A Techno-economic and pricing strategy simulation model of multiple manufacturing companies supplying micro milling

Dirkse-van Schalkwyk, Theunis Gysbert (2017-03)

Thesis (DEng)--Stellenbosch University, 2017.

Thesis

ENGLISH ABSTRACT: Micro milling is a fairly new machining technology and is still developing in leaps and bounds. Many new products are also smaller than the products they replace, driven by microprocessing, portability advantages and resource scarcity. This allows micro manufacturing in general and micro milling specifically to increase market share at the expense of traditional manufacturing technologies. Advantages in capital cost, labour, materials volumes and operating costs all add to the attractiveness of micro manufacturing. The ability to manufacture smaller batches economically promotes local manufacture and has a smaller carbon footprint than traditional approaches. It also fits well with the concepts of mass customisation and tailor-made products in the medical implants area. Other, more esoteric concepts, such as cloud storage and design coupled with local manufacture, have impacts to potentially simplify local manufacture and lower overheads. Such new technology and rapid changes in the market require timely and informed decisions by businesses to become more efficient and stay competitive. Simultaneously, business risk must be considered. A techno-economic feasibility studies or business plans are common ways to support such a complex decision making process. A methodology to do a comprehensive techno-economic feasibility study is described and followed. The techno-economic feasibility study depends on various aspects such as market demand, a model of a typical business process, generating of potential outcomes through applying simulation and evaluating the simulation output. By way of a market analysis and literature study, the most advantageous markets to consider for micro milling were identified as medical implants, research and prototyping, small and medium batches of complex 3D shapes, electronics devices and dental accessories. One way to explore the business potential of new technology and simultaneously consider risks is through simulation. A simulation model of the technology environment was set up and simulated outcomes were used to assess risks versus opportunities. The simulation used in conjunction with the techno-economic feasibility study allowed a thorough investigation of the issues involved, conclusions to be drawn and recommendations to be made. Some conclusions include the following. Companies which are interested in new technologies should have at least some human resources available to allow technology transfer to be successful. Software and hardware training, time to gain experience and insight into the financial aspects of the new technology will all have an impact on the success of the investment. If the company is already active in the macro milling market, the techno-economic feasibility study shows that such knowledge should be sufficient to allow the company to become more efficient and competitive if they invested in micro milling. The market size, competing companies and minimum required rates of return all have bearing on these decisions. Using a simulation model more completely identifies the probable outcomes, but also shows that the future will not limited to deterministic outcomes. The market analysis of potential products that can be manufactured using micro milling showed that there is ample space in the manufacturing sector to invest in this technology and that the uptake of the technology is far from saturation. Many of the identified markets are in growth phases and will continue to grow for many years according to forecasts. Some barriers to success include skill requirements, complex process chains, compatibility issues with software and hardware and penetration of high technology markets. Universities are in favourable positions to facilitate some of the technology transfer by using their research capacities wisely. The simulations showed that the initial market size, required minimum interest rates or hurdle rates, growth rates of the markets, pricing strategy and number of competing companies in the market will have the greatest impact in the choice of investing.

AFRIKAANSE OPSOMMING: Mikro-frees is ’n taamlike nuwe tegnologie en dit ontwikkel steeds vinnig. Baie nuwe produkte op die mark is ook heelwat kleiner as die produk wat hulle vervang, as gevolg van die markkragte soos mikroprosessering, draagbaarheid voordele en hulpbron skaarsheid. Die tendense gee vir mikro-vervaardiging in die algemeen en mikro-frees spesifiek die geleentheid om markaandeel te bekom te koste van tradisionele vervaardigings metodes. Voordele in kapitaalkoste, arbeidkoste, materiaal volumes en bedryfskoste dra alles by tot die aantreklikheid van mikro-frees. Mikro-frees kan ekonomies werk met kleiner lotte en bevorder dus plaaslike vervaardiging en het boonop ’n kleiner koolstof voetspoor as tradisionele vervaardiging modelle. Dit het ook goeie passing met die konsepte van pasmaak massaproduksie en mediese implantate. Die voordelige areas om te oorweeg is mediese implantate, tandheelkundige bybehore, ontwikkeling en prototipering van klein tot medium lotte wat komplekse 3D vorms benodig. Nuwe tegnologie en snelle veranderings in die mark noop vervaardigers om intydse en goeddeurdagte besluite te neem om meer effektief asook kompeterend te wees. Terselfdetyd moet risiko’s oorweeg word. Tegno-ekonomiese doenlikheid studies of besigheidsplanne is algemene metodes om sulke komplese besluitneming te ondersteun. ’n Metode om so studie volledig te doen is beskryf en gevolg. Die tegno-ekonomiese doenlikheid studie word moontlik gemaak deur verskeie aspekte te ondersoek, soos markaanbod en vraag, ’n besigheids model, simulasie van moontlike uitkomstes en deur die simulasie resultate te ondersoek. Simulasie is een van die maniere om besigheids risiko’s duidelik te maak. In die simulasie is ’n model gebou wat die markaanvraag voortbring en dan vervaardigers die geleentheid gee om te tender vir kontrakte. Vervaardigers moet dus koste berekeninge doen en daarna hulle wins persentasie bysit. Verskeie aspekte beïnvloed die vervaardigers wat veroorsaak dat hulle met verskillende pryse in die mark kom. Die klient besluit dan weer met ’n komplekse stel reëls, wat prys en reputasie insluit, aan wie die kontrak toegeken word. Inligting uit die simulasie saam met die navorsing oor die mark-potensiaal gee dan ’n redelike volledige voorstelling van die geleenthede en risiko’s. Maatskappye wat wil belê in komplekse tegnologie moet in ag neem dat hulle genoeg spaar kapasiteit in menslike hulpbronne het sodat die leerkurwe van die tegnologie bemeester kan word. Opleiding moet voorsiening maak vir beide hardeware en sagteware aspekte. Om akkurate koste berekenings te kan doen moet die tegnolgie ook leer ken word. Indien die maatskappy reeds bestaande mikro-werk verrig sal dit die oordrag vergemaklik. Die mark volume, kompetisie, minimum opbrengs koerse, groei in die markte en huidige ondervinding sal alles kan bydra tot sukses. Deur simulasie te gebruik word al die uitkomstes sigbaar gemaak en kan die waarskynlikheid van elke uitkoms bepaal word. Dit wys ook duidelik dat die toekoms nie in ’n enkele uitbeelding kan pas nie. Die mark-analise van moontlike produkte wat vervaardig kan word wys dat daar baie geleenthede is om in mikro-frees tegnologie te belê en dat die gebruik van die tegnologie nog ver van voldoende is. Baie van die mark-sektore wat geïdentifiseer is, is ook in ’n groei-fase en sal so wees vir etlike jare. Die hindernisse tot mark-betreding is in skaars vaardighede, komplekse proses kettings, meewerking van sagteware en hardeware en die binnedring van hoë tegnologie markte. Universiteite is in ’n gunstige posisie om sulke tegnologie oordrag te fasiliteer indien hulle navorsing oordeelkundig aanwend. Die simulasies het gewys dat oorspronklike mark volume, benodigde minimum opbrengs koerse, mark volume groei koerse, prys-strategie en aantal kompeterende vervaardigers die grootste impak sal hê op die keuse om te investeer.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/101176
This item appears in the following collections: