Right MFG: Combining monozukuri and kokorozashi

As a manufacturer of semiconductor, ophthalmology and other medical equipment, can you give us your take on the Japanese manufacturing philosophy of monozukuri?

Although the Japanese monozukuri philosophy and Kaizen is, as you say, a popular concept, my perspective on it is a little different. When I speak to youngsters of our staff, I always mention this other Japanese word called ‘kokorozashi’, which is more about the spirit, and focuses on the essence of what you really need to do when you're applying monozukuri, and I think it's important to have that clarity.

If we just talk about monozukuri, technically it just means making something, akin to a manufacturer. However, to me it's deeper than that. That’s why I refer to ‘kokorozashi’, to understand the spirit and essence of why we need to manufacture something and what goals we want to reach. I think that's an important aspect of monozukuri.

I think many Japanese have this sense based on their family education and how they grow up that in Japan we should try to contribute to society and do it in a very genuine way with all the effort we can muster. We're taught this way from childhood. Our parents would tell us that if we cannot try to contribute to society and improve ourselves in doing this, then we should feel ashamed of ourselves.

That's why I was talking about kokorozashi and why we need it to bolster our interpretation of monozukuri as a manufacturing company. Our mission is to be able to provide very high quality products that would contribute to the world.

Technically we're manufacturing for semiconductor manufacturing equipment companies, medical device companies and also other companies in various field to help them make their products, but we don’t focus specifically on their final products that will come from our parts, we, as OEM Experts, just want to manufacture our products and contribute to the world and that's really the essence and spirit of what we do and how we approach our role.

I always remind my staff of this and tell them to try and be emotionally connected to their individual roles because we all share the same spirit and the same thoughts. And that’s why we have very close collaboration across our staff. We share information closely. We tell people when we have ideas or when we think of something new. And we always have this sense of empathy and try to be considerate of others.

For example, if I'm one of the workers on the production line, I receive something from the previous step in the process and I need to do my part and then pass it on to the next person. If I get something that's dirty or in some way sub-optimal then I won't be able to do my work well, so if the previous person is considerate enough then he or she will think about how to make it clean and deliver it in good condition to the next step in the process. If all of us have this approach then we can create a quality product, and that's why I always emphasize the need to be considerate.

We have this concept of the entirety when we produce a product because you're not just going from step A to step B and just throwing an item along the production line, you're trying to be very careful during every step. And if you notice something, you'll disseminate information to people in other steps of the process. For example, you notice that maybe there's a risk, or there's something wrong with your part, and you tell others to take care of it. By this sharing of information, not just across the process, but throughout the entire production chain, we have this network of information which allows us to create products that can really contribute to the world. And this is how we are all connected. We are all on a mission to contribute to each other as workers, to the suppliers, to the clients and to the entire local society.

The Japanese population has the oldest average life expectancy in the world at 85 years. More than 1/3 of the population is over 65, which means a reduced labor force and less demand for products in general. How has this declining demographic affected your company and how are you reacting to this particular challenge?

In response to this, I have always thought that we should get rid of just producing at high volume because up to now we’ve been inclined towards mass production and we have a lot of factories and other facilities with a lot of machinery geared towards mass production. But in aiming at mass production, you end up with a product that does not bring very high added value, and in that sense I think we should shift our mode of production to something that's more compact, meaning that it would be less labor intensive which should be our concept to be a specialized OEM Expert.

We'd need to optimize and specialize the number of required qualified workers by increasing the use of software and associated digital technologies and embrace more digital transformation.

The World Health Organization estimates that half the population of the world will have some sort of myopia by 2050 and Japan has very famous companies such as Kodak and Kubota who are tackling these issues. Can you tell us as an ophthalmology device maker, what needs to be done to slow this progression of myopia?

You're correct that one of our focuses will be producing medical devices for the ophthalmology field, and we’re trying to produce something that is unique when compared to the products of other companies. We try to focus on very niche areas and the reason is because of course there are bigger companies out there making ophthalmology devices. They have a full lineup and they have massive production and sales capabilities all over the world.

But we understand that as a company, size wise we don't have the huge scale that a global company has, so we're focusing on areas that we can really contribute to by manufacturing products that other companies cannot.

Retinomax

We're trying to contribute through ophthalmic products such as handheld autorefractkeratometer Retinomax – worldside standard model, and autorefractkeratometer Acomoref with accommodation measurement function – with unique function, to help people who are suffering from eye problems as well as those who just need a checkup of their vision. Retinomax and Acomoref is measuring device to check myopia, and Acomoref has a function to measure myopia or presbyopia caused by IT devices or smartphones.

Between the main areas of your business - the ophthalmology devices, the semiconductor business and the OEM/ODM business – which is the main priority? Where do you see the most sales coming from in the future?

Major markets of our OEM/ODM business including contract manufacturing are optical devices, medical devices, and then semiconductor manufacturing equipment. We also have our own brand products.

About 80% of what we do is contract manufacturing, with the remaining 20% being work for our own brand.

I want to expand both OEM contract manufacturing and original brand products, especially for original brand products, with our unique technology, in addition to ophthalmic instruments, we are planning to launch new products for semiconductor handling equipment with our unique N2 purge system. Our AGV with lifter is also a unique product, which is used for production efficiency improvement replacing for conventional conveyer or similar production lines.

With regards to your Retinomax ophthalmology device, which is an auto refractometer, can you tell us some of the use cases for it? For example, are they used in hospitals or at optometrist’s? What's the niche that you're filling with this product?

Retinomax is the world leader for this handheld type of autorefractkeratometer and it can measure human eye refraction, myopia, hyperopia and also measure astigmatism as well as corneal curvature for people who want to wear contact lenses. Our biggest market in the world is the North America followed by Europe.

The main use cases will be at eye hospitals and eye clinic in Japan and worldwide, and optometrists outside of Japan use them to examine and measure patients for contact lenses and glasses. The conventional type of instrument is the table-top device, so usually the patients should sit on a chair and move their body close to it and take measurements that way. But for people like small kids who cannot sit properly on a chair or elderly people who may be in a wheelchair, Retinomax is effective for measurement.

We call Retinomax a niche product because although the table type product is the norm for taking these measurements, the market itself is smaller if compared, but Retinomax is at the top of this type of product in worldwide. Acomoref is a three in one type product, which means that it contains a Refractometer (Keratometer), Accommodative Micro Fluctuation measurement and Opaque Media (opacity) screening.

For Accommodation Micro Fluctuation measurement, Acomoref takes measurements at various distances to gauge how a person can focus and how stressed the eye is. Both eye focusing and eye stress are important to check the eye conditions. We are working with a doctor in Japan, Dr. Masayoshi Kajita, who has the original design of the Accommodative Micro Fluctuation measurement and he insists on 70 to 80% of people are wearing the wrong prescribed lenses without proper accommodation measurement.

Measurement data by Acomoref is one of a ascertain to prescribe the correct type of eye glass lenses. It's really important to get accurate diagnosis otherwise people may develop conditions linked to poor eyesight such as stiff shoulders or headaches.

The Retinomax is also used in disaster zones. For example during the 2011 Japanese earthquake and tsunami many people lost their eyeglasses so the handheld type Retinomax could utilize to devastated areas to help people quickly get their eyes retested and supplied with new glasses.

Japan is famous for its semiconductor manufacturing devices. What is your forecast for this sector and how are you planning on catering to the increased demand which is expected over the next decade?

As for the semiconductor industry, we're mainly working as an OEM manufacturer and our main focus is to stay on top of the precision technologies involved so that we can continue to provide the most sophisticated technologies to our clients. We’re not wholly focused on the semiconductor market but our technology should be most advanced to catch up to requirements for quality and quantity by the leading semiconductor industry.

Semiconductor N2 Purge>

We provide our products as an OEM Expert to semiconductor manufacturing equipment companies and we are planning to expand our original brand products in this field with our unique N2 purge or other technologies.

You established your own R&D center in 2001. Can you tell us what you're currently working on as part of your R&D strategy? Are there any new products that you would like to share with our international audience?

If you look at our company history you can see that we started out working with Nikon cameras but we realized that if we only deal with a product and the technology becomes not too sophisticated, then at the end of the day the production would just go overseas due to lower labor costs and so on. So we switched focus on having higher added value and that's one reason we started working on medical equipment and the semiconductor world. We want to be sophisticated in our technology and our way of manufacturing, and be able to sell unique products and that's why we set up an R&D center so we’re now really focusing on advancing our technology development as an original brand manufacturer and as an OEM Expert.

But one thing you cannot tell from this company's history is that many of the OEM orders we get are from large companies who have given up on their own monozukuri and want to outsource that aspect of production.

What happens is that these companies end up saying they are manufacturers but they start forgetting and losing the know-how involved in the manufacturing technique because of the out-sourcing, and then the next aspect to suffer is they started losing the ability to design effective and cost saving production lines.

In this aspect, I think the reason our customers appreciate our presence is because we are able to work closely with them throughout a project’s lifecycle from R&D through to production and match their needs exactly. We originally started from doing processing work for various smaller parts of our customer’s products but then we started acquiring more know-how and eventually were actually able to save costs as well as produce high quality products because we had that experience of building up from smaller parts to entire assemblies.

We can provide OEM products and original brand products in the same product quality level since we have the entire skillset and procedures from R&D to manufacturing. Our key technologies are important for our R&D as OEM Expert and original brand product manufacturer. Based on this concept, we will provide new products for our OEM customers and in our new original brand products for ophthalmic devices, semiconductor handling equipment and AGVs.

When it comes to new functionality that you’d like to add but don’t have the required expertise, what role does co-creation play? Are you looking for partners, for example in foreign countries, who have technology and know-how that maybe you're lacking, so that when you collaborate together you can create more superior products?

We’re quite proud to have created our own technologies to manufacture original brand products and to supply OEM products. We have played a part in contributing to Japan's monozukuri community.

However, if we only stick to the knowledge gained from our former successes we may lose the ability to make further improvements or apply kaizen effectively. I strongly feel that we should not just keep on doing our monozukuri based on what we already know and have. We should collaborate with other partners in order to explore new areas and build new pillars of our business by making new products together. Although we're very good at manufacturing things that we already know, there could be something that we don't know and areas we haven't touched on yet.

You’ve had production capability in Qingdao, China since 2004. Can you tell us a bit more about your international strategy? What are some of the goals that you've set yourself as part of your mid-term plans?

As you said, we’ve been manufacturing in China since 2004 so it has been almost 20 years now. We started that operation because we thought we could not survive in the future by manufacturing solely in Japan.

We also saw the possibility to further develop our manufacturing technology to produce precision devices in China, so that's why we worked on it over the years and now we're making new investments there to renovate our factory and build a new facility as well.

In terms of increasing sales of Retinomax, are you looking for more sales agents? Would you be looking to open up more offices? What strategy are you using to develop the sales of this product?

I think it's important to work closely with our distributors worldwide, to communicate well with them and elicit the needs of local customers so that we can then upgrade our products or maybe create new ones to better suit market demands.

Retinomax has the market in the United States and Europe in general, but in Asia I think the handheld type Retinomax is not that popular yet due to the fact that the investment priority of hospitals is not this type of product yet. The markets for medical device sales in Asia are not as mature as in the US or Europe so that's why we still have more work to do in Asian regions as well as perhaps trying to further boost ourselves in the United States and Europe.

And since medical devices are regulated in different ways across different geographical and national regions, we need to look closely at how those regulations will affect our ability to sell. Opportunities, too, can arise on a regional basis. For example, would there be a particular country saying that they intend to boost their percentage of pediatric patients or kids in general getting eye check-ups. Initiatives like that could present us with valuable opportunities and that’s another example of why working closely with our local distributors and agents is very important.

Is there any specific regional market apart from the EU and the US that you are looking to tackle in future?

Manufacturing-wise I don’t think we have any plans to go overseas, for example, to Europe right now because I recognize the importance of establishing a very strong monozukuri in Japan, because monozukuri itself is also changing. I think we need to really catch up on it and make sure we're at the leading edge of it domestically first.

I am personally very worried about the outlook for Japan's economy and I think that supporting our society using the power of monozukuri is very important to us. I would never want to close down any of the factories we have built and that's why I want to properly build up and consolidate our strength in Japan first and then we can grow from that point.

Next year your company will be celebrating its 75th anniversary. So let's imagine I come back in the next five years and we have this interview all over again. What goals would you like to have accomplished by then?

We started off conducting an OEM business and now we have our own branded products but I think we want to increase our expertise so that we will be able to more effectively produce better OEM products for our clients. Our manufacturing process adheres entirely to Japanese monozukuri and our OEM business is fueled by large Japanese clients but I don't think it's good for us to just stay in this passive position of simply getting orders and doing as instructed, because I think that would just make us lose the essence of Japanese monozukuri and lead to eventual decline.

Due to the fierce price competition with China as well as with other Asian countries, I don't think we would get any winning edge just by competing on cost. We really need to improve ourselves as OEM manufacturers and be competitive on quality rather than cost.

In future, we should aim at being very proud of the quality that we can deliver to society and of the fact that we are supporting these big manufacturers but in order to get there, I think it's not good if we just stand alone as a single company. We need to work all over Japan to increase productivity and once we get there, it will realize my vision of a really exciting society delivering happiness to the lives of all the stakeholders including our employees, their families, our supplies and our clients.

So if you come five years later, and all our employees greet you and say “welcome to our company” with nice smiles on their faces, I think I will have arrived at what I'm looking for.