Small-Sized Supplier's Competence-Driven Growth Strategies -A Case Study of a Japanese Durable Production Component Supplier-

Type de publication:

Conference Paper


Jaeho Lee


Gerpisa colloquium, Paris (2017)


competence, Customer, Durable Production Component, Product, Scope, Small-Sized Supplier


In this study, the author attempts to clarify how small-sized durable production component suppliers can grow despite a lack of managerial resources.
As a basis for growth, Japanese manufacturing industries are shifting from domestic markets to overseas markets. Not only auto part suppliers but also durable production component suppliers are being forced to reconsider their existing strategies.
However, mainstream study of supply chain management has put emphases on structural embedding in a specific network. They have discouraged the study of growth strategy from the viewpoint of suppliers.
 This study was carried out with a qualitative analysis based on fieldwork of Shiogai Seiki on December 19, 2016, and on several surveys conducted via e-mail.
According to the results, the author suggests that competence-driven expansion via entrepreneurship is significant in terms of small-sized supplier’s growth.
Shiogai Seiki was founded in 1967 as a repairer of machinery. It entered in the manufacturing facility-part supplying business as a subcontractor in 1972.
The current president of Shiogai Seiki who is the son of the founder, thought that it was impossible for his company to grow unless it got out of subcontracting. He realized that stretching its competence is indispensable in order to increase its customers and product line.
As a result, it started assembly of facility modules by launching its machinery processing division and automatic assembly section in 1992.
Around 1995, Shiogai Seiki recruited an engineer who had been dissmissed from Panasonic. He was instrumental in developing design capabilities for Shiogai Seiki.
After establishing the capability of designing of complicated machines, its growth became more stable.
Currently, this company has established a seamless production system by offering all-around services that cover planning according to customers’ requests, design, material procurement, processing, surface treatment, coating and assembly.
This comprehensive and efficient production system enables this company to fill customer orders quickly. The company says it takes 1.5 months for it to produce a machine whose price is under 10 million yen, while it would take rival companies longer than 2.5 months.
Shiogai Seiki has projected its machine assembly business will increase from 5% of total sales in 2006 to 12% in 2017.
This company has found new customers who are engaged in stable or promising industries including pharmaceuticals, lithium battery for electronic and hybrid vehicles, and food.
Moreover, since 2004, it has established several overseas subsidiaries in Vietnam and Singapore. It makes the most of these overseas subsidiaries in various ways such as gaining Japanese overseas customers, working as a liaison officer for foreign talents including engineers, off-shore insourcing (of design), and playing a role of a trading company.
Regarding off-shore insourcing, when two engineers from the headquarters of Shiogai Seiki in Japan come up with an idea for a machine, they send the basic design to their subsidiary in Vietnam electronically. Then, Vietnamese engineers finish the design in detail and they send it back to Japan.
In summary, the success of Shiogai Seiki is due to top management’s entrepreneurship, and competence-driven expansion of customer and product scope.

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