Exam_Preparation_Slides_AM.pdf

TU Munich Advanced Topics in Finance and Accounting ”Innovation Management How a Swiss high-tech company works on a sustainable future“ Prof. Dr. Michael Suess December 04, 2023 Introduction to Innovation and Strategic Management Overview Innovation Approaches to innovation ”Innovation" is derived f...

TU Munich Advanced Topics in Finance and Accounting ”Innovation Management How a Swiss high-tech company works on a sustainable future“ Prof. Dr. Michael Suess December 04, 2023 Introduction to Innovation and Strategic Management Overview Innovation Approaches to innovation ”Innovation" is derived from the Latin terms:  novus ("new" or "new-like") Companies operate under the view that innovations are created by staff within the company innovatio ("something newly created") Different definitions “Innovations are qualitatively new products or processes that differ significantly […] from what existed before.” (Hauschildt) “A new way of doing things that is commercialized.” (Porter) “The adoption of ideas that are new to the adoption organization.” (Afuah) Source: Müller-Prothmann/Dörr (2009), pp. 7 – 12. Page 2 Closed Innovation model E.g.: Apple (because of its highly integrated and coordinated product range the company is more inclined towards closed innovation)  Open Innovation model Companies source external knowledge for their innovation management strategies by making active and strategic use of the environment around them E.g.: Crowdsourcing (a wide range of customers, users, inventors and innovative people around the globe can be involved in the innovation process) Introduction to Innovation and Strategic Management Overview Innovation Management Innovation Controlling Innovation Management is the systematic promotion of innovation in organizations. It includes tasks of development and implementation of the innovation strategy, organization and role allocation in innovation management and the development of innovations. Innovation Controlling is a regularly and systematically searching for causes that disrupt innovation efforts. Furthermore it is the support of management in the planning and control of innovation projects through analysis, information supply and coordination of individual activities for ensuring both the efficiency and effectiveness of innovation. Source: Müller-Prothmann/Dörr (2009), pp. 7 – 12. Page 3 ≠ Introduction to Innovation and Strategic Management Types of Innovation Product vs. Process Innovation  Product Innovation: Innovations in the way a new product is developed and marketed, such as its goods or services  Process Innovation: Innovations in the way an organization conducts its business, such as in techniques of producing or marketing goods or services Note: Product innovation can enable process innovation and vice versa Source: Schilling (2013), pp. 46– 49. Page 4 Example  Creates a new distribution service = Product Innovation  Fully automated sorting of parcels in the distribution centres = Process Innovation Introduction to Innovation and Strategic Management Types of Innovation Radical vs. Incremental Innovation  Radical Innovation: Innovations in the way of developing completely new systems, products or services that did not exist before  Incremental Innovation: Innovations in the way of minor changes or adjustments to existing practices Note: The radicalness of an innovation is relative; it may change over time with respect to different observers Source: Schilling (2013), pp. 46– 49. Page 5 Example  Invention of the iPhone = Radical Innovation  Expansion of Storage = Incremental Innovation Innovation Strategy Influence of innovations on company valuation Influencing factors of innovations on the company value  Research & Development headcount/ budget as a percentage of sales, result compared to competing companies  Production of intellectual property (e.g., patents, trade secrets, etc.)  Number of active projects  Number of ideas submitted by employees  Percentage of sales from products introduced in the past X year(s) Example: Tesla Tesla Volkswagen  Market Value (12/2022): 606 Billion $  Market Value (12/2022): 87 Billion $  Cars sold in 2021: < 1 Million  Cars sold in 2021: 8.6 million  Revenue 2021: 53 Billion $  Revenue 2021: 280 Billion $ McKinsey: 84 % of executives say that their future success is mainly dependent on innovation. Sources: https://companiesmarketcap.com/automakers/largest-automakers-by-market-cap/, CompaniesMarketCap / Dec. 2022 https://www.statista.com/statistics/272120/revenue-of-tesla/, Statista / Dec. 2022 https://www.volkswagenag.com/en/news/2022/03/volkswagen-group-achieves-solid-results-in-2021-and-drives-forwa.html#, VWAG, Mar. 2022 Page 6  How can this be justified? Innovation Strategy Timing of Market Entry Pioneer Strategy vs. Follow-up Strategy  Pioneer Strategy Innovations are effectively enforced on the market ahead of other companies resulting in a temporary quasi-monopoly. E.g.: Polaroid  Follow-up Strategy Direct technological succession of a pioneer, if possible combined with an application-oriented further development of the innovation already introduced to the market. E.g.: Kodak Source: Schilling (2013), pp. 89 – 99. Page 7 (Science) Push vs. (Market) Pull Strategy  (Science/Technology) Push Strategy The drive for innovation comes from the development of new knowledge or new technologies. E.g.: iPad (Market) Pull Strategy The drive for innovation comes from the market; the innovation is initiated by the needs of the customers, which can be satisfied by a new product. E.g.: Bread slicing machine Innovation Strategy How do managers identify changes in new technologies? S - Curve Concept Saturation Maturity Performance/ Cumulative patent applications by Richard N. Foster Growth R&D/ Emerging New Technology Pacing Technology Key Technology Base Technology Cumulative R&D/ Time The S-Curve Concept is an instrument within the framework of the external company analysis of strategic innovation management, pointing out, in particular, the need for tailored strategic decisions based on the current state of technological development. Source: Schilling (2013), p. 50. Page 8 Innovation Strategy How do managers identify changes in new technologies? General Aspects Structure  S - shape of the curve refers to the relationship between the performance of technology and the associated research and development effort (time or sales volume are also possible)  Gradient of the curve: describes the gain in performance due to additional research and development work, i.e. the R&D productivity  It serves as an assessment support of how the technology can still develop  Assumption: Technology always reaches technical performance limits regarding its potential for further development  Four stages of S-Curve: (not all undergo all phases) R&D/Emerging – Growth – Maturity - Saturation Goal Set Identifies possible "technological discontinuities" that can contribute significantly to eroding market share if companies switch to a more advantageous technology too late. Source: Schilling (2013), pp. 50 - 55. Page 9 Innovation Strategy How do managers identify changes in new technologies? 20 15 = Sailing ships Speed (kts) 25 RMS Titanic (1911), 24 kts = Steamships Cutty Sark (1870), 17,15 kts USS Constellation (1797), 14 kts 10 Robert Fulton’s “Clermont” (1807), 5 kts 5 1800 Page 10 1870 1910 Time Innovation Strategy - Performance S-Curve model: Spare Part Distribution @ UPS >1,000 Warehouses worldwide Traditional Spare Part Distribution Manufacturing game changer: USP launches 3D-printing network UPS Supply Chain Center in Louisville, Kentucky: 1,000 3D printers to produce on-demand prototypes and product parts for business customers On demand 3D printing Spare Parts 1907 1980 Source: https://news.sap.com/germany/2016/05/warum-ups-glaubt-dass-3d-drucker-die-logistikkette-verandern-werden/. Page 11 2015 Time Innovation Strategy Alternative S-Curve Consideration (including cash flow) Economic performance, cash flow consideration Significant relevance for the approval or non-approval of the innovation The curves can vary extremely. The prediction of these curves is part of innovation management Cumulative R&D/ Time Page 12 Innovation Strategy How do managers identify changes in new technologies? Gartner Hype Cycle Garnter Hype Cycle Peak of inflated expectations Expectations by Gartner, Inc The Hype Cycle is a graphical curve model to represent the maturity, adoption, and social application of specific technologies. Plateau of Productivity Slope of Enlightenment Innovation Trigger Source: Gartner Hype Cycle Page 13 Trough of Disillusionment Time Innovation Strategy How do managers identify changes in new technologies? I. Innovation Trigger A potential technology breakthrough starts. Early proofof-concept stories and media interest trigger significant publicity. Often no usable products exist, and commercial viability is unproven. II. Peak of inflated expectation Early publicity produces a number of success stories — often accompanied by scores of failures. Some companies take action; many do not. IV. Slope of Enlightenment More instances of how the technology can benefit the enterprise start to crystallize and become more widely understood. Secondand third-generation products appear from technology providers. More enterprises fund pilots; conservative companies remain cautious. Source: Gartner Hype Cycle Page 14 III. Trough of Disillusionment Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investment continues only if the surviving providers improve their products to the satisfaction of early adopters. V. Plateau of Productivity Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology's broad market applicability and relevance are clearly paying off. If the technology has more than a niche market then it will continue to grow. Innovation Strategy Process of identifying strategic changes Porter‘s five forces by Michael Porter Supplier Power Threat of New Entry Competitive Rivalry Threat of Substitution Buyer Power The Porter's five-force model can be used to analyze the competitive market dynamics of an industry. Source: Schilling (2013), pp. 110 - 121. Page 15 Innovation Strategy Process of identifying strategic changes General Aspects  The five forces are the key sources of competitive pressure within an industry Structure  Competitive Rivalry: Looks at the number and strength of a company’s competitors  Threat of Substitution: Refers to products/services that can perform the same function as the product in the industry under consideration  Threat of new Entry: Limiting of companies in the market by the existence of entry barriers and thus influencing the rivalry between existing competitors  Supplier Power: Determined by how easy it is for a company’s suppliers to increase their prices  Buyer Power: Determined by how easy it is for buyers to drive a company’s prices down Source: Schilling (2013), pp. 110 - 121. Page 16 Goal Set Guides a business strategy to increase competitive advantage and indicates what strategic changes need to be made to deliver long-term profit. Aircraft OEMs Innovation Strategy Porters five forces in the aerospace industry Threat of New Entry: Low   Facilities and equipment required to manage the designing, testing and production require a lot of investment All the major players in the industry have gained competitiveness through experience and obtaining important long-term contracts  The barriers to entry are significantly high Supplier Power: Medium  Aircraft OEMs are dependent on the supply of material by first and second tier suppliers. Suppliers can influence the quality and cost of spare parts  Supplier Power Due to the limited number of OEMs and the willingness to conclude longterm contracts with them, the supplier power is not extremely high Threat of Substitution: Low Although train journeys have become more comfortable and faster and the environmental debate has become more intense in people's minds, the demand for airplanes from the airlines has not diminished  Fast overseas travel remains the unique selling point of aviation. There is only little threat of substitution Competitive Rivalry Buyer Power: Medium   Few customers, but limited bargaining power dueBuyer to overall increase in demand, surpassing the production capabilitiesPower of aircraft OEMs Source: https://www.porteranalysis.com/porters-five-forces-of-aerospace-industry/, https://exaltedvalue.com/index.php/1531-2/ Page 17 = High = Medium = Low Innovation Strategy Porters five forces in the aerospace industry Competitive Rivalry: Medium  Airbus and Boeing dominate the market as a duopoly  The few large scale manufacturers compete for gaining longterm supply contracts with the airline, creating a moderate level of competitive rivalry among the OEMs  This competition does take toll on the overall long-term profitability of the organization In order to comply with Airbus new A320 Boeing took risks when introducing the B737 Max https://www.porteranalysis.com/porters-five-forces-of-aerospace-industry/ https://exaltedvalue.com/index.php/1531-2/ Page 18 Innovation Strategy Decision processes in the M&A sector Mergers, acquisitions and strategic alliances Do we have the resources and competences? by Gomes, Weber, Brown & Tarba No Yes Could those R&D become of critical importance to or future competitive advantage? Could someone else do it better, cheaper and faster? Yes No Internal development Yes Yes Is there enough time and potential capability to develop them internally? No No External development (M&A or alliances) This model helps determining whether a company should pursue external M&A activities or internal development. Source: Gomes, Weber, Brown, Tarba (2010). Page 19 Different dimensions of Innovation Management A multi-layered construct Innovation Management Innovation Strategy Development of the innovation strategy Making strategic M&A decisions Planning of innovation activities, for example with an innovation roadmap Innovation Development  Following the process of transforming an idea into a successful innovation  Managing ideas from inside and outside the company Innovation Organization  Managing the portfolio of innovations within a company  Ensuring a smooth implementation of new innovations in a company Innovation Organization Evaluation of market potential Total addressable market (TAM) Total addressable market Serviceable available market Overall market demand or revenue potential for a product or service Example: All tea drinkers in the world Serviceable available market (SAM) Portion of TAM that can be served by your company’s product or service Example: All tea drinkers in Germany Serviceable obtainable market Serviceable obtainable market (SOM) Market share of SAM that can realistically be obtained, given the competition Example: 15% of all tea drinkers in Germany Page 21 Innovation Organization Portfolio vs. Program vs. Project Management Source: Pratt (2023) Page 22 Innovation Organization Ansoff Innovation Matrix The ideal ratio for resource allocation differs for different companies Source: Nagji, B., & Tuff, G. (2012) Page 23 Innovation Development How to determine customer needs and find suitable solutions? The House of Quality by Yōji Akao Relationships Among Responses Supplier Measurable “Responses” Objective Customer Requirements * = Requirements Characterization and Verification * Relationship Matrix Competitive Analysis Targets & Technical Analysis Importance The House of Quality is a quality method for determining customer needs and for immediate transformation and implementation into the necessary (technical) solutions. Source: Schilling (2013), pp. 245 – 247. Page 24 Innovation Development How to determine customer needs and find suitable solutions? Structure 1 Determination of customer requirements 7 Evaluation of the requirements-solution relationship: determination of the solution with the highest degree of fulfilment 2 Prioritization of individual requirements 6 Multiplying of the customer importance rating of a feature by its relationship to an engineering attribute 3 Identification of the engine- ering attributes that drive the performance of the product 5 Formation of a correlation matrix, in which all possible solutions will be linked to the requirements 4 Entering of the correlations between the engineering attributes to assess the degree to which one characteristic may positively or negatively affect another Goal Set 8 Determination of the target values for each of the design requirements Source: Schilling (2013), pp. 245 – 247. Page 25 9 P Creation of Product design based on those design targets Allows comprehensive ideas and project evaluation to be realized as well as the conception, creation and sale of products and services that the customer wants. Innovation Development How to efficiently manage the innovation development process? The Stage Gate Model - by Robert G. Cooper Discovery: Idea Generation Gate 1: Idea Screen Stage 1: Scoping Brief, preliminary scoping of the project, utilizing easy-to-obtain information that enables narrowing the list of potential projects Gate 2: Does idea justify more research? Stage 2: Building the business case More detailed research (both market and technical) to build business case: product definition, project justification, and plan for project Gate 3: Is the business case sound? Stage 3: Development Detailed product design, development, and testing, Plans are also developed for production and launch Gate 4: Should project be moved to external testing? Stage 4: Testing & Validation Testing of proposed new product and its production and marketing; may include production trials and trial selling Gate 5: Is product ready for commercial launch? Stage 5: Launch Post-Launch Review Source: Schilling (2013), pp. 243 – 244. Page 26 Full production, marketing and selling commences How did we do compared to projects? What did we learn? Innovation Development How to efficiently manage the innovation development process? General Aspects Structure  Stages and gates break the innovation process into defined stages, each consisting of a set of defined, parallel and cross-functional activities  Gates = entrance to each stage, serve as quality-control and Go/Kill checkpoints to help filter out bad projects Companies using the ”Stage-Gate-Model” Example Checkpoint Question: Is there a market for the product?  Each gate has three components: deliverables (results of the previous stage), criteria (questions or metrics used to make the go/kill decision) and outputs (results of the gate review process, include decisions and action plans)  Stages = a cross-functional team undertakes parallel activities designed to drive down the risk of a development project; they gather vital technical, market, and financial information to use in the decision to advance the project to the next gate Goal Set Allocates resources efficiently on most promising projects and minimizes risks. Source: Schilling (2013), pp. 243 – 244. Page 27 Process to define and review NPV and Payback  Definition of Top Line Top Down by Global product management / business Development  Definition of Top Line Bottom Up by local Head of Sales  Alignment on a common top line goal  Definition of engineering and development costs as well as potential capex and & timeline until market launch of the finale product Def. of development costs Top Line ramp up Profitability CM1 & GP  Alignment between global function / local head of sales and local finance on profitability goals Page 28  Based on total sum and strategic impact different management levels up to division CEO and CEO have to approve Management Approval Process Utilize Oerlikon NPV sheet  Enter Data into Oerlikon standard sheet over 10 year: Top Line, CM 1, GP, Capex and depreciation period, project costs, potential efficiency gains Innovation: When Innovation Meets Passion: Coating Solutions & Technologies Yearly Management review Development & Product Launch  Review assumptions vs reality and define action items if required PVD (=Physical Vapour Deposition) Technology Benefits of arc technology Arc evaporation +  High ionization of the deposition flux (not as smooth = droplets)  Dense coatings  Good adhesion Benefits of sputtering technology Magnetron sputtering +  Smooth coatings (deposition with virtually no droplets)  Low density, lower hardness  Moderate adhesion Page 29 Scalable pulsed power plasma Technology TU Munich Advanced Topics in Finance and Accounting ”Additive Manufacturing – Applications and Showcases“ Dr. Marcus Giglmaier January 22, 2024 What is new with Additive Manufacturing? Conventional (subtractive) manufacturing process Top-Down-Process Buy to fly ratio: ≈ 10 to 100 (Definition: weight of raw material / weight of product) Additive manufacturing process Bottom-Up-Process Buy to fly ratio: ≈ 1-5 (potential scrap: surface treatment, support structures, failed builds, …) Page 31 Oerlikon Innovation Hub Munich – Exemplary AM research activities in publicly funded projects EU-Funded Project InShaPe Green Additive Manufacturing through Innovative Beam Shaping and Process Monitoring © EOS 6.8 Mio. € Gaussian Ring Top Hat Horseshoe Line Laser beam shaping for AM:  Flexible adaption of beam shape to influence material properties  Flexible zooming of spot size  AI-powered „recipe book“ for beam shapes  Multispectral in-line monitoring and control Overall project Aims 7x -50% -60% -30% Productivity Part costs Energy consumption Scrap Page 32 Project budget Review cost structure of OAM Europe, Product cost analysis Manufacturing costs vs sales, e.g. Airbus, satellite antenna 2,0  Revenue shall cover profit, manufacturing costs as well as overhead costs 1,84 1,8 68% like Salesforce, Building & Infrastructure, General & Administrative 63% 1,6 expenses 1,4  Based on target profit and overhead costs, target manufacturing costs can be determined 1,2 Million € 45%  For all years, target manufacturing costs are 906k€ (=49% of revenue) 1,0 0,83 0,8 0,71  Real manufacturing costs are 833k€ (45% of revenue) and can be split into: 0,69 0,6 0,4 1) 0,45 0,44 0,30 e.g.: Powder, Raw material, External service providers, … 13% 0,2 Material costs = 323k€ (39%) 2) 0,09 Production costs = 510k€ (61%) e.g. Printer, Machining Tools, Labor costs, … 0,0 2021 2022 2023 YTD10 Sum all years  Real production costs < target manufacturing costs  Successful project Revenue Page 33 Production Costs Production Costs / Revenue TU Munich Advanced Topics in Finance and Accounting ”Advanced & Additive Manufacturing – Definition, technologies, markets, industrialization“ Dr. Marcus Giglmaier January 29, 2023 Building Blocks of Advanced Manufacturing Advanced Materials Advanced Robotics Artificial Intelligence & Machine Learning Augmented Reality Smart Factory & IoT Workforce Transformation Nanotechnology Additive Manufacturing Enabling a more efficient and intelligent production and a more effective workforce organization. Page 35 New technologies are enablers for further productivity & efficiency improvements Technology Advanced Materials Enabling Software supported rapid alloy development shortens the development time of new materials Revolutionary material compositions can be identified Simulation of material properties enables fast results for multi-parameter optimizations Example: Oerlikon Scoperta Artificial Intelligence & Machine Learning Big data collection paired with AI and ML supports in identifying bottlenecks and improvement potentials Machine learning can be used to train algorithms to identify defects (e.g. from images) to reduce costs for quality control Conclusions and predictions from AI can be used for predictive maintenance that helps to avoid expensive production downtime Smart Factory & IoT Manufacturing hardware can be linked together, enabling communication with each other and automatically adjusting production depending on current demand Sensor data and automated quality inspection can indicate problems in production very early Digital twins enable simulation of the production process to optimize factory layout New technologies are enablers for further productivity & efficiency improvements Technology Enabling Additive Manufacturing New part geometries and higher design flexibility Fast iteration cycles in prototyping and early development projects -> Faster time to market More Sustainable production with reduced waste Advanced Robotics Automation reducing the need for manual labor Robots can operate 24/7 with only minimal supervision Cobot (collaborative robots) enable a more efficient and safer workplace supporting humans in repetitive tasks Nanotechnology Essential for all manufacturing achievements in electronics (e.g. smaller transistor size, flexible displays) Nanoocoatings (e.g. ALD) are enabling functions like better corrosion protection, antibacterial properties, etc. Nanotechnology has enabled the development of completely new materials (e.g. Nanotubes, Graphene) Nanoparticles in lubricants are essential for friction reduction New technologies are enablers for further productivity & efficiency improvements Technology Enabling Workforce Transformation Future workforce is highly skilled and flexible Focus shifting from manual labor to creative problem solving and innovation Augmented Reality Efficient training of new employees and upskilling existing employees using interactive visual guides Increased efficiency and limiting mistakes by visual instructions developed for the task at hand replacing paper instructions Remote support of employees by virtually calling experts - eliminating costs for sending support and allowing for fast problem solving AM is at the core of future manufacturing in discrete industry Data based manufacturing process through whole production Page 39  Design / Scan  Production process  Part inspection  Part field service  Digital twin  3D Printing  Data verification  Digital twin update  CAD file creation  In situ monitoring  Modeling and simulation  Post processing Source: Deloitte University Press Total AM market split into Polymer and Metals Polymer AM market is larger but… (Sums in € bn) Metal AM market is growing at a higher rate 11.92 Part Manufacturing 9.66 Part Manufacturing CAGR 12.9% Material (Sums in € bn) Material System CAGR 26.1% System 6,14 3,08 10.3% 13.4% 6.50 2,84 5.83 5.14 17.5% 3,08 2,82 1,66 3.03 2.50 1,92 2,09 2,69 0,94 1,09 1,33 2020 2021 2022 Source: AMPower Report, 2023 Page 40 23.2% 3,09 2,54 2027 2.03 0,50 0,64 0,90 0,76 0,75 0,95 0,89 0,99 1,18 2020 2021 2022 3,74 2027 Metal feedstock use by alloy: double digit growth of all alloys expected Yearly growth rate of feedstock: 44% vs. CAGR of Metal AM: 26% Difference explained by: 42’207.00 1. Future material prices expected to adjust downwards 2. Consumption expected to shift towards less favorable mix in terms of revenue (steels growing faster than titanium) (Sums in tons) Aluminum alloys +44% Stainless steel alloys Yearly growth rate Tool steel alloys Alloy Price (€/kg) Use in tons (2022) (2022-2027) Aluminum 10-100 699 39% Titanium alloys Stainless steel 90-120 1155 64% Cobalt alloys Tool steel >75 655 46% Copper and bronze Nickel based 50-100 1445 38% Other Titanium 200-550 1787 35% Cobalt n/a 851 24% Copper and bronze ≈120 172 60% Other n/a 87 53% Nickel based alloys 4’790.00 Material costs can highly differ depending on the specific alloy and printing method! They also fluctuate depending on raw material prices. Page 41 Source: AMPower Report, 2023 2020 5’600.00 2021 6’851.00 2022 2027 Forecasts are hard to make, especially about the future! Forecast in 2019: Total AM market to be ≈ $43bn in 2027 Source: Smartech Report, 2019 Forecast in 2022: 21.58bn€ in 2027 Source: AMPower Report, 2023 21.58 Part Manufacturing Material System 9,22 (Sums in € bn) 9.53 8.33 7.17 5,93 3,98 3,58 3,04 Page 42 3,04 2,30 2,67 1,83 2,08 2,51 2020 2021 2022 6,43 2027 Production steps in 3D printing Steps 1 Digital design of the 3D model (eventually including simulation of part performance properties, etc.) 2 Preparation of construction process 2.1 Conversion of 3D model into 3D printing format 2.2 Build strategy of the 3D-Part (e.g. orientation and nesting, support structure, slicing, scanning strategy) 2.3 Preparation of printer (e.g. calibration, preheating, filling with printing material) 3 Construction process 3.1 Physical construction (Printing) 3.2 Extraction (Removal of powder, removal from printer, cutting from build plate) 4 Possible post-processing 4.1 Eventual heat treatment 4.2 Removal of support structures 4.3 Surface treatment and machining 5 Page 43 Inspection and use of printed object Source: Additive Manufacturing with polymers – Three main technologies Fused Depositing Modeling (FDM) Stereolithography (SLA) Selective Laser Sintering (SLS) Other printing technologies  Multi Jet Modeling (MJM) = PolyJet Modelling (PJM)  Laminated Object Modelling (LOM) Commonly used for metals but also applicable for polymers: Fused Deposition Modeling (FDM) or Fused Filament Fabrication (FFF) The parts are created by liquefying a wire-shaped plastic or wax material by heating it in a nozzle, extruding it via the nozzle and then hardening it by cooling it down at the desired position in a grid on the build plate. Page 44 Stereolithography The separate layers of a 3D model are projected with a laser onto the surface of a liquid polymer, under which a movable build platform is positioned. The first layer hardens and attaches the object to the underlying build platform. Selective Laser Sintering (SLS) or Selective Laser Melting (SLM) A powder material (typically nylon or polyamide) is layer wise locally sintered via a directed local heat source (laser). After one layer has been exposed, the building platform is lowered, a new layer of powder is applied and exposed again.  Binder Jetting (BJ)  Direct Energy Deposition (DED) Additive Manufacturing with metal powder Powder Bed Fusion (PBF) – Step by step Product examples Dental prostheses MEDICAL Page 45 Knee implant MEDICAL Cylinder head AUTOMOTIVE Nozzle holder ENGINEERING Source: Siemens/Oerlikon Additive Manufacturing with metal powder – Powder bed fusion (PBF) – Pro and Contra Powder Bed Fusion (PBF) Nozzle holder ENGINEERING Pro  High geometric freedom  Smooth surfaces  Thanks to closed construction chamber (high temperatures, gas treatment) different material combinations are possible Page 46 Knee implant MEDICAL Teeth MEDICAL Contra      Limited overhang angle possible / Support structure necessary Limited build volume (up to 600x600x1500 mmm) Low Build rate (20-80 cm³/h per laser) High costs Long printing time -> Failure at the end = waste of time & money Source: Wikipedia / DMG Mori / Oerlikon AM / 3yourmind Additive Manufacturing with metal powder – Direct Energy Deposition (DED) Direct Energy Deposition (DED) Tools Energy source: Typically laser, plasma arc or electron beam Feedstock: Typically powder or wire Pro     Drill Head OIL & GAS Contra Fast build process (up to 2-3000 cm³/h) Cost almost competitive with castings Large sizes (up to 2 square meters) possible Ideal for the production of blanks Source: DMG Mori / Oerlikon AM Page 47 Rocket engine AEROSPACE  Rough surfaces  Lower deposition efficiency (down to 20-50 %)  Limited re-usability of powder Additive Manufacturing with metal powder – Binder Jetting (BJ) Binder Jetting (BJ) Hard materials (e.g. gears, Medical tools Pro Contra  High surface quality  No (or less) support structures necessary  Higher nesting efficiency Source: Metal Binder Jetting: Vom Prototyp zur Serienfertigung (fraunhofer.de), MicroCare/ Page 48     De-binding (removal of binder) and sintering step necessary Complex Binder Chemistry Shrinking of part size while sintering (~16-20%) Typically limited part size (15M Calculated Alloys, 50k Alloys Calculated / Day  Scoperta can optimize for different material properties:  Vacuum Induction Gas Atomization (VIGA) in Plymouth  ~3,640 kg per day  Electrode Induction melting Gas Atomization (EIGA) in Plymouth (MI)  ~400 kg per day Page 68 Artificial Intelligence & Machine Learning Generative AI – interesting but potential needs further assessment Generative AI is useful for tasks ranging from copywriting and marketing visuals to complex functions like automated research. While there's still progress to be made for enterprise-ready solutions, investigating the technology is already advisable. Customer Research Chat GPT is an artificial intelligence chatbot developed by OpenAI. It is a versatile tool mimicking human conversations and is used to answer questions, formulate emails, summarize content, write computer code snippets or generate business ideas. Image Generation Potential applications at Oerlikon Chat GPT is a powerful tool to accelerate the creation process, however, at the current stage verification of results is highly recommended. Additionally, data security concerns arise when working with confidential company information. Administration Task Coding Prompt: 4 metal drills with colorful coatings, shiny, metal shaft, M8, industrial background, studio light, photograph, 8k Page 69 Oerlikon is currently developing a strategy for future AI applications IT First Level Support / Customer Support Advanced Robotics Cobots as support in the factory for repetitive tasks Robots & Cobots are cost efficient if: 1) Flexibility needed (no hard automation) 2) Certain volume produced so manual work is more expensive (depends also on location!) Cobot Page 70 vs. Robot + Higher flexibility + Higher loads + Easier programming + Higher precision + Less risk for operator + Higher speed Source: https://www.researchgate.net/publication/285951267_Robotic_Welding_Technology Real Case Study Oerlikon – Initial market analysis: High growth market predicted for AM Strong growth expected across all value chain steps identified in 2014/2015 Metal AM market 2012-18 Comments Metal AM market (2012–18, in CHF M) CAGR 14-18 4,500 "The global economy is worth about $70 3,285 Total 3,000 68% more than 15%, which is $10.5tn. If AM Services +68% 64% 1,987 trillion, and manufacturing accounts for grows to capture just 2% of this global manufacturing market, that’s $210bn” 1,500 System 1,207 679 196 277 2012 2013 Wohlers 2014 416 Materials 0 2014 2015 2016 2017 ~50M powder market in 2014 Source: Wohlers report 2015, Credit Suisse, Oerlikon (AM Strategy 1.0), expert interviews Page 71 67% 2018 ~500M powder market in 2018 77% … in the retrospect, Wohlers was very bullish and additional reports & expert interviews should have been taken into consideration. Real Case Study Oerlikon – Define your Business Model: Competitive landscape vs. internal strengths Value chain segment Materials manufacturers Software developers A potential assessment  Competitive landscape: Fragmented competitive landscape  Recommended action: Focus  Competitive landscape: Domination of large software incumbents expected to expand in AM specific software  Recommended action: Seek partnerships with software companies in preparation and simulation software Equipment providers  Competitive landscape: Highly dynamic technological development AM service centers  Competitive landscape: Industry consolidation ongoing, system providers and OEMs integrating forwards and backwards  Recommended action: Define partnerships with leading providers to remain at technological forefront  Recommended action: Focus Page 72 Innovation Organization – Evaluation of market potential 2014 – AM metal materials Total addressable market (TAM) Total addressable market Serviceable available market  Total market size Metal AM materials:  ~ CHF 50 million Serviceable available market (SAM)  Alloys that Oerlikon is offering to the market:  ~ CHF 10 million Serviceable obtainable market Serviceable obtainable market (SOM)  Ambition to achieve 50% market share in the alloys that Oerlikon is offering:  ~ CHF 5 million Page 73 Source: Wohlers report 2015, Credit Suisse, Oerlikon (AM Strategy 1.0), expert interviews Real Case Study Oerlikon – Oerlikon’s business model assessment: Considering end-to-end value Design/ chain Materials Systems Post processing Engineering 1 Core Elements 2 3 4 6 Powder producer Software developers Equipment providers Post processing technologies Creation of metal powders and alloys Development of AM software AM systems and components Post processing technology specialist 5 Powder distributors AM Service centers AM production and manufacturing center Services Material design & Powder producer  End-to-end application engineering Design optimization  Additive fabrication  Increased performance (more efficient gas mixing)  30% reduced weight for a hand held device Page 74  Postprocessing   Oerlikon's focus Success Factors Innovation Management – People management is vital Change ! Successful innovation management = People management = putting people at the centre of every innovation initiative Management 01 Innovations put a company in a state of continuous change and therefore it requires a conscious and constant Change Management of these changes in order to take all employees on the journey. Especially when implementing a disruptive technology. Corporate Culture A corporate culture open to innovation is needed that encourages employees at all levels to be conscious of innovations. Factors for an innovation culture are for example management commitment, successful knowledge management, the use of intellectual property, or sufficient resources for employee innovations Page 75 02 03 Open Environment To convince external stakeholder an innovation-friendly environment must exist or must be created. It is also important to ensure that customers are open to innovation. A rethink must therefore be encouraged not only within the company. The timing can be extremely important Real Case Study Oerlikon – Initial market analysis 2014-2018 vs. AM 2022-20227 Strong growth (CAGR: 68%) expected for metal AM market in 2014 but in retrospective growth rates around 20% are a more realistic assumption. 9.66 Metal AM market 2020 – 2027 sums in € bn Metal AM market (2012–18, in CHF M) 4,500 CAGR 26.1% Part Manufacturing 3,285 3,000 Material System Services 2,84 +68% 1,987 17.5% 23.2% 1,500 System 1,207 277 416 Materials 0 2012 2013 2014 2015 2016 2017 2018 Source: Wohlers report 2015, Credit Suisse, Oerlikon (AM Strategy 1.0), expert interviews Page 76 3.03 2.50 2.03 0,50 0,64 679 196 3,08 0,90 0,76 0,75 0,95 0,89 0,99 1,18 2020 2021 2022 Source: AMPower Report, 2023 3,74 2027 AM Market – Complex competitive landscape AM Materials Main competitors Pure materials players A D System OEMS (some has valueadded services i.e. EOS) AM Hardware Hardware OEM with powder production and engineering consulting services offerings E Hardware OEMs with AM services offerings Page 77 Source: Oerlikon C* C Tier 1 Component supplier with AM offerings Component producers with material offering System OEM with ext. service offering B AM services Service Bureaus* * OEMs w/ external service offering Real Case Study Oerlikon – Metal AM expectations from 2014/15 reviewed today 4. 2. 1. R&D stage  Automated powder supply and platform exchange First applications  Process control systems  Larger build chambers  Highly manual  Small build chamber Industrialization  Improved build rates through multi laser systems  Continuous production  High speed process through multi dimensional melting (e.g., full layer exposure) + Multi Material Printing + DED for bigger parts  Single point melting 2000 - 2010 2014/2015 5-10 yrs  Fully automated process chain (including postprocessing, heat-treatment)  New energy sources (e.g., X-Ray lasers) for full 3D exposure + Beam Shaping for AM + Green lasers for highly reflective materials (e.g. copper, aluminium, Capabilities 3. Optimization 10-20 yrs Since 2014 technological developments have significantly increased productivity in 3D printing but there is still some hurdles to take for a fully automated 3D printing production. Other innovations like multi-material printing have further increased the capabilities of additive manufacturing. Page 78 Development industrialized | Concept proven, industrialization ongoing | Under development Lecture examination Question example Information on the exam Which of the following models can best be used to analyze competitive market dynamics of the company? a Quality function deployment b S-curve model c Porter’s five forces d Change Management - 50 questions in 60min o Multiple choice with 1-2 points o Only 1 answer correct per question x - Date: 21.02. - Location & Time: Tbd. by TUM What is NOT a benefit of AM? Contact for further questions a Functional Prototyping b Simple mitigation of supply chain disruptions c Ease of design evolution d Low prices in high volume production Page 79 Niclas Kurzmann x [email protected]