2
1
Advanced
Manufacturing
Presentation to DPE
Winter School
August 2009
1
- Confidential -

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

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A simpler view of an industrial value chain helps us understand
what advanced manufacturing is about
But how do we apply it?
Raw Materials
Processed Materials
Parts and Components
Machines
Service
Industries
Information
Engineering

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

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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

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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

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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
Factors of
productions
Demanding
customers
Business
Environment
Regulatory
environment
Competitive
industry
If you don’t have
this locally, get it
globally

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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.
value-added) activities leading
to end use
Two or more value chains
that share at least one actor
(network linkage)
Other Names Supply Chain, Commodity
Chain, Production Chain,
Activities Chain, Pipeline
Value network, Input-output
matrix, Supply Base
Benefits Focuses on the essential steps
taken to get a product to
market and thus makes the role
of the key players more
explicit.
Allows the capturing of the
dynamism and complexity of
productive activities

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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.
Application of the global value chain approach
Key postulates of the Global Value Chain Approach

2
o Automotive sector
o Aerospace sector
o Pharmaceutical sector
o Defence sector
o Clothing sector
o Agro-processing
o Beverages
o Appliances
o Media
o Etc. etc.
Examples of where this is happening in the world around us
?
Can we leave
anything out

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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
Conclusion

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)