{"id":33848,"date":"2018-11-13T17:53:11","date_gmt":"2018-11-13T22:53:11","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/adding-value-across-the-value-chain-additive-manufacturing-at-siemens\/"},"modified":"2018-11-13T17:53:11","modified_gmt":"2018-11-13T22:53:11","slug":"adding-value-across-the-value-chain-additive-manufacturing-at-siemens","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/adding-value-across-the-value-chain-additive-manufacturing-at-siemens\/","title":{"rendered":"Adding Value across the Value Chain \u2014 Additive Manufacturing at Siemens"},"content":{"rendered":"

As a diversified manufacturer of industrial equipment and provider of related services, Siemens has found applications for additive manufacturing (AM) that drive process improvements and product development enhancements across its value chain. Speed of innovation, design and dependability of equipment, and the ability to provide ongoing maintenance and aftermarket parts are key to Siemens\u2019s competitive edge, all of which benefit from AM.<\/p>\n

In the energy sector, AM has enabled Siemens to reduce product development time by up to 25% through enhanced prototyping and to cut replacement part lead times by up to 50% in the high-margin aftermarket [1]. Spare part designs are stored in 3D-datasets for easy replication, and production doesn\u2019t require costly retooling. In conventional manufacturing, equipment manufacturers face the recurring decision of whether to incur high inventory costs resulting from upfront overproduction of large quantities of spare parts or to perform costly retooling when smaller batches of replacement parts are demanded [2]. In certain circumstances, Siemens can eschew the need for replacement parts altogether by leveraging AM to perform repairs and make upgrades directly to existing equipment [3]. Additionally, AM has significantly reduced material waste \u2013 Siemens has seen up to a 65% reduction in resource use and 30% reduction in gas emissions in certain applications [4]. This kills two birds with one stone \u2013 lowering Siemens\u2019s cost base in an increasingly competitive market, while responding to customer demands for environmental responsibility.<\/p>\n

In the near-term, Siemens is providing AM as a service<\/em> to increase adoption through its online collaborative platform, Additive Manufacturing Network (AMN) launched in April 2018. High upfront costs, lack of requisite engineering expertise, and slow diffusion of knowledge are some of the main inhibitors of the adoption of AM among smaller scale manufactures and equipment users [5,6]. By bringing together participants from both the supply- and demand-side of the market (see Figure 1), AMN is designed to lower these barriers, while providing access to production capacity and a forum for collaboration [7]. Lowering adoption risk associated with AM and the use of 3D-printed parts has the potential to significantly increase the size of the market opportunity for Siemens.<\/p>\n

To capitalize on expected demand growth, Siemens is investing in medium-term capacity expansion and human capital. In March 2018, Siemens announced plans to invest approximately \u00a330 million in a new AM factory in England [8]. \u201cThis significant investment underlines our belief that there is huge potential for innovation and growth within the [AM] sector. It is also the next step towards achieving our ambition of pioneering the industrialisation of 3D printing\u2026\u201d said Juergen Maier, Siemens UK CEO [9]. Over the next five years, the new facility will allow Siemens to increase its AM asset base from 15 machines to over 50 [10]. The facility will create 55 jobs, strengthening the existing human capital base of engineers, metallurgists, and manufacturing specialists [11].<\/p>\n

While Siemens\u2019s initiatives have the potential to increase demand for AM and ensure that it has adequate capacity to capitalize on market growth, there are additional opportunities to explore. As a conglomerate, Siemens is exposed to demand trends that differ by end-market. In the near-term, Siemens can benefit from monitoring demand for AM machines across divisions to achieve higher utilization across its asset base \u00a0[12]. For example, consider a hypothetical scenario in which the optimal number of AM machines are allocated to each of the Power and Gas<\/em> and Wind Power<\/em> segments to maximize practical capacity utilization under existing demand levels. If there were a subsequent shift in trends causing Power and Gas<\/em> demand to fall and Wind Power<\/em> demand to increase, Siemens should be nimble enough to identify this and reallocate capacity across the two business units to keep utilization optimized. Since AM equipment is more fungible than conventional manufacturing equipment, which is tooled to the specifications of a certain set of outputs, Siemens can realize utilization synergies across business units by virtue of being a \u201cpan-industrial\u201d company, as theorized by Richard D’Aveni [13].<\/p>\n

In the medium-term, Siemens should focus on continuously evaluating opportunities to integrate production with testing and inspection. Since AM is an emerging method of manufacturing mission-critical equipment, one of the largest risks is in the lack of extensive historical data on failure rates and the mechanical properties of output [14]. If Siemens can run production and testing in parallel, it will be able to offer a dependable manufacturing solution without the risk of elongated lead times that can result from focusing on capacity versus output integrity.<\/p>\n

Looking forward, one of the main challenges that Siemens will face is determining what production processes will not<\/u><\/strong> benefit from AM due to structural factors \u2013 such as large volumes or minimal customization \u2013 and resisting the urge to falsely adopt AM. As the cost-effectiveness of AM continues to improve, fluid reassessment of new applications is needed.<\/p>\n

Figure 1:<\/span> Siemens Additive Manufacturing Network<\/p>\n


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End Notes:<\/u><\/strong><\/p>\n

[1,3,4] Siemens AG, \u201cFast, efficient, flexible: Additive Manufacturing (3D-printing) in the energy sector,\u201d https:\/\/www.siemens.com\/global\/en\/home\/products\/energy\/services\/maintenance\/parts\/additive-manufacturing.html<\/a>, accessed November 2018.<\/p>\n

[2] A. Brown. Chain reaction: Why additive manufacturing is about to transform the supply chain<\/strong>. Mechanical Engineering<\/em> 140, no. 10 (October 2018): 30\u201335.<\/p>\n

[5] M. Holwef. The limits of 3D printing<\/strong>. 性视界 Business Review Digital Articles<\/em> (June 23, 2015).<\/p>\n

[6] J.B. Roca et al., Getting past the hype about 3-D printing<\/strong>. MIT Sloan Management Review 58, no. 3 (Spring 2017): 57\u201362.<\/p>\n

[7] \u201cSiemens launches Additive Manufacturing Network to transform global manufacturing,\u201d press release, April 23, 2018, on Siemens AG website, https:\/\/www.siemens.com\/press\/en\/pressrelease\/?press=\/en\/pressrelease\/2018\/digitalfactory\/pr2018040255dfen.htm<\/a>, accessed November 2018.<\/p>\n

[8,9,10,11] \u201cSiemens to invest \u00a327m in new 3D-printing factory,\u201d press release, March 19, 2018, on Siemens AG website, https:\/\/www.siemens.co.uk\/en\/news_press\/index\/news_archive\/2018\/siemens-to-invest-27m-in-new-3d-printing-factory.htm<\/a>, accessed November 2018.<\/p>\n

[12,13] Richard A. D’Aveni, \u201cGE Goes Short-Term With Larry Culp,\u201d Forbes.com, October 25, 2018, https:\/\/www.forbes.com\/sites\/richarddaveni\/2018\/10\/25\/ge-goes-short-term-with-larry-culp\/#53da9ab525e7<\/a>, accessed November 2018.<\/p>\n

[14] C.W.J. Lim, K.Q. Le, Q. Lu, and C.H. Wong. An overview of 3-d printing in manufacturing, aerospace, and automotive industries<\/strong>. IEEE Potentials<\/em> 35, no. 4 (2016): 18\u201322.<\/p>\n","protected":false},"excerpt":{"rendered":"

Siemens is leveraging additive manufacturing to create value across its value chain — from equipment manufacturing to repair, maintenance, and services.<\/p>\n","protected":false},"author":11801,"featured_media":33849,"comment_status":"open","ping_status":"closed","template":"","categories":[4102,3340,858,4881,161],"class_list":["post-33848","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-3dprinting","category-additive-manufacturing","category-conglomerate","category-industrial-equipment","category-manufacturing","hck-taxonomy-organization-siemens","hck-taxonomy-industry-manufacturing","hck-taxonomy-country-germany"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2018\/","yoast_head":"\nAdding Value across the Value Chain \u2014 Additive Manufacturing at Siemens - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/adding-value-across-the-value-chain-additive-manufacturing-at-siemens\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Adding Value across the Value Chain \u2014 Additive Manufacturing at Siemens - 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