Innovating and challenging the status quo

In recent years, we have seen that the manufacturing processes of Japanese corporations have been copied at cheaper costs by countries such as China and South Korea. If competing enterprises play on price competitiveness, how can Japanese companies not just survive, but thrive in this kind of environment?

Competing companies in China and South Korea that are ‘copying’ Japanese manufacturing processes tend to focus on delivering products quickly and cheaply. The issue with this mentality is that the level of quality of the products manufactured is oftentimes far from optimal. Japanese companies are very meticulous in the way they undertake their manufacturing processes and are known for their high-quality products.

The reasons we are able to achieve this level of quality are linked to the fact that we have highly qualified employees who oversee every single step of the development and production processes, as well as the fact that we use state-of-the-art technologies and automated systems. Another reason is linked to our implementation of ‘vertical integration’, a practice that is widely abandoned by our competitors in China and South Korea that often buy expertise from many different vendors. In addition, I believe that Japanese companies are capable of surviving in today’s competitive market because we instil trust in our customers. We always put quality and satisfaction of our clients first. Customers know this of Japanese companies and it is why they have so much confidence in our abilities to deliver on our promises.

We recently conducted an interesting interview with the president of Toyota Boshoku who explained to us that in 2006, the company lost its ‘Camry Sedan’ contract to Johnson & Johnson, which ultimately led to a massive 8% loss in the company’s revenue. He gave us an analysis on the ‘Keretsu’ structure and explained that 30 years ago, the company did not need to innovate or be cost competitive because they could always rely on Toyota to buy their products. However, in today’s globalized world, this ‘Keretsu’ structure is falling apart and many companies have become vulnerable. What is your view on this end of the ‘Keretsu’ structure?

You are correct in that the ‘Keretsu’ structure is definitely crumbling and is carving the path towards a new framework where innovation and cost-competitiveness are key factors for survival. We are experiencing a new era of manufacturing where outsourcing has become common practice, and with increasing globalization, competition has skyrocketed and forced many companies to seek new methods to stand out amongst the crowds. However, for major Japanese automotive companies, although certain components may be outsourced, their core technologies are still all designed and produced in-house. They stand by the level of quality and reliability they can achieve themselves and have full confidence in their ability to use cutting-edge technology to deliver state-of-the-art products to customers worldwide.

Talking about the importance of technology, I would like to expand a bit more on the concept of innovation. At the eve of the 4^th Industrial Revolution, many industries are experiencing tremendous changes due to innovative technologies, such as automation, robotics, IoT and many more. While these technologies influence end-products, they are also having an impact on production processes. What has been the impact of innovative technologies on Sanyo Machine Works?

Everyone is talking about how ‘Industry 4.0’ is on the horizon and that we have to brace ourselves for ground-breaking changes that will shake up industries; but the reality is that none of this is new… We have been doing this for over 30 years! The integration of IT into manufacturing began in the 80’s with data collection from quality control systems and has been expanding since.

Our company has actually developed a new IT system and incorporated it into a number of assembly lines to improve the overall quality and productivity of our manufacturing processes. Assembly lines usually have automated sections which are controlled by the direct command from IT systems, and manual sections whereby human expertise are integrated into the overall processes. Our new state-of-the-art system manages resources more appropriately and optimizes the productivity of the automated sections, whilst also providing quick and detailed instructions to our employees regarding production materials, methods and schedules assigned to specific assembly lines. Thanks to these improvements, our processes are now more efficient and systematic.

So in response to your question, IoT and network integration into manufacturing is nothing new to us. We have been doing this for a long time now and are looking to further develop what we already know.

The vision of automation has been changing over the years. As media partners of the International Robot Exhibition (IRX), we were able to speak to some members of the board who told us similar things as you have today, i.e. that in the 90’s everybody wanted to automate everything. Today however, people are scared of automation and robotics companies are constantly criticized by the press about how they are promoting the destruction of manufacturing jobs. What is your opinion on automation and how do you reassure the public of its benefits?

This is quite a sensitive subject in today’s world and I think it is important to tailor your approach according to the audience you are addressing. For example, in Japan, the general consensus is that automation is beneficial as it is helping to alleviate the major shortage of workers in the Japanese labour force induced by the ageing demographic of the country. In countries like the U.S, it is important to make people understand that automation is essential for certain aspects of manufacturing, particularly for high quality and complex assembly systems; other processes require more than human force or speed – it is as simple as that. I think it is important to shed light on the valuable aspects of automation rather than focusing on the potential flaws. From experience, people tend to understand when you explain it to them in that manner.

Your company was established in 1945 as a seller of electrical instruments. Can you tell us about the key milestones of the company since its inception?

In my opinion, there are three major milestones in the company’s history that helped define the Sanyo Machine Works of today. The first dates back over 60 years. Our company first started as a trading company that dealt with heavy industrial equipment. As the company grew, we decided to shift our business line towards manufacturing and began creating our own products.

Automation, which was still an emerging practice at the time, was a key factor in our success in this endeavour. The decision to transfer top-notch welding technology from the US to Japan allowed us to kick-start this new change. The second milestone was the automation of engine assembly systems in the 80’s where we initially employed techniques invented by German companies. Over the years, we learned to refine and optimize these techniques, which led to the development of unique systems that were far more accurate and efficient than ever before. From this, came our third milestone, where our manufacturing processes drastically shifted from manual labour to fully automated systems. This change welcomed a surge in productivity, and our customer base drastically expanded alongside the booming automotive industry.

You have an amazing track record in the Japanese industry and abroad. Do you collaborate with any international firms?

We currently collaborate a fair amount with Fiat Chrysler, and have worked with General Motors, Ford and certain Korean companies in the past. We also sell assembly systems to Chinese manufacturers. Depending on the country, our company has different roles in our collaborative approach with companies. In countries such as China and Thailand where assembly systems are more labour-intensive and less automated, we focus our efforts on improving quality and efficiency. In the US, Canada and Japan, we tend to focus more towards streamlining, flexibility and safety.

Can you tell us more about the company’s corporate philosophy?

Over the years, our company has gained significant expertise in assembly systems. With this know-how, we are capable of suggesting improvements to our customers and implementing them in assembly lines so that they may benefit from cutting-edge technologies that will greatly improve the quality of their end-products.

As a company we are constantly seeking to innovate and to challenge the status quo. For example, traditional manufacturing follows material flow – all supply chain factors are interconnected within the same factory floor. However, Sanyo Machine Works advocates an alternative workflow termed ‘kitting’ whereby production lines within a general assembly system are strictly disconnected from one another and produce independent products or ‘kits’ which can then individually be integrated into an overall end-product. This workflow endorses both high-quality of products but also time-efficient assembly of systems.