Production Process Innovations of Japanese Automobile Components Suppliers; A Case Analysis

Publication Type:

Conference Paper


Gerpisa colloquium, Paris (2017)


    Only few researches shed light on process innovation compared to product innovation. For example, Keupp et al. (2012) found that only 11 of 342 articles regarding the strategic management of innovation extracted from top-tier journals treated the process innovations as a central theme. They pointed out that process innovation, besides service innovation and administrative innovation, is one of neglected areas in innovation researches and also “this neglects of process innovations seems problematic, as process innovations may also exert a strong influence on firm performance.” (Ibid, p.381) Moreover, Hervas-Oliver et al. (2014) indicated that researches tend to understand process innovations as complementary activity to foster product innovation, but “not much is known about process innovation strategy considered as a production-oriented activity aimed at improving efficiency.” (p.874)

     As well known, in Japanese automobile industry, component suppliers are periodically required cost reduction to retain the long-term business relationship with automakers such as Toyota, Nissan and Honda (Fujimoto and Clark, 2009). Therefore, production innovations to increase efficiency and respond to cost reduction demanded by automakers are crucial strategies for their survival. Asanuma (1988) clarified how automakers appreciate the suppliers’ contribution to decrease the production costs and to lower the prices of their purchasing components. In there, automakers will allocate larger volume of orders as a kind of rewards to those contributed suppliers in the next period. It stands that the cost reduction based on process innovation might be indispensable not only for survival but also for continuous growth of suppliers. Also, Choi and Hartley (1996) pointed out the necessity of further researches to illuminate in detail how the suppliers as tier1 or tier2 positively contribute to increase effectiveness of the supply chains besides suppliers themselves (see also Dyer, 2000).

   This case-based analysis attempts to investigate how two Japanese components suppliers implement process innovations and then improve efficiency and flexibility of production. Supplier X as tier 2 introduced the new production technology, i.e. progressive cold forming, to integrate cutting and punching operations separately located after stamping operation into a progressive die and then enabled to decrease dramatically processing time and costs by the new technology. Supplier X concurrently implemented the Kaizen activities to change the shape of components to save material costs and the administrative process innovation, i.e. “less die-changing method”, to mitigate labor forces. Supplier Y as tier1 developed new production method by cooperating with an automaker, Mazda. It expands the flexibility of production lines by changing the layout of the components and the procedure of fabrication, using the versatile jigs, and eliminating the installation of car-specialized production equipment. As a result, besides supplying the meter units installed in instrument panels to multiple cars of Mazda ranging from small to medium-sized categories by use of the same production line, it enable to manufacture the units for another automaker’s products, that is Daihatsu’s several mini-sized cars, on the same line.

   As stated above, this article attempts to complement the shortage of researches on process innovations by investigating how those new production technologies were developed in the Japanese automobile components suppliers and also how much efficiency and flexibility they attained by the use of those technologies. Moreover, it might be concluded that those kinds of process and incremental innovations are not quite radical like “industry 4.0,” but become a feasible solution not only for Japanese suppliers’ or supply chains’ survival but also for the significant shortage of labor forces, that is a Japanese social problem.


Asanuma, B. (1988), Manufacturer-Supplier Relationships in Japan and the Concept of Relation-specific Skill, Working Paper No.2, Faculty of Economics, Kyoto University (

Choi, T.Y. and J. L. Hartley (1996), “An Exploration of Supplier Selection across the Supply Chain,” Journal of Operations Management, vol.14, pp.333-343.

Dyer, J. (2000), Collaborative Advantage; Winning Through Extended Enterprise Supplier Networks, NY: Oxford University Press.

Fujimoto, T. and Clark, K.B. (2009), Seihin Kaihatsu Ryoku (Zouhoban) (in Japanese) (Product Development Performance: Extended Ed.), Tokyo: Daiyamondosha.

Hervas-Oliver, J., Sempere-Ripoll, F. and Boronat-Moll C. (2014), “Process Innovation Strategy in SMEs, Organizational Innovation and Performance: A Misleading Debate?” Small Business Economics, vol.43, pp.873-886.

Keupp, M.M., M. Palmie and O. Gassmann (2012), “The Strategic Management of Innovation: A Systematic Review and Paths for Future Research,” International Journal of Management Reviews, Vol.14, pp.367-390.

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