28% APAC 27% 2015 Distribution of Capacity

Independent Designers (US)

20K (2006) to 220K (2016) Microfactories $425M (2008) to $3,574M (2015)

Innovation Platforms

AM contract manufacturer on average uploads & prints 120K new designs per month Development time for new designs is over 90% faster

SOURCES: Wohler’s Report 2016, BLS, UL SOURCES: Wohler's Report 2016, MorganStanley, UL SOURCES: Wohler's Report 2016, MorganStanley, UL SOURCES: Shapeways, Wohler’s Report 2015, PDMA, UL

Global AM installations are growing rapidly…

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AM IS CATALYZING CHANGES IN THE CONCEPTUALIZATION, DESIGN, AND PRODUCTION PROCESSES (1 OF 2)

Product Co-Development Real-Time Market Testing Optimal Market Selection

• Increases likelihood of product launch success
• Increase customer loyalty
• AM prototypes to validate user requirements
• Rapid identification of worthy product concepts
• Decreases market research costs
• AM pre-production prototypes to conduct “split testing”

across markets

• Selective specialization across target markets
• Identify modularization across market segments
• AM used for small scale production in specialized markets

1 2 3

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AM IS CATALYZING CHANGES IN THE CONCEPTUALIZATION, DESIGN, AND PRODUCTION PROCESSES (2 OF 2)

Production Scale Up Maintenance & Sustainment

• Rapidly identify product variants warranting large scale

production across market segments

• AM used for production of complex parts and for

manufacturing tooling

• AM used to producing low turnover spare parts and to

produce tooling for moderate turnover spare parts 4 5

• Increase speed to market by over 50%
• Increase part consolidating by over 20%
• Decrease tooling costs by over 50%
• Decrease unit total landed cost by over 15%

Potential Benefits from AM Technology

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In which areas in the product realization process is your organization MOST interested in applying additive manufacturing technologies? (Select One) A. Product Co-Development B. Real Market Testing

• C. Optimal Market Selection / Small Production Runs
• D. Production Scale Up / Bridge Tooling

E. Maintenance & Sustainment F. Other

POLL QUESTION #1

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MARKET FOR TRANSPORTATION AND INDUSTRIAL MACHINERY

Section Three

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TRANSPORTATION AND INDUSTRIAL MACHINERY

Motor Vehicles, Body, & Parts Aerospace Product & Parts Railroad Rolling Stock Ship & Boat Agriculture, Construction, & Mining Industrial Machinery Engine, Turbine, & Power Transmission Equipment Metalworking Machinery Fluid Flow Equipment

• High complexity, high value assemblies (e.g., electrical)
• Rapid tooling (e.g., cast patterns, die/molds, jigs, & fixtures)

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CURRENT STATE OF THE TRANSPORTATION SEGMENT

SOURCES: Capital iQ, Company Reports, Motor Intelligence, AutoPacific

Motor Vehicle industry has struggled with earning its cost of capital…

Total Shareholder Return

• 20%
• 15%
• 10%
• 5%

0% 5% 10% 15% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Estimated Cost of Capital Top 10 OEMs Top 100 Suppliers

…despite increasing spending to maintain & improve capital assets...

$0 $50 $100 $150 $200 $250 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Capital spending, R&D, & M&A for top 10 OEMs (USD billions)

…despite US vehicles sales reaching record levels…

5 10 15 20 2000 2009 2016 2020

…and despite profit margins being at 10 year highs.

• 2%

0% 2% 4% 6% 8% 2006 2009 2016 Top 10 OEMs Top 100 Suppliers

SAAR Million Units (light vehicles) Average EBIT Margin

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KEY FACTORS AND TRENDS IN THE TRANSPORTATION SEGMENTS

SOURCES: NHTSA, PwC, McKinsey, Industry Week

Connected, Intelligent & Autonomous Vehicles Stricter Fuel Economy & Safety Standards Divergent Demand Growth Shifts in Mobility Behaviors New Competition & Cooperation

Causal Factors Emerging Effects

• Supply chain consolidation
• Sharing of platforms
• Flexible manufacturing
• Offloading more product

development

• Focus on features that

matter to end users

• Focus on new product

development Trends that additive manufacturing technologies are well suited to address

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KEY FACTORS AND TRENDS IN THE INDUSTRIAL MACHINERY SEGMENT

Industrial Machinery segment has also struggled to earn its cost of capital

Total Shareholder Return

• 60%
• 40%
• 20%

0% 20% 40% 60% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Estimated Cost of Capital MSCI ACWI Machinery

SOURCES: YCharts, Association of Equipment Manufcturers

Diverging Market Demands Electrical Systems/ Electronics Regulatory Compliance

Emerging Trends

• Supply chain consolidation
• Platform consolidation
• Flexible manufacturing
• Offloading more product development
• Focus on innovation to reduce cost

and improve product performance

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AM CAN BE A STRATEGIC ELEMENT IN ADDRESSING INDUSTRY CHALLENGES

0% 20% 40% 60% 80% 100%

Traditional Cost 40% 15% 15% 7% 1% 6% 1% 17%

Quick Wins:

• Accelerating new product development
• Enhancing quality through rapid prototyping
• Customized fabrication tooling
• Reducing tooling costs in product design

Potential Decrease in Total Landed Cost from Using AM 4-5 years w/o AM Potential Decrease in Time to Market from Using AM 1-2 years w/ AM Estimated 20% Return On Investment

SOURCES: U.S. Census Bureau, Department of Commerce, US FDA, Stratasys Consulting

Near-Term Benefits:

• More complex designs driving weight

reductions and incorporation of electronics

• Reducing assembly and production

costs through simplification

Medium-Term Benefits:

• Customization and improved market

responsiveness

• Smaller supply chains with greater

contributions from members

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What is your organization’s manufacturing readiness level for AM technologies? (Select One) A. Considering AM; no significant investments B. Conducting AM research on products

• C. Producing systems/assemblies in mock production environment
• D. Developing stable manufacturing and supply chain processes

E. Conducting low rate initial production runs (piloting) F. Conducting full rate production runs

POLL QUESTION #2

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What is the LARGEST obstacle for adopting and integrating AM technologies in your organization? (Select One) A. Quality Assurance B. Regulatory Compliance

• C. Identification of Applications and Value
• D. AM Expertise

POLL QUESTION #3

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BUT MANUFACTURES HAVE CAPTURE ONLY A DEARTH OF THE VALUE FROM AM

10 20 30 40 50

Quality & Regulations Expertise Technology cost Multiple material Material availability Identification

• f Applications

& Value Printer speed Build volume

(% of Respondents)

AM applications make up only 0.01-0.05% of industry shipments

SOURCES: PwC, EY, Department of Commerce, Stratasys Consulting

Manufacturers’ Obstacles to Adopting Additive Manufacturing

Today’s Focus

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• Define clear business goals derived

from business unit strategy

• Develop a digital manufacturing vision

and strategy; have the end-goal in mind

• Manage change; build momentum
• Build/acquire/borrow expertise and

capacity at the right times in your plan

• Mind quality and safety (standards

and regulations)

KEY CONSIDERATIONS FOR ENTERPRISE-WIDE DEPLOYMENT OF ADDITIVE MANUFACTURING TECHNOLOGIES

Identify Validate Create Deliver

Deployment Model Key Considerations

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IDENTIFY AND VALIDATE THE EXPECTED VALUE FROM AM FOR NEW PRODUCT INTRODUCTIONS

Strategic Plan Sensing & Discovery Idea Generation

Product Improvement/Introduction Approach

Portfolio of Opportunities Select areas with high potential for large contributions towards business goals Idea Collisions

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IDENTIFY AND VALIDATE THE EXPECTED VALUE FROM AM ACROSS THE SUPPLY CHAIN

Business Goals Inventory Distribution Manufacturing Portfolio of Opportunities Select areas with high potential for large contributions towards business goals

Supply Chain Improvement Approach

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CASE STUDIES

Section Four

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CASE STUDY #1: MID-CAP COMMERCIAL VEHICLE MANUFACTURER (1 OF 2)

Situation

• $1 billion line of heavy duty trucks
• High costs (inventory, distribution, and

manufacturing)

• Long lead times

Obstacles

• Complex, high-cost electronic and

mechanical assemblies/components

• Strict standards and regulatory

requirements (FMVSS and CAFE)

• Concentrated assembly plants and

distributed supplier base

• Lack of sufficient technical understanding of

AM and resource capacity

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CASE STUDY #1: MID-CAP COMMERCIAL VEHICLE MANUFACTURER (2 OF 2)

Actions

• Reductions in inventory and manufacturing cost and

assembly lead time

• Facilitated over 75 client and Tier 1/2 supplier staff
• Conducted facility walkthroughs and supply chain data

analyses across 5 facilities in 10 weeks

Results

• Decreased CAPEX by 10%, operating profits by 15%,

and average lead times by 80%

• 500 tools, jigs, and fixtures reduced CAPEX
• 150 assemblies/parts to reduced working capital and

lead times

• Institutionalized AM among suppliers

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CASE STUDY #2: MID-CAP SUPPLIER TO THE MOTOR VEHICLE INDUSTRY (1 OF 2)

Situation

• Diverse Tier 1 supplier investing approximately

$1.2 billion per year in R&D

• New technology increasing vehicle costs by 20%

and CAPEX by 12% Obstacles

• New technology is complex
• Strict standards and regulatory requirements

(FMVSS, CAFÉ, UL 2580, SAE J2464, SAE J2929)

• Over $3 billion capital invested in

manufacturing

• Lacked wide-spread staff with a sufficient

technical understanding of AM

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CASE STUDY #2: MID-CAP SUPPLIER TO THE MOTOR VEHICLE INDUSTRY (2 OF 2)

Actions

• Reductions in manufacturing cost by $50M and net

CAPEX spend of $10M

• Facilitated nearly 100 client staff
• Conducted innovation workshops across 4 product

categories in 12 weeks

• Develop product charters and time-phased

implementation plans

Results

• Increased profitability by 15% without a net

increase in CAPEX

• 600 assemblies/parts reduced manufacturing costs
• Develop product charters and time-phased

implementation plans

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Enterprise Value Growth Change Requires Justification Systematic Methods Focused on Business Goals New Competencies Required

KEY TAKEAWAYS

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QUESTIONS

Chris Krampitz, P.E.

Principal Consultant Stratasys Consulting 9600 West 76th Street Eden Prairie, MN 55344 T: +1 773 480 5808 E: Chris.Krampitz@Stratasys.com