Value Chain At Siemens Wind Power Commerce Essay

observe Chain At due south veer actor Commerce EssaySiemens is a world-class serve provider with over 30 years of experience in providing high quality receiptss with superior safety principles. Based on this signifi beart knowledge, a tractile range of service solutions fulfill been designed for both(prenominal) onshore and onshore projects, to optimize the output of bakshis turbines throughout their lifetime.The purpose of the Service Department is to repair damaged principal(prenominal) shafts of the wind mills. The range of operations in the service plane section feces be divided into twain main categories On-site repairmen and substitutions of the damaged or unconnected main shafts.At Siemens Wind Power the service segment in galore(postnominal) cases is prioritized win in the organization beca expend it is costing the connection m superstary, and non really generating any m unityy. The service part it just advanceing up inventory, and boastnt run since January 2009.So we distinguishable to take a look and accommodate a analysis of their apprise range to deliver a overview of the current situation and to put on if t here(predicate) atomic number 18 any problems which need solving.A value filament is a chain of activities for a firm operating in a specific industry. A value chain typically consists of inbound distribution or logistics, manufacturing operations, outbound distribution or logistics, marketing and selling, and after-sales service. These activities atomic number 18 backinged by purchasing or procurement, research and development, human resource development, and corporate infrastructure.We used the Value Chain framework of Michael Porter from the strategic anxiety book because it breaks down the activities of the organisation into its many separate. percentage of each part can be analysed for its contribution to the total value added by the organisation. Afterwards this can be used to see where to put in the effort and make improvements.The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities, thereby resulting in a profit margin.Primary Activities inbound Logistics Includes receiving, storing , inventory control , transportation schedulingThey fork out a safety stock in Denmark in Tinglev that consist 5 pieces of each component and in USA they cave in the safety stock in Huston and consists 10 pieces of each component. The safety stocks atomic number 18 enough to cover get hold of of 35 days tally to their forecast. Production capacity is 30 turbines a week of the 2.3 and 4 a week of 3.6 and they have 60.000 components. cognitive figure out when a part is broken Demounting the defect shaft and then can be transported directly to Brande, or through the regional Headquarter and then mount it. Then it is grade back to Fabriksvej and repaired and then to Tinglev, where it fills up a container, which consists of 2 main shafts. L ead time of one year of main bearings from the assembly department.OperationsIncludes machining, assembly, equipment maintenance.The Costumers have to make the pieceation, electricity and have the infrastructure. They be only buying turbines, costume designers has to know for themselves the weather conditions and so on A wind mill cost approx. 18 mio. DKK for turbine without SLA. Siemens promises in the SLA that the windmill is running 95 % of the time. only when it is in truth running 97% of the time. Siemens fulfill the customers service contracts through the SLA (service level agreements) which is made in potbelly stove with the customers. They have a Monitoring department that can see if the main bearing gets to a fault hot and then switch it off and in the UK have their own monitoring departments but neartimes it brakes when it is turned on again.Siemens can monitor the costumer without the SLA, but dont, because they didnt pay for the service. scarcely if the custome rs want it later, they can start monitoring them.Outbound LogisticsThe activities required to get the finished product to the customers warehousing, put together fulfillment, transportation, distribution managementIn the past Siemens reflectiond a problems with higher demand than judge and couldnt deliver spare parts to the customer because of low safety stock levels there were a demand for 10 in UK because they were broken down, but Siemens only have the safety stock of 5, which is not sufficient but besides keeping a high level of safety stock is overly not proper because it takes divides of money to keep components in the stock.Siemens is not prioritizing the service department regarding the suppliers when they need to share capacity on old components, broken components or naked as a jaybird components. When it is new components, the service department forecast a year ahead, to meet the demand.Siemens in order to reduce variation in demand and increase flexibility in or der to meet the demand they try to build a corporation with the service regions USA, Germany Uk to get a forecast from them at least 4 months ahead. barely they ask the regions to have service materials on stock, so they dont get to many urgent orders. There is also a safety-stock in USA, which covers the demand for 35 days.From this they are making forecasts to their suppliers, for them to be able to plan their capacity, they use Delta forecasting and using Delphi method compared with failure rates. The forecasts are updated every month by the demand management department.Marketing and SalesThe activities associated with getting buyers to purchase the product.The Siemens service home base is located in Brande, Denmark for both onshore and offshore services. In order to optimize knowledge transfer and customer value globally,regional service centers have been established. Thesemain offices arelocated inThe United States of AmericaSingapore andGermany.In an effort to stay close to the customer in thecomplex European region, the heart of the wind industry, littler officesare alsoset upinThe United KingdomSpain,Germany andDenmark.They get the approximately gross of selling turbines .The markets are Europe, USA and Asia Pacific . Onshore is not growing in Europe, but in the USA and New Zealand it is expanding. Siemens are the best wind turbine manufacturers they offer high quality and good service for the ones who are leading to pay for it.Their windmills are running 97% of the time, compared with Vestas windmills, which are running to a lower place 95 % of the time.Brand name Siemens and with the history of bonus they are adding value to their product. The service department crew is adding value when there is a problem with the customers windmills. The service department has a monitoring department which monitors the windmills all the time.ServiceThe activities that maintain and enhance the products value, including customer support, repair services, instal lation, training, spare parts management.The Costumers have to make the foundation, electricity and have the infrastructure. They are only buying turbines, costumers has to know for themselves the weather conditions etc. A wind mill costs approx. 18 mio. DKK, for turbine without SLA. Siemens promises in the SLA that the windmill is running 95 % of the time. But it is actually running 97% of the time. Siemens fulfill the customers service contracts through the SLA (service level agreements) which is made in corporation with the customers.They have different types of SLAs to meet the costumers needs. When a windmill breaks down, Siemens takes the part back and replaces it with a new one. Siemens Service department repairs the broken part, and then sell it again to an opposite customer, 40 % of the sights (customers) are buying the long term SLA. Only in the service department the costumers who pay more(prenominal) for SLA, get service scratch. 70 % want service, only pays 40 % for t he quick lead time. 30 % dont want service, but can buy spare parts.In the service department there are two main categories of operationsThe first type of repairment is taking place on-site by service teams, come in out by the service department in Brande, or by one of the regional headquarters in Houston, Germany or in the UK. On-site repairmens are taking place when the detected problem is a minor damage that can be situated without removing the main shaft, and when the repairment can be done in spite of appearance the scope of the service level agreement. This means that the turbine has to be up and running again within one week.The second type of repairment is when Siemens is facing a more serious damage that cannot be fixed on-site then the service department calls for a repaired main shaft from the safety stock, to use as a substitute for the operating and damaged main shaft. The regional headquarters are responsible for preparedness and execution of the arrangements need ed to do a successful changeover of the main shaft. The teams which are send are trained especially for this operation, and the dissembled shafts are then transported to Denmark, where the repairment is taking place.Technicians and monitor regions are responsible for telling if they have the new shafts. They communicate to the service department to yield new parts.When it comes to repairing the wind mills Siemens has to face a seasonality. In the spend is not possible to fix any problems in the field thats why Siemens is trying to fix as much mills as they can before winter in October and November. The second pick period is after the winter when mills not repaired before winter need to be fixes as soon as possible in March and April.Support Activities.procuralProcurement of raw materials, servicing, spare parts, buildings, machines.When a part breaks down within the 2 years first it is sent from supplier to Siemens in Tinglev, and sold, then to the suppliers when it is broken, whe re it is renovated, then back to Tinglev and then to the new costumer who buys it. First when it goes to the supplier it is seen if it is better to scrap or renovate. After two years, you evaluate if it should be send to suppliers or renovate it yourself? They sell them as renovated parts for 80 % of the price.The supplier is out of the corporation with Siemens after 6 months if there are problems with the supplier. They have good suppliers which are pliable. At least 2 suppliers on each part. Suppliers have to pay if the turbine is down, if it is their fault. Many suppliers are owned by Siemens, on the main parts. Blades, gearboxes etc.They have stock in USA and in Tinglev, to provision with a new component, when broken down. Suppliers Spain for main bearing. Normark are for shafts. Stockgos Germany, bearing housesMost parts from Europe are from suppliers but they dont have that many suppliers in the USA. So have to build up a supplier network. Siemens has the most pricy turbine s and best quality. They are selling service in the US and they have a service zeal but no repair.If the parts are under guaranty the supplier go away turn in a new part or a renovated part. The hours the technicians use will be paid by the supplier. For the most parts Siemens are able to renovate themselves.Technology DevelopmentIncludes engine room development to support the value chain activities, such as Research and Development, Process automation, design and redesign.Thanks to turn technology developed by Dr. Gerald Hohenbichler (44), steel manufacturers can now save energy by bordering coat in continuous strands. Hohenbichlers groundbreaking solution enables molten raw steel to be rolled at once after casting, reducing a mills energy requirements by as much as 45 percent.Siemens Energy has installed the first prototype of a newly designed direct-drive wind turbine. The new SWT-3.0-101 DD is a gearless turbine with a power rating of three megawatts (MW). Its rotor has a diameter of 101 meters. The prototype was installed tight the Danish town of Brande, where Siemens Wind Power headquarters is located. The intelligent, straightforward design of the turbine makes gearboxes unnecessary. The new turbine will officially be launched in 2010.Human Resource ManagementThe activities associated with recruiting, development (education), retention and compensation of employees and managers.They have a new strategy they are now finding the costumers themselves, because of the financial crisis. Siemens has already laid-off 400 workers in Brande and 200 in lborg.Siemens training centers offer thorough training programs to fancy that all service personnel are trained to our stringent safety and quality standards. Training centers are located inBrande, DenmarkBremen, GermanyNewcastle, UKHouston, United States.Firm InfrastructureIncludes general management, planning management, legal, finance, accounting, public affairs, quality management, etc.Peter Lscher, P resident and CEO of Siemens AG.The firms margin or profit then depends on its effectiveness in performing these activities efficiently, so that the amount that the customer is willing to pay for the products exceeds the cost of the activities in the value chain. It is in these activities that a firm has the opportunity to generate superior value. A competitive receipts may be achieved by reconfiguring the value chain to provide lower cost or better differentiation.Now that we have an overview of Siemens put up chain we observe that they are facing some problems. We have received culture regarding the possibility of investing into a new regional service department in the states which in our opinion might prove to be a very good answer to the problems that they are facing now and since the USA market is expanding for Siemens, a local risk hedging service department may indeed benefit the company. A service department who would communicate with the current service regions and the ne w found ware plant in the USA. Having a repair department in the U.S would cut down the transportation and handling lead times and costs.The profitability for the service department and Siemens as a whole would be to reduction of inventory costs, because the inventory will be reduced in the service department of broken shafts, when it starts running again. There would be a reduction in transportation costs severely if they implement a service department in the US, and namely if they optimize the flow in Denmark. It will also reduce the capital bindings in defect components which are in the service departments inventory. as tumefy a good estimation would be built up a supplier network in the USA because most of the parts come from the European suppliers.Choosing the remunerate proviso chain strategy erst the production plant and service department are build they need to have a right supply chain strategy which prepares them for the new business challenges and opportunities.A sim ple but powerful government agency to characterize a product when seeking to devise the right supply chain strategy are the two secernate uncertainties faced by the product which are demand and supply. Demand uncertainty is associate to the predictability of the demand for the product.In order for Siemens to choose the right strategy they have to follow some measurements in order to understand what is going on with their supply chain.A first yard would be to figure out what time of product are they selling functional products or progressive products .Functional products are ones that have long product life cycles and there for abiding demand, magical spell innovative products are products that have short life cycles with high innovation and fashion contents as we can see clearly, different supply chain strategies are required for functional versus innovative products. Functional products feed to have less product variety than innovative products, where variety is introduce d due to the fashion-oriented record of the product or the fast introduction of new product options due to product technology advancements. Demand for functional products is much easier to forecast, while demand for innovative products is highly unpredictable due to the differences in product life cycle and the nature of the product, functional products tend to have lower product profit margins, but the cost of obsolescence is low whereas innovative products tend to have higher product profit margins, but the cost of obsolescence is high.A second step would be to choose their supply chain characteristics. A stable supply process is one where the manufacturing process and the underlying technology are mount and the supply base is well established. An evolving supply process is where the manufacturing process and the underlying technology are still under early development and are rapidly changing, and as a result the supply base may be limited in both size and experience. In a sta ble supply process, manufacturing complexity tends to be low or manageable. Stable manufacturing processes tend to be highly automated, and long-term supply contracts are prevalent. In an evolving supply process, the manufacturing process requires a lot of fine-tuning and is often subject to breakdowns and uncertain yields. The supply base may not be as reliable, as the suppliers themselves are going through process innovations. While functional products tend to have more mature and stable supply process, that is not always the case. There are also innovative products with a stable supply process.Demand Uncertainty Reduction StrategiesOnly through entropy sharing and tight coordination can one regain control of supply chain efficiency. Sharing of demand knowledge and synchronized planning across the supply chain are crucial for this purpose.Supply Uncertainty Reduction StrategiesFree exchanges of information starting with the product development stage and continuing with the matur e and end-of-life phases of the product life cycle has been found to be highly effective in reducing the risks of supplier failure. So a good idea for Siemens would be to form a supplier hub in the USA operated by a third-party logistics company which would manage the replenishment and inbound logistics of the parts and materials to a warehouse (known as the supplier hub) which would be in close proximity to the Siemens plant. The inventory at the hub would be owned by the suppliers. The use of the hub will allow the suppliers to have much better information about Siemens needs and consumption patterns of their parts as well as about the inventory in transit. This will result in a more effective management of inventory replenishment and inbound logistics by the suppliers thereby reducing the supply uncertainties for Siemens.Supply Chain StrategiesSome uncertainty characteristics require supply chain strategies with initiatives and innovations that can provide a competitive edge to c ompanies.These strategies can be classified into four typesEfficient Supply Chains these are supply gyves that utilize strategies aimed at creating the highest cost efficiencies in the supply chain. For such efficiencies to be achieved, non-value-added activities should be eliminated, scale economies should be pursued, optimization techniques should be deployed to get the best capacity utilization in production and distribution, and information linkages should be established to ensure the most efficient, accurate, and cost-effective transmission of information across the supply chain. The role of the Internet in this case is that it enables the supply chain to have tight and effortless information integration, as well as enabling production and distribution schedules to be optimized once the demand, inventory, and capacity information throughout the supply chain are made transparent. Risk-Hedging Supply Chains these are supply chains that utilize strategies aimed at pooling and sha ring resources in a supply chain so that the risks in supply disruption can also be shared. It is therefore a risk-hedging strategy. A single entity in a supply chain can be vulnerable to supply disruptions, but if there is more than one supply source or if alternative supply resources are available, then the risk of disruption would be reduced. A company may want to increase the safety stock of its secern component to hedging against the risk of supply disruption, and by sharing the safety stock with other companies who also need this key component, the cost of maintaining this safety stock can be shared. Such inventory pooling strategies are quite car park in retailing, where different retail stores or dealerships share inventory. The Internet plays a key role in providing information transparency among the members of the supply chain that are sharing inventory. Having real time information on inventory and demand allows the most cost-effective transshipment of goods from one si te (with excess inventory) to another site (in need). antiphonary Supply Chains these are supply chains that utilize strategies aimed at being responsive and flexible to the changing and diverse needs of the customers. To be responsive, companies use build-to-order and mass customization processes as a means to meet the specific requirements of customers. The customization processes are designed to be flexible. Order accuracy (i.e., accurate specification of customer requirements) is the key to the success of mass customization. Again, the Internet has enabled very accurate and timely capturing of highly personalized requirements of customers as well as fast transfer of order information to the factory or customization centers for the final configuration of the product. restless Supply Chain these are supply chains that utilize strategies aimed at being responsive and flexible to customer needs, while the risks of supply shortages or disruptions are hedged by pooling inventory or o ther capacity resources. These supply chains essentially have strategies in place that combine the strengths of hedged and responsive supply chains. They are agile because they have the capability to be responsive to the changing, diverse, and unpredictable demands of customers on the antecedent end, while minimizing the back-end risks of supply disruptions.Given the different nature of demand and supply uncertainties of different products, different supply chain strategies are needed for different products.The Right Supply Chain StrategyInnovative Products with Evolving Supply ProcessesCompanies with innovative products and evolving and unstable supply processes have to utilize the combination of risk-hedging and responsive strategies. The appropriate strategy here is to establish agile supply chains. Demand and supply uncertainties can be used as a framework to devise the right supply chain strategy. Innovative products with unpredictable demand and an evolving supply process fac e a major challenge. Because of shorter and shorter product life cycles, the pressure for dynamically adjusting and adapting a companys supply chain strategy is mounting. Using the Internet to develop agile supply chains with information sharing, coordination, and postponement has enabled companies to make do successfully in their market places. The challenges are great, but so are the opportunities.To be continued straightaway