New tools in the Toolbox
Why apply new strategy and cooperation model
Mogens Nyborg Pedersen
Head of Global Sourcing
© Siemens AG 2013 – All rights reserved
 Company profile
 Challenges & Strategies
 Modularization and strategic cooperation
© Siemens
AG AG
2013
– All– rights
reserved
© Siemens
2013
All rights
reserved
Page 2
E W SPR GS
SIEMENS AG
Answers provided by 19 Divisions in four Sectors
Energy

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
Oil & Gas
Fossil Power Generation
Energy Service
Solar & Hydro
Power Transmission
Wind Power
Infrastructure & Cities






Building Technologies
Mobility & Logistics
Smard Grid
Low & Medium Voltage
Rail Systems
Osram
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Industry




Industry Automation
Drive Technologies
Customer Services
Metals Technologies
Healthcare
 Imaging & Therapy Systems
 Clinical Products
 Diagnostics
Wind Power Division
CEO Dr. Markus Tacke
Americas
(E W AM)
APAC
(E W APAC)
EMEA
(E W EMEA)
Business
Units
Division
Wind Power Division
Organizational structure
Business Fields
 Onshore wind farms
 Offshore wind farms
 Service*
Offshore No. 1
*Energy Service Division (E S)
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Market
position
Wind Power Division
Key figures for fiscal year 2013
Key figures for FY 2013
New Orders
6.6
Revenue
5.2
Division Profit
0.3
(in billions of €)
Employees*
*incl. Service
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10,901
Wind Power Division
Market and locations
Market
Market growth for wind energy
(installed capacity in MW) is estimated
at 2% a year (2012–2018)*:
 Onshore (2012–2018): 0.7% p.a.
 Offshore (2012–2018): 13.4% p.a.
Market position:
 No. 1 in offshore market
 No. 3 in global installations (2012)
Locations
Headquarters: Hamburg, Germany
Production locations:
Denmark
 Nacelles: Brande
 Blades: Aalborg
 Blades: Engesvang
China
 Blades and Nacelles: Lingang City, Shanghai
Americas
 Nacelles: Hutchinson, Kansas
 Blades: Fort Madison, Iowa
 Blades: Tillsonburg, Ontario, Canada
Sales and service centers worldwide
* Market Update 2013
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Siemens Wind Power
Facts at a glance
Siemens Wind Power facts
One of the world’s leading suppliers of wind power solutions
Acquired Danish wind turbine manufacturer Bonus Energy A/S in 2004
Installed Base: > 13,100 turbines with ~ 22,100 MW capacity
Installed in CY 2012: > 4,100 MW
10,900 employees globally incl. Wind Service
Record order backlog of ~ € 12 billion incl. Wind Service
Revenue in FY 2013: € 5,2 billion)
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Page 7
November 2013
Siemens Wind Power Division
Getting the costs of energy down - Innovations
Example 1: The B75 - one of the world’s largest rotor
blades
• Increased rotor-swept area harvests more wind and is thus crucial for
the annual energy yield of the turbine.
• IntegralBlade-Technology: the world's largest fiberglass component
cast in one piece.
• No seams or glued joints and no adhesive, all of which saves weight.
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Page 8
November 2013
Siemens Wind Power Division
Getting the costs of energy down - Innovations
Example 2: Nacelle – Direct Drive Technology
• Gearless drive train increases reliability and availability
• 50% less parts reduces maintenance time
• 30% less weight facilitates installations offshore
• Higher energy yield
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Page 9
November 2013
Siemens Wind Power Division
Getting the costs of energy down - Innovations
Example 3: 6 MW offshore gearless wind turbine
• Direct Drive wind turbine with 6 MW rated power
and a 154 m rotor diameter designed specifically
for the harsh offshore environment
• Simple and straightforward design based on and
benefiting from experience with smaller Siemens
Direct Drive turbines
• Towerhead mass less than 350 tons – a new
low-weight standard for offshore turbines. This
will contribute significantly to reduced cost of
offshore wind energy, including Balance of Plant
• Turbine design optimized for offshore installation
and commissioning
• High emphasis on safe and comfortable working
environment, and cost effective service and
maintenance
Prototype installation Høvsøre, Denmark
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Page 10
November 2013
Siemens Wind Power Division
Getting the costs of energy down – further levers:
Synergies with maritime industry
• A2Sea: Siemens 49 % und DONG 51 %
• Synergies of offshore know-how of OEM,
utility and maritime economy
• Tailor-made ships contribute to lower installation help to e senken
time and cost
• Next-generation vessel SEAINSTALLER
first Siemens 6MW wind turbines
at Gunfleet Sands III (DONG Energy)
installed
• Rekord installation time of less than 24 hours
per wind turbine in spite of particularly harsh
weather conditions in January
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Seite 11
26.08.2013
Markus Tacke | E W
Agenda
 Company profile
 Challenges & Strategies
 Modularization and strategic cooperation
© Siemens
AG AG
2013
– All– rights
reserved
© Siemens
2012
All rights
reserved
Challenges
Chances
Chances and Challenges
Environment for future growth
We are…
 …growing faster then competition
 …among the most profitable wind turbine manufacturers
 …the Offshore market leader and will stay that way
 …reliable partner and are seeking long term partnerships
We have…
 …the world’s biggest assembly plant in Brande
 …the strength of Siemens in our back






Price productivity demand has increased
Customers expect shorter project lead times
Customers quality requirements are increasing
Strong seasonal pattern of customers demand
Product variety is increasing
Globalisation of the business and our organisation
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Page 13
E W SPR GS
Technology Development – Turbine Size
Boeing / Douglas Aircraft MTOW Growth
SWP WTG
Growth,Extrapolated
Extrapolated
SWP WTG
Growth,
Boeing/Douglas Aircraft MTOW Growth
1000
1000
Historical
Extrapolated
Plateau
100
Maximum Take-Off Weight (tons)
Nameplate Rating (kW)
10000
10
100
10
1
1975 1980 1985 1990 1995 2000 2005 2010
Year
1930
1950
1970
1990
2010
Year
Until 2003 exponential growth




From 22 kW to 2.3 MW over 25 years
Doubling time 4 years
Plateau reached 2003 at 2.3 MW
Flagship SWT-6.0-154 turbine has 154 m
wing span – Boeing 747 has 64 m
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Page 14
E W SPR GS
Flagship of the Multi-MW class:
SWT-6.0-154 wind turbine
Main data:
IEC Class:
Rotor diameter:
Blade length:
Swept area:
Hub height:
Power regulation:
IA
154 m
75 m
18,600 m2
Site-specific
pitch regulated, VS
Towerhead mass:
350 t
(as per December 2012)
Page 15
© Siemens AG 2013 – All rights reserved
E W SPR GS
In the future, logistic and Value stream excellence
will make the difference
Past
Now
Supply
Demand
Demand >>> Supply
• Growth
• Global spread
• Local content
• Larger turbines
•
•
•
•
Page 16
Demand <<< Supply
•
•
•
•
•
Shift of projects
Price reductions
Long term agreements
Reliable partners (offshore)
Local content
Capacity constraints
Shortages
Price increases
Heavy investments of
Suppliers
• Stabilize, improve and
prepare
• Raw material price red..
• Overcapacity
• Supplier instability
• Reduction costs
Size the supply chain
Establish Global Footprint
= Key action
Future
Demand = Supply
•
•
•
•
•
Turbine is commodity
New turbine types (DD)
Faster-to-market
Value added options
Offshore Growth
•
•
•
•
•
Logistic excellence
Global/regional/local
Fast reaction
Optimized supply
System supply/
(standard) modules
• Assembly in harbor
Optimize logistics
© Siemens AG 2013 – All rights reserved
E W SPR GS
Applying the right strategy is an essential lever, especially
in the procurement and transport driven wind industry
SCM’s procurement strategy
global
regional
high
1
–
TOWERS
BLADES
GEN
2
Magnets
 Regional supply
 Depending on industrial infrastructure
 Supporting development
 Regional suppliers supporting global
 Lead supplier for Sub Modules
Stator
GBX
HYDR
PU
1 Heavy and large components
2 Systems
CASTINGS
 Global CoC
 Local production if needed
FORGINGS
Low
–
Added value
local
3
KITS
ASSEMBLY
3 Kits (B/C-parts)
 Global provider
Low
–
Transport cost
–
high
 Potentially, with local presence
Procurement strategy is to have sustaining relationships
with global best in class suppliers who support global AND local demands
© Siemens AG 2013 – All rights reserved
Page
Page 1717
E W SPR GS
Wind power ‘4i’ strategy to reach a sustainable
Top 3 position in the future
R-Evolution
Growth
Flawless execution
People
LEC (EUR/kWh)
0.100
0.010
2005
Innovation
 Technology
leadership
through direct
drive
 Comprehensive
innovation
projects to reduce
LEC
 Modular
thinking through
platforms
 Accelerate
innovation cycle
2
3
2
1
3.0 101 DD – RProjected Evolution
EEX electricity
Price ceiling
(1)
price
case
Price ceiling with Chinese
2010
2015competitors
2020 (2) 2025
3
2
2030
Industrialization
International Foster transition ization




 Talent acquisition,
development & retention
 “Zero Harm” to all employees,
 Suppliers and customers
1
2
to large serial
production
Flexible and lean
manufacturing
Industrialize
Offshore value
chain (A2SEA
partnership and
lean BOP design)
Relentless cost
down
Modularization
Customer
Intimacy
 Regionalize

operations
 Increase global
footprint, while
maintaining strict 
capacity control

 Drive SMART out
of China

 Global Value
Sourcing
Reach wholesale parity within 3-5 years
Strategic
Partnerships
(Dong, SSE,
RWE)
Broaden
customer base
Build up through
local sales forces
Establish a
concept for
serving small
customers
Achieve Top 3
Processes
 Process optimization
 Strong risk assessment of
new products (TÜV
certification)
 Enhanced prototype testing
Organization
 Shaping the
organization
for future growth
 Regionalization
Keep target margin
© Siemens AG 2013 – All rights reserved
Page 18
E W SPR GS
Early Procurement activities and establishments
support Global Footprint strategy
UK
(planned)
Russia
Czech
(planned)
Romania
Canada
Ft. Madison
(blade)
Hutchinson
(nacelle/hub)
Spain
(under consideration)
Turkey
(under consideration)
Mexico
India
Shanghai
(Nacelle, Hub, blade)
Vietnam
Brazil
Engesvang
(blade)
Ølgod
(hub)
Supply Chain
Additional Supply Chain
Brande
(nacelle prod. &
Global HQ)
Aalborg
(blade prod. &
R&D blade design)
Procurement Offices
© Siemens AG 2013 – All rights reserved
Page 19
E W SPR GS
Rigid Processes needed for rapid growth and
Globalization
© Siemens AG 2013 – All rights reserved
Page 20
E W SPR GS
R-evolution takes customer perspective and makes
Wind competitive with conventional energy
R-evolution – Strategic umbrella of all activities within Energy Renewables
 Goal: Long-term competitiveness
with conventional energy
time
Offshore
 KPI: Generation cost from
customer perspective
Onshore
4 EUR ct / kWh
LEC
WTG invest
LEC =
OPEX
Other CAPEX
+
+
Lifecycle energy output
SWP scope CAPEX (WTG invest)
Source: R-evolution, E R WP CP
Page 21
Other CAPEX (e.g., foundation)
Lifecycle OPEX (e.g., service)
Lifecycle energy output
© Siemens AG 2013 – All rights reserved
E W SPR GS
 Company profile
 Challenges & Strategies
 Modularization and strategic cooperation
© Siemens
AG AG
2013
– All– rights
reserved
© Siemens
2012
All rights
reserved
Page 22
E W SPR GS
Our biggest competitor……
Long term target is to Beat fossil Long term target is to
Versus
Our biggest competitor is not another turbine manufacturer.
It is fossil fuel.
We have set the goal of bringing down the cost of wind energy to become
free of subsidies.
© Siemens AG 2013 – All rights reserved
E W SPR GS
Global footprint to reflect regional and local
markets for SWP and Supplier
General setup and strategy for the global footprint
Large
plants
Local
content /
Currency
 Economy of scale/Lean
 Module assembly acc. to
Core Competence matrix
Fundamental setup
Asia
Flexibility
$
 Lead factory at Strategic
Supplier in one Region
 2nd Tier Component supply
base EMEA and APAC
$
 Optimized landed costs
 Flexible capacity
 Modular
SWP Assembly
Logistic
EMEA
 Satellites for local content
 Strategic Supplier set-up
 Sourcing in currency we sell
$
Supply
cluster
Americas
 Modular thinking
reducing Transportation cost
Sub Module Supplier
Supply Base
Supply lines
Lead factory
Sub module Supplier
© Siemens AG 2013 – All rights reserved
Page 24
E W SPR GS
The future lies in modularization
Each product is made up of six modules, which are the main building
blocks of our turbines.
© Siemens AG 2013 – All rights reserved
Page 25
E W SPR GS
Primary advantages of Modularizaton
Program simplification
•Strengthen core
Outbound logistics
R&D simplification
Make or buy
facilitation
Global footprint
Modules & submodules
© Siemens AG 2013 – All rights reserved
Page 26
E W SPR GS
Turbine layout – D3
Brake
console
Yaw
gear assy
Mounting plate
in bedframe
Blade
Complete
stator
HUB
Cooling tower
Blade bearing assy.
HPU
Back-End
Tower
Complete
yaw assy
SICS
Mounting plate
in shaft
Generator
cooling unit
Generator
© Siemens AG 2013 – All rights reserved
Page 27
E W SPR GS
Modularization has achieved already some initial
success cases on
Modularization
and
Standardization
Modularization
and
outsourcing
the existing items
•
Same Yaw Gear assembly can
be used in D3 and D6 platform
•
Reduction of, e.g., development and
testing time, warehouse space, ...
•
Cooling Tower/ Generator
Cooling outsourced to Tier 1
supplier
•
Modularization •
and logistics
•
cost reduction
•
Reduction of complexity. Reduce BoM
parts from > 50 pcs. To 1 pc.
Split Nacelle and Back-end
Reduction of transport cost I US
Enabler for flexible production (back-end
from US, generator from DK)
© Siemens AG 2013 – All rights reserved
Page 28
E W SPR GS
Wind Turbine industry need to adopt the
Industrialization and Modularization techniques
Can we adopt the industrialization and
modularization techniques used by the
automobile industry? This is not quite the
case………..
Using modules and product platforms
for wind power plants saves money
on purchasing activities, simplifies
storage and allows us to execute
large production runs as just a few
benefits.
© Siemens AG 2013 – All rights reserved
Page 29
E W SPR GS
Early supplier involvement engages procurement
into product development, supporting costs of innovative products
Potential of early supplier involvement
Savings
To-be
Potential of
early
supplier
involvement
As-is
Time
1
40
3
>100
Product Development Process
Concept
Development
Volume Release
© Siemens AG 2013 – All rights reserved
Page 30
E W SPR GS
Price focused Procurement vs.
Total Cost focus.
Requirements for Component Supplier
Shared Risk and opportunities for
Module Supplier
•Competitive pricing
• Risk sharing models
•Payment terms of 75 days next first
• Investment requirements based on
•Acceptance of our contractual standards
•Global footprint or supply scope
•Deliveries under schedule agreement and
within short lead times
commitments and shared risk.
• Raw material and 3rd-party sourcing. As
affiliate to SWP, when lower cost.
• Storage and logistic
•On Time Deliveries of more than 90%
• Open book policy
•Highest Quality
• Sharred inovation – Early involvement
•Strong technology capabillities
• Optimization and cost out
•Flexibility
• Contract design (warranties & liabilities)
• Quality (System responsabillity)
© Siemens AG 2013 – All rights reserved
Page 31
E W SPR GS
Success Criteria for establishing
efficient global Value stream
© Siemens AG 2013 – All rights reserved
Page 32
E W SPR GS
Strategic Suppliers are a future member
of the Module Group
External
Service
Lead
supplier 1
Lead
supplier 2
Dept x
Module Group
EW
SPR (incl
quality)
EN
OPS
• Module Groups run by a Module
Owner (actors: EN, SPR, OPS) will be
the primary owner impacting the
Commodity Group set-up &
responsibilities
• Module owner should be responsible
for
• current and forecasted total
lifetime cost
• supplier requirements
• module quality and performance
• technology roadmap
• MoB decisions on sub-modules
• Interfaces between sub-modules
© Siemens AG 2013 – All rights reserved
Page 33
E W SPR GS
Questions & Answers
Best @ Wind
.
We want to be the Best @ Wind - this is our ambition.
Best @ Wind means we want to be preferred because of our quality, reliability,
innovation and responsibility. That is our way to achieve sustainable
success and a long term profit.
© Siemens AG 2013 – All rights reserved
Page 34
E W SPR GS