Improving business performance

In recent Epson research across five European markets, respondents reported increasing innovation as the number one objective of their organisation. Read our thoughts on improving business performance.

Improving business performance

Japanese principles improving business performance: the continued benefits of Monozukuri and Sho Sho Sei

To maintain a competitive advantage, businesses need to create new products that will meet consumers’ needs and keep up with market trends. Innovation is the staple component of any thriving business and is rightfully at the top of European businesses’ and the European political agenda. In fact, in recent Epson research across five European markets, respondents reported increasing innovation as the number one objective of their organisation1. At a time when Europe is clearly pushing forward with innovation, initiatives like Horizon 2020 – aimed at driving economic growth and boosting Europe’s global competitiveness – are more vital than ever. Those looking to bolster their abilities to better identify and respond to market gaps and opportunities quickly and cost-effectively, might be interested in proven Japanese philosophies such as Monozukuri and Sho Sho Sei.

The monozukuri principle – meaning “the art and science of making things” – has been at the heart of traditional Japanese craftsmanship for centuries as well as Epson’s own heritage. It was often associated with a dedication to continuous improvement to delight customers. Nowadays, monozukuri reflects a unique Japanese manufacturing style and lean production techniques. Lean production is a Japanese method that combines highly efficient manufacturing techniques, technical expertise and low-cost mass production aimed at producing high quality products and increasing productivity2.

Innovation is also an important factor for global competitiveness. In its Global Competitiveness Report 2014-2015, the World Economic Forum stated that business sophistication and innovation are essential for innovation-driven economies like Japan. These depend in part on the quality of individual firms’ production processes, their ability to produce sophisticated products, the skills and know-how of their workforce and technological innovation.

Monozukuri – Epson’s success story

At Epson, our spirit of creativity along with our longstanding commitment to monozukuri has enabled the delivery of Sho Sho Sei (compact, precise and energy saving) characteristics to our core technologies and products, allowing us to stay at the forefront of technological innovations. Being a monozukuri company means that rather than outsourcing, we have drawn on our own skills and know-how to turn our innovative ideas into high-quality products from the ground up. In practice, it means that we manufacture our products using our own manufacturing plants, processes and robots, allowing us to deliver unique value and long term competitive advantages. This has stood us in good stead to weather the economic pressures of recent years and more recently has enabled us to post progressively positive financial results.

R&D is also of great importance to our company. Epson invests over $1.3 million each and every day into R&D for both core component and manufacturing process development, resulting in around 5,000 patents being registered each year. We currently hold over 50,000 live patents. Many world-first products like the quartz watch, the inkjet photo printer and technological breakthroughs such as our PrecisionCore technology have been made possible for us by combining R&D, monozukuri and Sho Sho Sei principles. Such dedication to technology and innovation has led us to become one of the world leaders in the technology industry and to flourish despite the economic crisis.

Monozukuri – What about European businesses?

Although European and Japanese cultures are considerably different, European businesses could greatly benefit from implementing lean production methods and the monozukuri principle. By adopting this unique Japanese manufacturing model characterised by its efficiency, productivity and its strong commitment to quality, European businesses could become better prepared to face global competition. The great advantage of these principles is that they allow businesses to optimise product quality while reducing overall costs.

Over the past twenty years, hundreds of European businesses have participated in manufacturing training courses to learn about Japanese production methods3. These courses teach them to develop best practices in production, cost deployment and lean production. By doing so, European businesses can achieve great cost reductions, reduce production cycle times or reduce the likelihood of overproduction.

One well-known case is Renault-Nissan’s successful Alliance in 1999. By integrating the monozukuri principle into its new strategic plan and learning about the Japanese production systems and engineering, Renault managed to optimise its global value chain, reduce the overall production costs and improve the quality of its cars4. Learning from Nissan, Renault now develops cars faster, more cheaply and to higher levels of quality. Furthermore, Renault’s productivity improved by 15% in just over ten years5.

The lean production principle is not limited to manufacturing companies. As McKinsey demonstrated, the lean manufacturing principles offer surprisingly apt solutions regardless of sector or industry. With global competition putting pressure on businesses to produce high quality products at a competitive price, they could greatly benefit from applying the basics of lean production. As McKinsey suggests, by improving their operating system and processes (material resources, engaging and equipping staff, etc.), businesses can dramatically cut costs and become more competitive6.

For our part, we will ensure that we don’t lose our monozukuri tradition, in order that we can continue to turn our original ideas into outstanding products.

REFERENCES

1 Epson, 2014

2 The Economist (2009), Lean production

3 EU-Japan Centre (2014), World Class Manufacturing

4 Le Blog Auto (2011), Renault à la mode monozukuri?

5 Renault (2009), The Renault-Nissan Alliance ten years of a successful cooperation

6 McKinsey (2006), Applying lean production to the public sector