Wärtsilä is a global leader of power solutions and services to the marine and energy generation markets with net sales of around 5 billion EUR in 2014. Operating profits in 2014 were around 570 million EUR, or approximately 12% of net sales.
Wärtsilä is a publicly traded company with 17 700 employees who operate in nearly 70 countries, with headquarters in Helsinki, Finland.
Wärtsilä provides ship machinery, propulsion and maneuvering solutions for all types of vessels and offshore applications. Marine applications range from fishing vessels with a single main engine to large cruise ships that carry thousands of people, deploy multiple engines for propulsion and additional engines to generate electricity. Caterpillar and MAN Diesel are important medium speed engine competitors within the core marine market segments, while Hyundai Heavy Industries competes within the smaller output electricity generating segment.
Wärtsilä also participates in the more fragmented energy market where numerous engine manufacturers and gas turbine suppliers compete on power generation facilities. These power plants range in size from a few megawatts for a small city or university to hundreds of megawatts that capture the daily peaks in electricity for an entire country such as Jordan. Wärtsilä typically sells an entire power plant, but there are also some opportunities where the scope of delivery is an engine with certain ancillaries.
Medium speed engines have the highest efficiency of any internal combustion engine. They can be configured to burn light fuel oil (LFO), which is similar to diesel for cars and trucks; heavy fuel oil (HFO), which has lower viscosity; and natural gas. Medium speed engines operate in the range of 500 to 1200 revolutions per minute using 4 to 18 cylinders to produce 0.8 to 19.2 megawatts of power (1 000 – 26 000 horsepower). The smallest engines are approximately 2.5 meters long, 2 meters high and 1.5 meters wide, weighing a respectable 7 tons; and the largest engines are 14 meters long, 5 meters high and 4.7 meters wide, weighing an enormous 240 tons.
Wärtsilä produces approximately 1,000 engines per year with the majority coming from European plants in Vaasa and Trieste, but there are also engines produced by joint venture factories in China and Korea.
Creators of the World’s Most Efficient Engine
Wärtsilä’s Medium Speed Engine business faced a number of challenges, including customer requirements for more fuel-efficient engines, flex-fuel options and faster time to market. In addition, the company needed to develop an entire family of engine products with future upgrade paths, retrofits and enhanced serviceability. Wärtsilä embarked on a modularity program with the support of Modular Management.
Wärtsilä was able to develop the entire product family simultaneously, at dramatically reduced time to market, and created the world’s most efficient four-stroke engine with greater than 50% efficiency rating, which is a Guinness World Record.
KPIs45% reduction in initial development time
44% lower cost for ongoing product care
43% fewer unique part numbers
100% increase in use of common parts
40% less purchased parts
50% reduction in assembly time.
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In 2008, there was a strong push in the market to increase fuel efficiency, and customers were looking for flexibility to burn different types of fuel. Other engine manufacturers were starting to deliver next levels of performance with newer products, while Wärtsilä was not able to quickly answer with something new. They needed to make improvements to their entire line of medium speed engines to stay competitive.
The range of medium speed engines at that time was based on designs that originated in the late 1980s and early 1990s. Performance improvements had been implemented continuously, but at this point the engines had reached the physical boundaries of the design and no further performance increase could be achieved without major redesign.
In the past, each engine was designed and optimized independently with little shared design between medium speed engines. The standard time for Wärtsilä to develop a single new engine was around 10 years. The management team decided that this needed to change, and the company could no longer develop just one engine at a time. They needed to determine how to develop and launch an entirely new range of engines and ensure the potential for incremental performance improvements during the coming twenty years.
To answer this challenge the company enlisted a large management consulting firm and began work on a commonality initiative with the goal of deploying more standard components. By working from the bottom-up to choose a smaller set of components that deliver the range of engines, they could reduce development time and costs. Unfortunately for Wärtsilä, these standardization efforts turned into a never ending process that didn’t help them reach their goals. Once a specific engine was optimized with standard components, the others were no longer optimized.
They also found that commonality was driving toward reduced variety and forced choices based on volume goals rather than the market demand, which was quite volatile. Oil prices are one driver of volatility. With increasing prices, the demand from the off-shore oil industry goes up and the demand from the cruise ship industry goes down. With decreasing prices, the opposite happens. With component standardization, Wärtsilä found that they would never reach the volumes needed to take advantage of any savings. Instead, they needed a variety of engines and options coupled with commonality and efficiency. They concluded that the bottom-up commonality initiative could not solve the challenge of widening the portfolio while increasing commonality at the same time.
Product Management & Sales
To address the new levels of competitive products entering the market in 2008, Product Management and Sales established the vision of Wärtsilä as the performance and efficiency leader. Since they could not squeeze more power or efficiency out of the old engines, they needed a step change that phased out the old product family.
Defining the exact requirements for this new product family was a difficult task. For the various marine and power generation applications, the product requirements and technical restraints were very much intertwined. The requirements were a moving target that changed with each customer conversation by the sales team. It was difficult to manage and track where requirements came from and how they changed over time and across customers.
Product management was also done on the level of individual engines rather than at the level of the portfolio. Sales and marketing, on the other hand, was managed on a business unit level with separate focus on the marine and energy generation markets. This division was clearly reflected in the implementation of sales and engineering configurators. There were sales configurators managed at each of the business unit levels and separate engineering configurators for each of the engine sizes.
When customers specified their requirements, the sales team translated their request into a selection from the portfolio offering in the sales configurator. This request was then converted to a configuration in the engineering configurator. Often, the engineering configurator was not able to fulfill a specific customer request and a “non-standard request” was issued for technical and economical evaluation.
Product Design & Engineering
The engineering team was the most challenged of any group at Wärtsilä with the goals established for the next generation of products. They were under extreme pressure to develop new products quickly, but the roll-out of new engine capabilities and features took a long time. Many of the engineering resources were deployed to create unique customer solutions, and every new capability or feature on the existing products required adaptions of every engine type. Furthermore, there was no formal technology roadmap in place to address the step change in performance. Up to this point, technology planning was left to the intuition and experience of the senior engineers.
Engine development was highly dependent on multi-million Euro, full prototype testing as the primary mode of design evaluation. In addition to being a large portion of the overall expense, the designs were never well coordinated and there were many surprises that caused delays. Engineering was also challenged with pressure to reduce costs. This included both product material cost and the cost of developing new products. Cost reductions were challenging because most product costs are set during the initial design. They needed a new design that would accomplish their cost reduction targets.
Alongside the commonality initiative, Wärtsilä had started to implement a new Product Data Management (PDM) system to support the reuse of components. Wärtsilä had identified the primary barrier to component reuse as the ability to easily find them. However, they discovered the quality of the existing part data was very low, and the effort to implement a solution required the experience of people who have worked on the product for a long time. In addition, the same, highly valuable engineers involved in the customer orders are required to create the PDM data.
Wärtsilä had two legacy PDM systems that existed in separate companies before they were merged together. Since Wärtsilä was a pioneer in the usage of PDM systems, the systems had become heavily customized, making a simple merging of the two impossible. A lengthy PDM program was defined with four multi-year phases to first merge and then improve the management of product lifecycles at Wärtsilä.
Generally, it is a long process to source and produce a big engine for marine and power generation. They are comprised of big, heavy and difficult to fabricate components. For the largest components, only a few suppliers around the world are able to manufacture them. New products and engine variants always brought new processes or assembly sequences and changes to the support functions like factory logistic and quality.
Because of the large number of different engines and sizes, the assembly operations had to handle a lot of variations. Years back, an assembly line was implemented to improve the efficiency and productivity of the final assembly. It was difficult to achieve a consistent movement of products. They worked to limit the steps completed on the line, and much of the work was done off-line with components preassembled into large modules. The cycle time of the line extended into the preassemblies because the large assemblies could only be assembled once an order was received.
During the process Wärtsilä had to deal with customization changes that were often not settled once the supply needed to start. It was hard to predict how these changes would affect the product to be produced – they could have big domino effects inside the product. Long lead time components, that had to be ordered early, could need re-work or even become unusable when the impact from the customizations emerged. Such unused components were put into the warehouse, tying up capital and waiting for another suitable order, and many were scrapped in the end.
It was hard to setup an efficient sourcing and production flow or commit to production lead times when there were grey areas in the production bill of materials (PBOM). Customization changes could potentially have a wide impact to the system. This prevented Wärtsilä from ordering components in bigger batches to make sourcing more efficient. Instead components were ordered one-by-one, disabling any batching synergy effects. With the low volume per part, high variety and many new parts, there were large investments in tools, fixtures and automation support.
Goals for the Modular Architecture
After Wärtsilä was unsuccessful with component commonality and standardization, they examined other companies to see how large strategic changes to their business were made. Modularity was one of the major initiatives identified to enable increased commonality. They found that commonality occurred at a lower, more granular level than their previous approach, and the modular architecture would simultaneously provide variance in their product offering.
“There is some risk,” says Director of Concepts and Solutions, Patrick Baan. ”But we’ve studied companies in other industries and it’s clear that the ones who adopted a similar approach have been consistently successful, delivering good results for long periods, well over 20 years.”
The initial program to implement a modular architecture was focused on the middle power range of Wärtsilä’s medium speed engines. This range of engine constituted the largest portion of sales revenue, and the architecture that was developed could be extended to larger and smaller sizes.
Wärtsilä planned to maintain their significant share in the marine and energy markets by regaining their leadership in technology and performance. This included significant advancements in fuel efficiency, fuel flexibility and improved serviceability. With a modular architecture, they would offer customers high performance, tailor-made solutions that are validated in product development rather than engineered during the delivery process.
During the lifetime of the medium speed engine family, Wärtsilä planned to roll out novelties across the family at a faster pace than with the previous family. They also planned to increase serviceability through backward compatibility of new module variants and a limited number of different spare parts. Products would need to be easy to upgrade, cost-effective to recondition, and provide a low total cost of ownership.
The overall profitability of the product family would increase by reducing cost in product development and operations. They planned to reduce the cost of developing new engines and maintaining existing engine products by using fewer designed articles. The cost of engine components would be reduced by using more common components.
Lower production costs, increased production flexibility, worldwide availability and high quality level would be achieved through global suppliers and module production with centralized final assembly. They looked for an increase in standard processes and a faster flow of engines through the factory.
The new middle power range, medium speed Wärtsilä 31 engines are truly flexible to meet varying customer demands. They can use HFO, LFO and natural gas, plus any combination of these fuels. The initial launch of the product family can be configured to host 8 to 16 cylinders that crank out 610 kilowatts per cylinder. This is the highest power per cylinder and total overall power for middle power range engines. They achieved above 50% efficiency rating, making this the most fuel efficient four-stroke engine in the world – for which Wärtsilä received a Guinness World record award.
“With this breakthrough development, which is based on the introduction of the very latest technology, we can now open the doors to a new level of optimization that is valid throughout the entire life of the vessel,” says Roger Holm, President of Marine Solutions and Executive Vice President of Wärtsilä.
With the new engine platform based on a modular architecture, commonality level has doubled. It took half the time to develop the engines versus any other product in the past, and the range was 2-3 times the scope of any of the past product development efforts. With fewer prototypes, the company saved over 10 million Euros. They also reduced the annual continuation engineering cost by 700 000 Euros.
The company has grown in modularity competence quickly. The development team learned how to work better together making compromises and balanced decisions,” said Marco Delise, General Manager. “Wärtsilä has also created specific positions to manage the modular system. “This was due to the Modular Management consultants who were very professional with high competence and experience.”
Across the family of medium speed engines the number of unique components has been reduced from nearly 7 000 to under 4 000. Product development expense for the entire family was initially estimated at 88 million Euros, but it was reduced to 49 million Euros with the use of the modular architecture. The time to develop the new engines was also reduced from 15 years to 10 years. The ongoing cost of maintaining the product family has also been drastically reduced from 6.1 to 3.4 million Euros. By reducing the number of different purchased articles from 1 200 to 720, Wärtsilä has gained leverage on higher purchased volumes per article.
Product Management & Sales
For customers, the modular design of W31 enables time spent on maintenance to be notably reduced. Since the entire engine modules can easily be removed and exchanged with modules available from stock, no dismounting and overhauling of individual parts is necessary. The shift from single spare parts to exchanges including power units, injectors and high pressure fuel pumps allows servicing to be more efficient, while engine uptime is maximized. Single parts dismounting remains possible when needed.
“The modular design will also allow for technological upgrades over time, particularly with regard to evolving emission controls and decisions to opt for different fuel types,” says Giulio Tirelli, Director of Engines Portfolio and Applications.
There are many customers building power plants on sites where only diesel fuel is currently available, but they know that a gas pipeline or a gasification plant is coming in few years. Now, Wärtsilä can offer a new engine optimized for diesel that can be easily converted into an engine optimized for gas. This is a strong value proposition that can be quantified by the savings in fuel consumption and the conversion cost. Similar retrofits can be made for different levels of emissions.
To develop the modular architecture, the team needed a plan for the whole family. They worked from a market view – not from a single customer or application view. Product requirements became marketing’s assessment of the market rather than the specific needs from each customer. Customer focus is now the “why” behind everything they do. Every variant of a module exists for a specific customer reason.
Targeting the most important segments first, four complete engine configurations were completed before the product family was launched to the market. The remainder were prioritized by segment and would be completed as additional Module Variants were designed. They could get the new product on the market faster while maintaining the ability to meet varying customer demands. The new product configurator was a helpful tool to prioritize what modules and variants to develop based on market demand. The product configurator also helps Wärtsilä to sell existing variants, rather than having the customers tell them exactly what they want. Sales has become much more proactive.
“Customers are unlikely to see any difference because the flexibility we’re offering is the same as it was before”, says Patrick Baan, Director of Concepts and Solutions. “By getting this right, our view of what we’re doing and how much time, effort and risk it entails will be much improved. It will be easier for us to keep the promised time schedule. And there’ll also be more components that we’ve already used in other solutions, making the commissioning process smoother.”
Product Development Engineering
At the beginning of the project, the team developed a technology roadmap that was a clear and objective evaluation of what should be done to become the technology leader. It was a solid starting point for the development of the architecture and for achieving performance and technology goals.
The reduced complexity and standardized interfaces have increased Wärtsilä’s ability to pre-test components on rigs during the development phase. All of the mechanical equipment is now evaluated with computer-aided engineering and then moved to a rig test long before it ever makes it to full prototype validation. This has resulted in many fewer early failures and quality problems than in previously launches.
“The Wärtsilä 31’s modularity is a very powerful property,” says Ilari Kallio Vice President Engines R&D, “allowing us to make the product easily configurable to all kinds of applications. You’ll see this approach at work in all the new engine generations we create. This development establishes a new type of thinking for Wärtsilä – a new way to design and manage a product.”
By using existing CAD features in a smart and harmonized way, the modularity program defined a new way of working in order to capture and use the modular data. CAD system changes were implemented and procedures were added to the CAD protocol to embrace module interfaces and skeletons. The modularity program now became the vehicle for changing CAD systems. There were many opponents to the change in beginning, but once the design work actually started and passed a threshold it was very much appreciated.
“We created a lot of new stuff. It was more work at the beginning, but the benefits came when we created all of the Module Variants and when we started maintaining the product family”, says Juha Matti Myllykoski, the head of the design team.
A more advanced way of working with the new CAD system, that was several years newer and more capable than the previous versions, enabled reuse of design elements ranging from interfaces to regular parts. They could now reconfigure a complete engine by using modules and a standard assembly of the virtual product. Module Variants are replaced automatically or with simple, manual interactions. Something that only a few experts could do before was now easily available for everyone.
In parallel with the modularity program, the PDM beta project had been executed and was nearly complete. Special requirements for the modular architecture were added to the final stage of PDM the project. Specifically, they added special item types for modules and interface and divided some into sub-classes.
By integrating the PDM system with the modular architecture, users were able to navigate the modular architecture to match parts to modules, to list all of the variants of a module, to see what interfaces were used by a module, and to see other modules using the same interfaces. Authorization and release procedures could also be maintained by these new item types, which enabled tracking and governance of the ongoing modularity program.
Managing the configuration of the engines with a modular architecture was an eye-opener for Wärtsilä. It was significantly more efficient than the existing configuration tool and practice. Now the complete engine in all its variations could be captured in one configuration model within days of completing the architecture. Previously, an engine assortment like this was divided into a number of subgroups where each group was programmed independently over weeks or months amounting to several month or years for the complete product family.
They were now able to build an early picture of the logical limitations in the way modules and variants had been specified. During the refinement of the architecture, timely measures could be taken to adjust the definition of the modules to achieve an improved configurability. As they built experience, Wärtsilä found that they could create even more flexible configuration rules with less complex programming. Previously, the configuration rules were done after the complete design was finished. Now, configuration rules were available long before design work began as part of the initial engineering and planning work.
In past, Wärtsilä talked about a few large modules that were brought together on the assembly line. Their new way of thinking about modular architecture deploys a larger number of smaller modules – many of which are planned, batched and pre-assembled. They continue to use the single assembly line, but there is significantly more parallel production. There are modules that enable flexibility during the engine assembly, which extends the point where an exact product configuration is determined. This has allowed Wärtsilä to offer fast delivery on many of their engine configurations and an overall 50% reduction in the engine assembly lead time.
“The new, modular W31 family of engines is much more efficient to source and produce, even in a situation with many customization changes,” says Janne Kansanaho, New Product Development Manager for the Delivery Center in Vaasa. “The stable interfaces put a limit to where customizations impact the system. This makes it possible to source in batches, and the risk of ordered components that will be unused is virtually eliminated.”
Early availability of product architecture data with the specification of all module variants and the three-dimensional module data of skeletons and interfaces allowed the production experts to simulate and optimize the assembly line well ahead of the finalization of drawings and realization of first prototypes. When the manufacturing engineers knew the weights, dimensions and interfaces in advance, they were able to plan for jigs, movements and storage. They were able to design, optimize and “virtually validate” the system for the whole portfolio at once. The new operations design was completed well before the first new engines were produced.
With the modular architecture, the PBOM has become much clearer. Late customization components have empty placeholders in the bill of materials that tell exactly what components will be unique. Wärtsilä has also found it much easier to convert the Engineering BOM to a PBOM. There was a much better coordination of activities between engineering, manufacturing and sourcing. They had fewer problems and a quicker ramp to full production reducing tied-up capital and Return on Investment (ROI).
Modular Architecture in Action
It is common for marine customers to choose the driving end of the engine relative to the intake and exhaust. Finding an innovative way to handle this need was an objective of the new modular architecture. With this goal in mind, the team came up with a symmetric engine design where both ends of the engine block were identical.
They could now switch the side of the engine where it is connected to whatever it is powering. This is shown in the diagram below where the large flywheel is located on the left side of the engine in the left picture and on the right side of the engine in the right picture. In both of these pictures, the turbo charger, intake, and exhaust on top of the engine remain in the same location.
In the past Wärtsilä had to use 40% unique parts to be able to offer both engine configurations. Now there are only a few parts that change. To accomplish this design they had to use a thicker engine block in some areas than was necessary for the individual configurations. This added some material cost to the engine block, but it was a small price to pay to reuse parts within the portfolio.
The team similarly optimized the portfolio for other product variance drivers such as fuel type. This greatly reduced the number of fuel system components unique to the fuel types increasing the overall commonality of parts within the engine portfolio. They have increased the number of fuel choices for customers and have created a cost effective path to upgrade an engine.