High-Value Manufacturing
Dr Mohamed Afy-Shararah
Director of EMMS MSc
Lecturer in Manufacturing Operations
[Link]
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What is Manufacturing?
At its core, it is the process of converting or processing raw materials into usable
physical, tangible products
Input Process Output
QUESTION:
Is manufacturing the same as production?
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A Wider Scope on Manufacturing
Source: Foresight report, 2013
Production is but one activity of a manufacturing company. It may or may not be the defining activity of the
company. For example, if a company has outsourced all its production activities and is focusing on brand
management or R&D, that company can still be a manufacturer. Source: IfM, Defining HVM 2006
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UK Manufacturing in Context
• UK in top 10 world manufacturers (by manufacturing output)
• Ranked second in Aerospace industry
• 2 of top 6 Pharmaceuticals companies are UK based
• Employs 2.7 million people – earning an average of £32,500
• Contributes 11% of Gross Value Added
• Accounts for 45% of total exports – totalling £275bn
• Represents 69% of business research and development (R&D)
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UK Manufacturing in Context
• £31bn annual turnover
Aerospace • 18% global market share
• 128,000+ direct jobs
• £71.6bn annual turnover
Automotive • 80% of a vehicle can be manufactured in the UK
• 2,000+ automotive suppliers, inc. 18 of world’s top 20
• UK’s largest manufacturing export sector
Pharma and Chemical • 158,000+ direct jobs & 500,000 indirect jobs
• 30,000 employed within R&D
• World’s 5th largest in terms of production
Electronics • 14 of the world’s top 20 semiconductor companies have established
design or manufacturing sites
• 16% of total UK manufacturing turnover – making it the largest sector
Food & Drink • 96% of the sector’s 6,360 businesses are micro to medium-sized
• 400,000+ direct jobs
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Changes in the Manufacturing Landscape in the UK
Source: The Manufacturer, Annual Manufacturing Report, 2020
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Industry 4.0
Source: ITBA 2018
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Industry 4.0 – Emerging Technologies
3D printing; will become an essential tool Sensors; New data streams from products
allowing optimised designs to reduce will become available to support new
waste; reduction on spare parts services, enable self-checking inventories
inventories; greater flexibility in location and products which self diagnose faults
of manufacturing; personalised products before failure, and reduced energy usage.
to consumers; consumers to make some
of their own products.
Internet of things; in factory and
process environments, virtually
everything is expected to be
connected via central networks. New Big data; the volume and detail of information
products will have embedded sensors captured by businesses will allow firms to
and become autonomous. understand customer preferences and
personalise products.
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Source: Foresight report 2013, ITBA 2018
Value – What & to Whom?
• On a piece of paper write your definition of “value”
• What types of “value” do different stakeholders derive from
manufacturing activities?
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Manufacturing Value – What & to Whom?
Value in the context of manufacturing is considered, Financial or Social or Strategic.
Financial Strategic Social
• Sustainable employment • Minimal
Country • GDP impact • Intellectual capital development environmental impact
• Employee capability development
• Return adjusted for risk • Acts ethically
Investors • Adaptability, sustainability
• Long term growth
• Personal development
• Pay, wages • Lifelong learning
Employees • Social interaction
• Funding of retirement • Opportunities for growth
• Work-life balance
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High Value Manufacturing
Definition:
• High-value manufacturing is the application of leading-
edge technical knowledge and expertise,
• to the creation of products, production processes, and
associated services,
• which have strong potential to bring sustainable
growth and high economic value to the UK.
• Such potential is characterised by a combination of
high R&D intensity and high growth.
Source: Technology Strategy Board, 2012
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High-Value Manufacturing
UK business expenditure on R&D as
a percentage of total expenditure
Telecommunications
Machinery and Equipment
Aerospace
Motor Vehicles and parts
Information services
Pharmaceuticals
Others
0% 5% 10% 15% 20% 25% 30% 35%
Source: ONS, 2012
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Source: ONS, 2012
Types of Manufacturers
• Product manufacturers who focus on
generating value through production
• Service led producers who provide
customers with services based on a
significant production capability
• System integrators who control the
channel to customers and manage an
external production network
• Service manufacturers who have
little or no production and generate
value from services which are based
around a product
Source: IfM, Defining HVM 2006
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Cadbury Schweppes
• The Cadbury Schweppes group
comprises a confectionary business
and a soft drinks business.
• Both businesses derive their revenues
from product sales to retailers.
• In addition to its manufacturing base, it
has a significant proportion of its costs
in the maintenance of its brand’s
equities.
• The soft drinks business has an
additional services revenue dimension
in that there are a number of bottling
franchises. Source: IfM, Defining HVM 2006
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Eurotherm
• Eurotherm Limited is a supplier of
control, measurement and data
recording instrumentation.
• Today’s business is focused on the
design and development of
customised products and solutions
with very personalised customer
support services included in the
solution.
• Longer-term strategy will extend the
small fee services activity that is
already underway.
Source: IfM, Defining HVM 2006
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GlaxoSmithKline
• GlaxoSmithKline (GSK) is a world-
leading pharmaceutical company
headquartered in the UK.
• GSK is primarily focused on the
development, production and
distribution of its own products.
• GSK does also ‘in- license’ other
products at various stages of
development, regulation and
production to enlarge their commercial
offer.
• In the longer term it is envisaged that
the company will expand on its
diagnostic customised product Source: IfM, Defining HVM 2006
offerings.
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Types of Manufacturers
Which other manufacturers can you fit in the matrix, and where?
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Wrapping up
• UK Manufacturing
• Industrial Revolutions
• Value – What & to Whom?
• High-Value Manufacturing
• Types of Manufacturers
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Any Questions?
[Link]@[Link]
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