Value Chain At Siemens Wind Power Commerce Essay

Siemens is a first service supplier with over 30 old ages of experience in supplying high quality services with superior safety rules. Based on this important cognition, a flexible scope of service solutions have been designed for both onshore and offshore undertakings, to optimise the end product of air current turbines throughout their life-time.

The intent of the Service Department is to mend damaged chief shafts of the air current Millss. The scope of operations in the service section can be divided into two chief classs: On-site maintenance mans and permutations of the damaged or broken chief shafts.

At Siemens Wind Power the service section in many instances is prioritized down in the organisation because it is bing the company money, and non truly bring forthing any money. The service section it merely constructing up stock list, and have n’t run since January 2009.

So we decided to take a expression and do a analysis of their value concatenation to hold a overview of the current state of affairs and to see if there are any jobs which need work outing.

A value concatenation is a concatenation of activities for a house operating in a specific industry. A value concatenation typically consists of inward distribution or logistics, fabricating operations, outbound distribution or logistics, selling and merchandising, and after-sales service. These activities are supported by buying or procurance, research and development, human resource development, and corporate substructure.

We used the Value Chain model of Michael Porter from the strategic direction book because it breaks down the activities of the administration into its many parts. Contribution of each portion can be analysed for its part to the entire value added by the administration. Afterwards this can be used to see where to set in the attempt and do betterments.

The end of these activities is to offer the client a degree of value that exceeds the cost of the activities, thereby ensuing in a net income border.

Primary Activities:

Inbound Logisticss:

Includes receiving, hive awaying, stock list control, transit programming

They have a safety stock in Denmark in Tinglev that consist 5 pieces of each constituent and in USA they have the safety stock in Huston and consists 10 pieces of each constituent. The safety stocks are adequate to cover demand of 35 yearss harmonizing to their prognosis. Production capacity is 30 turbines a hebdomad of the 2.3 and 4 a hebdomad of 3.6 and they have 60.000 constituents.

Procedure when a portion is broken: Demounting the defect shaft and so can be transported straight to Brande, or through the regional Headquarter and so mount it. Then it is send back to Fabriksvej and repaired and so to Tinglev, where it fills up a container, which consists of 2 chief shafts. Lead clip of one twelvemonth of chief bearings from the assembly section.


Includes machining, assembly, equipment care.

The Costumers have to do the foundation, electricity and have the substructure. They are merely purchasing turbines, costumiers has to cognize for themselves the conditions conditions etc. A air current factory costs approx. 18 mio. DKK for turbine without SLA. Siemens promises in the SLA that the windmill is running 95 % of the clip. But it is really running 97 % of the clip. Siemens fulfill the clients ‘ service contracts through the SLA ( service degree understandings ) which is made in corporation with the clients. They have a Monitoring section that can see if the chief bearing gets excessively hot and so exchange it off and in the UK have their ain monitoring sections but sometimes it brakes when it is turned on once more.

Mhos can supervise the costumier without the SLA, but do n’t, because they did n’t pay for the service. Merely if the clients want it subsequently, they can get down supervising them.

Outbound Logisticss

The activities required to acquire the finished merchandise to the clients: repositing, order fulfilment, transit, distribution direction

In the past Siemens faced a jobs with higher demand than expected and could n’t present trim parts to the client because of low safety stock degrees there were a demand for 10 in UK because they were broken down, but Siemens merely have the safety stock of 5, which is non sufficient but besides maintaining a high degree of safety stock is besides non good because it takes tonss of money to maintain constituents in the stock.

Mhos is non prioritising the service section sing the providers when they need to portion capacity on old constituents, broken constituents or new constituents. When it is new constituents, the service section prognosis a twelvemonth in front, to run into the demand.

Mhos in order to cut down variableness in demand and increase flexibleness in order to run into the demand they try to construct a corporation with the service parts ; USA, Germany & A ; Uk to acquire a prognosis from them at least 4 months in front. Further they ask the parts to hold service stuffs on stock, so they do n’t acquire to many pressing orders. There is besides a safety-stock in USA, which covers the demand for 35 yearss.

From this they are doing prognosiss to their providers, for them to be able to be after their capacity, they use Delta prediction and utilizing Delphi method compared with failure rates. The prognosiss are updated every month by the demand direction section.

Selling and Gross saless:

The activities associated with acquiring purchasers to buy the merchandise.

The Siemens service central office is located in Brande, Denmark for both onshore and offshore services. In order to optimise cognition transportation and client value globally, A regional service centres have been established. TheseA chief offices areA located in:

The United States of America

Singapore and


In an attempt to remain near to the client in theA complex European part, the bosom of the air current industry, smaller officesA are alsoA set upA in:

The United Kingdom


Germany and


They get the most gross of selling turbines.The markets are Europe, USA and Asia Pacific. Onshore is non turning in Europe, but in the USA and New Zealand it is spread outing. Mhos are the best air current turbine makers they offer high quality and good service for the 1s who are willing to pay for it.

Their windmills are running 97 % of the clip, compared with VestasA? windmills, which are running under 95 % of the clip.

Brand name Siemens and with the history of fillip they are adding value to their merchandise. The service section crew is adding value when there is a job with the clients ‘ windmills. The service section has a monitoring section which monitors the windmills all the clip.


The activities that maintain and heighten the merchandise ‘s value, including client support, fix services, installing, preparation, trim parts direction.

The Costumers have to do the foundation, electricity and have the substructure. They are merely purchasing turbines, costumiers has to cognize for themselves the conditions conditions etc. A air current factory costs approx. 18 mio. DKK, for turbine without SLA. Siemens promises in the SLA that the windmill is running 95 % of the clip. But it is really running 97 % of the clip. Siemens fulfill the clients ‘ service contracts through the SLA ( service degree understandings ) which is made in corporation with the clients.

They have different types of SLAA?s to run into the costumiers ‘ demands. When a windmill breaks down, Siemens takes the portion back and replaces it with a new one. Siemens Service section repairs the broken portion, and so sell it once more to another client, 40 % of the sights ( clients ) are purchasing the long term SLA. Merely in the service section ; the costumiers who pay more for SLA, acquire service foremost. 70 % want service, merely pays 40 % for the speedy lead clip. 30 % do n’t desire service, but can purchase trim parts.

In the service section there are two chief classs of operations:

The first type of repairment is taking topographic point on-site by service squads, send out by the service section in Brande, or by one of the regional central office in Houston, Germany or in the UK. On-site maintenance man ‘s are taking topographic point when the detected job is a minor harm that can be fixed without taking the chief shaft, and when the repairment can be done within the range of the service degree understanding. This means that the turbine has to be up and running once more within one hebdomad.

The 2nd type of repairment is when Siemens is confronting a more serious harm that can non be fixed on-site so the service section calls for a repaired chief shaft from the safety stock, to utilize as a replacement for the operating and damaged chief shaft. The regional central office are responsible for planning and executing of the agreements needed to make a successful conversion of the chief shaft. The squads which are send are trained particularly for this operation, and the dissembled shafts are so transported to Denmark, where the repairment is taking topographic point.

Technicians and proctor parts are responsible for stating if they have the new shafts. They communicate to the service section to provide new parts.

When it comes to mending the air current Millss Siemens has to confront a seasonality. In the winter is non possible to repair any jobs in the field that ‘s why Siemens is seeking to repair every bit much Millss as they can before winter in October and November. The 2nd pick period is after the winter when Millss non repaired before winter demand to be fixes every bit shortly as possible in March and April.

Support Activities.


Procurement of natural stuffs, service, trim parts, edifices, machines.

When a portion breaks down within the 2 old ages ; foremost it is sent from provider to Siemens in Tinglev, and sold, so to the providers when it is broken, where it is renovated, so back to Tinglev and so to the new costumier who buys it. First when it goes to the provider it is seen if it is better to trash or restitute. After two old ages, you evaluate if it should be send to providers or restitute it yourself? They sell them as renovated parts for 80 % of the price.The provider is out of the corporation with Siemens after 6 months if there are jobs with the provider. They have good providers which are flexible. At least 2 providers on each portion. Suppliers have to pay if the turbine is down, if it is their mistake. Many providers are owned by Siemens, on the chief parts. Blades, gearboxes etc.

They have stock in USA and in Tinglev, to provide with a new constituent, when broken down. Suppliers: Spain for chief bearing. Normark are for shafts. Stockgos Germany, bearing houses

Most parts from Europe are from providers but they do n’t hold that many providers in the USA. So hold to construct up a provider web. Siemens has the most expensive turbines and best quality. They are selling service in the US and they have a service installation but no repair.If the parts are under guarantee the provider will provide a new portion or a renovated portion. The hours the technicians use will be paid by the provider. For the most parts Mhos are able to restitute themselves.

Technology Development

Includes engineering development to back up the value concatenation activities, such as Research and Development, Process mechanization, design and redesign.

Thankss to treat engineering developed by Dr. Gerald Hohenbichler ( 44 ) , steel makers can now salvage energy by treating metal in uninterrupted strands. Hohenbichler ‘s groundbreaking solution enables molten natural steel to be rolled instantly after projecting, cut downing a factory ‘s energy demands by every bit much as 45 per centum.

Siemens Energy has installed the first paradigm of a freshly designed direct-drive air current turbine. The new SWT-3.0-101 DD is a gearless turbine with a power evaluation of three megawatts ( MW ) . Its rotor has a diameter of 101 metres. The paradigm was installed near the Danish town of Brande, where Siemens Wind Power central office is located. The intelligent, straightforward design of the turbine makes gear boxs unneeded. The new turbine will officially be launched in 2010.

Human Resource Management

The activities associated with recruiting, development ( instruction ) , keeping and compensation of employees and directors.

They have a new scheme ; they are now happening the costumiers themselves, because of the fiscal crisis. Siemens has already fired 400 workers in Brande and 200 in Alborg.

Siemens preparation centres offer thorough preparation plans to guarantee that all service forces are trained to our rigorous safety and quality criterions. Training centres are located in:

Brande, Denmark

Bremen, Germany

Newcastle, UK

Houston, United States.

Firm Infrastructure

Includes general direction, be aftering direction, legal, finance, accounting, public personal businesss, quality direction, etc.

Peter Loscher, President and CEO of Siemens AG.

The house ‘s border or net income so depends on its effectivity in executing these activities expeditiously, so that the sum that the client is willing to pay for the merchandises exceeds the cost of the activities in the value concatenation. It is in these activities that a house has the chance to bring forth superior value. A competitory advantage may be achieved by reconfiguring the value concatenation to supply lower cost or better distinction.

Now that we have an overview of Siemens Supply concatenation we observe that they are confronting some jobs. We have received information sing the possibility of puting into a new regional service section in the provinces which in our sentiment might turn out to be a really good reply to the jobs that they are confronting now and since the USA market is spread outing for Siemens, a local hazard fudging service section may so profit the company. A service section who would pass on with the current service parts and the new found production works in the USA. Having a fix section in the U.S would cut down the transit and managing lead times and costs.

The profitableness for the service section and Siemens as a whole would be to decrease of stock list costs, because the stock list will be reduced in the service section of broken shafts, when it starts running once more. There would be a decrease in transit costs ; badly if they implement a service section in the US, and viz. if they optimize the flow in Denmark. It will besides cut down the capital bindings in defect constituents which are in the service section ‘s stock list.

Besides a good thought would be built up a provider web in the USA because most of the parts come from the European providers.

Choosing the right supply concatenation scheme

Once the production works and service section are build they need to hold a right supply concatenation scheme which prepares them for the new concern challenges and chances.

A simple but powerful manner to qualify a merchandise when seeking to invent the right supply concatenation scheme are the two cardinal uncertainnesss faced by the merchandise which are demand and supply. Demand uncertainness is linked to the predictability of the demand for the merchandise.

In order for Siemens to take the right scheme they have to follow some stairss in order to understand what is traveling on with their supply concatenation.

A first measure would be to calculate out what clip of merchandise are they selling functional merchandises or advanced merchandises.Functional merchandises are 1s that have long merchandise life rhythms and there for stable demand, while advanced merchandises are merchandises that have short life rhythms with high invention and manner contents as we can see clearly, different supply concatenation schemes are required for functional versus advanced merchandises. Functional merchandises tend to hold less merchandise assortment than advanced merchandises, where assortment is introduced due to the fashion-oriented nature of the merchandise or the rapid debut of new merchandise options due to merchandise engineering promotions. Demand for functional merchandises is much easier to calculate, while demand for advanced merchandises is extremely unpredictable due to the differences in merchandise life rhythm and the nature of the merchandise, functional merchandises tend to hold lower merchandise net income borders, but the cost of obsolescence is low ; whereas innovative merchandises tend to hold higher merchandise net income borders, but the cost of obsolescence is high.

A 2nd measure would be to take their supply concatenation features. A “ stable ” supply procedure is one where the fabrication procedure and the implicit in engineering are mature and the supply base is good established. An germinating supply procedure is where the fabrication procedure and the implicit in engineering are still under early development and are quickly altering, and as a consequence the supply base may be limited in both size and experience. In a stable supply procedure, fabricating complexness tends to be low or manageable. Stable fabrication procedures tend to be extremely automated, and long-run supply contracts are prevailing. In an germinating supply procedure, the fabrication procedure requires a batch of fine-tuning and is frequently capable to dislocations and unsure outputs. The supply base may non be as dependable, as the providers themselves are traveling through procedure inventions. While functional merchandises tend to hold more mature and stable supply procedure, that is non ever the instance. There are besides advanced merchandises with a stable supply procedure.

Demand Uncertainty Reduction Strategies

Merely through information sharing and tight coordination can one recover control of supply concatenation efficiency. Sharing of demand information and synchronized planning across the supply concatenation are important for this intent.

Supply Uncertainty Reduction Strategies

Free exchanges of information get downing with the merchandise development phase and go oning with the mature and end-of-life stages of the merchandise life rhythm has been found to be extremely effectual in cut downing the hazards of provider failure. So a good thought for Siemens would be to organize a provider hub in the USA operated by a third-party logistics company which would pull off the refilling and inward logistics of the parts and stuffs to a warehouse ( known as the provider hub ) which would be in close propinquity to the Siemens works. The stock list at the hub would be owned by the providers. The usage of the hub will let the providers to hold much better information about Siemens demands and ingestion forms of their parts every bit good as about the stock list in theodolite. This will ensue in a more effectual direction of stock list refilling and inbound logistics by the providers thereby cut downing the supply uncertainnesss for Siemens.

Supply Chain Schemes

Some uncertainness features require supply concatenation schemes with enterprises and inventions that can supply a competitory border to companies.

These schemes can be classified into four types:

Efficient Supply Ironss: these are supply ironss that utilize schemes aimed at making the highest cost efficiencies in the supply concatenation. For such efficiencies to be achieved, non-value-added activities should be eliminated, scale economic systems should be pursued, optimisation techniques should be deployed to acquire the best capacity use in production and distribution, and information linkages should be established to guarantee the most efficient, accurate, and cost-efficient transmittal of information across the supply concatenation. The function of the Internet in this instance is that it enables the supply concatenation to hold tight and effortless information integrating, every bit good as enabling production and distribution agendas to be optimized one time the demand, stock list, and capacity information throughout the supply concatenation are made transparent.

aˆ? Risk-Hedging Supply Ironss: these are supply ironss that utilize schemes aimed at pooling and sharing resources in a supply concatenation so that the hazards in supply break can besides be shared. It is hence a risk-hedging scheme. A individual entity in a supply concatenation can be vulnerable to provide breaks, but if there is more than one supply beginning or if alternate supply resources are available, so the hazard of break would be reduced. A company may desire to increase the safety stock of its cardinal constituent to fudge against the hazard of supply break, and by sharing the safety stock with other companies who besides need this cardinal constituent, the cost of keeping this safety stock can be shared. Such stock list pooling schemes are rather common in retailing, where different retail shops or franchises portion stock list. The Internet plays a cardinal function in supplying information transparence among the members of the supply concatenation that are sharing stock list. Having existent clip information on stock list and demand allows the most cost-efficient transshipment of goods from one site ( with extra stock list ) to another site ( in demand ) .

Responsive Supply Ironss: these are supply ironss that utilize schemes aimed at being antiphonal and flexible to the changing and diverse demands of the clients. To be antiphonal, companies use build-to-order and mass customization processes as a means to run into the specific demands of clients. The customization procedures are designed to be flexible. Order truth ( i.e. , accurate specification of client demands ) is the key to the success of mass customization. Again, the Internet has enabled really accurate and timely capturing of extremely individualized demands of clients every bit good as fast transportation of order information to the mill or customization centres for the concluding constellation of the merchandise.

aˆ? Agile Supply Chain: these are supply ironss that utilize schemes aimed at being antiphonal and flexible to client demands, while the hazards of supply deficits or breaks are hedged by pooling stock list or other capacity resources. These supply ironss basically have schemes in topographic point that combine the strengths of “ hedged ” and “ antiphonal ” supply ironss. They are nimble because they have the capableness to be antiphonal to the changing, diverse, and unpredictable demands of clients on the front terminal, while minimising the back-end hazards of supply breaks.

Given the different nature of demand and supply uncertainnesss of different merchandises, different supply concatenation schemes are needed for different merchandises.

The Right Supply Chain Strategy

Advanced Merchandises with Evolving Supply Processes

Companies with advanced merchandises and germinating and unstable supply procedures have to use the combination of risk-hedging and antiphonal schemes. The appropriate scheme here is to set up “ nimble ” supply ironss. Demand and supply uncertainnesss can be used as a model to invent the right supply concatenation scheme. Advanced merchandises with unpredictable demand and an germinating supply procedure face a major challenge. Because of shorter and shorter merchandise life rhythms, the force per unit area for dynamically seting and accommodating a company ‘s supply concatenation scheme is mounting. Using the Internet to develop nimble supply ironss with information sharing, coordination, and delay has enabled companies to vie successfully in their market topographic points. The challenges are great, but so are the chances.

To be continued today


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