Do we know JAPAN? Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 1 PARADOX Contrary to the general belief of American businesses and industrial communities with regard to the unique features and real strengths that characterize the Japanese industry’s success, it is not ‘JIT’, ‘QC Circles’, Life-time Employment, etc. Two of the most important facts are: 1. Subcontractor System (Big Company vs. Small Company) 2. Management of Technology Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 2 Balance of Forces Japanese Strengths American Strengths • Applied Research and Development • Incremental Improvements • Commercial Applications • Process and Production Technology • Components • Hardware • Basic Research • Breakthroughs and Inventions • Military Applications • New Product Design • Systems Integration • Software Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 3 You just don’t understand “The Fact” • Percentage of Japanese high school students who have taken 6 years of English--------------------------------------------------- 95% • Number of America’s 2.7 million high school students graduating in 1987 who took Japanese for at least 1_yr---- 2,300 • Americans awarded bachelor’s degree in Japanese in 1989-- 162 • Americans awarded master’s degree in Japanese in 1989----- 14 • Americans awarded doctorate in Japanese in 1989--------------- 4 Sources: Japanese statistics: Jackson Balley, Institution for Education on Japan, Eartham College. American statistics: Department of Education. THE NEW YORK TIMES, SUNDAY, JANUARY 5, 1992 Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 4 R&d IN Universities, Institutions and Corporations In Japan In Japan 94% 85% 4% 9% 85% In America In Japan 30% 83% In America In Japan In America 30% 60% 34% In America Read and write English Read English journal articles Read Japanese Read translated papers Attend technical meetings outside of normal work: 2/Month “ “ “ “ “ Are aware of foreign activity in their field “ “ “ “ “ Had spent +1 year outside “ “ “ “ Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, “ “ “ 5 Comparison of Technology Developments Among Japan, US and Europe JAPAN US Europe Revolutionary Inventions C B A Future Technology C A B Advanced Technology B A C Applied Technology A B C Improved Technology A B C Production technology A B C Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 6 Comparison of Operating Efficiency of US and Japanese Automobile Production GM* TOYOTA NUMMI Assembly hours Per car Assembly defects Per 100 cars Assembly space per car, per year (sq. ft.) Average inventory of parts 31 16 19 135 45 45 8.1 4.8 7.0 2 weeks 2 hours 2 days Operating efficiency of G’s Framingham, Mass., plant versus Toyota’s Takaoka plant versus the G.M.-Toyota joint venture in Fremont, Calif., as of 1987. * Plant close in July 1989. [“The Machine That Changed the World” and also New York Times, Sept. 23, 1990] Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 7 Percent of Distribution of College Graduates (All Degrees) Source: Misistry of Education, Japan (1982) W. Germany (1979) UK (1978) USA (1978) JAPAN (1981) 0 20 40 60 Science Engineering Agriculture Health Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 80 100 8 Electrical Engineering Graduates (per million population 1965 1970 1975 1977 FRANCE 20 34 28 33 JAPAN 82 133 162 185 U.K. 32 46 45 46 U.S.A. -- 85 67 66 W. GERMANY 16 11 48 109 Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 9 What the U.S. and Japan buy from each other Leading categories of goods traded by the U.S. and Japan in 1990. Figures in billions of dollars.Source: Commerce Department [The New York Times, Sunday, January 5, 1992] Top 10 exports to Japan 1. Aircraft, spacecraft and their replacement parts 2. Computers 3. Logs and lumber 4. Corn 5. Arts and antiques 6. Computer and office machine parts 7. Computer chips 8. Tobacco products 9. Fish 10. Controls and instruments (thermostats, etc.) $3.499 2.041 1.649 1.648 1.622 1.580 1.361 1.314 1.269 1.116 Top 10 exports from Japan 1. Motor vehicles $19.547 2. Computers 5.924 3. Motor vehicle parts 5.342 4. Telecommunications equipment (telephones, cellular phones, etc.) 1.648 5. Computer chips 3.757 6. Computer and office machine parts 3.454 7. Consumer electronics (televisions, household audio and video equipment) 3.140 8. Motor vehicles (mostly auto (engines and parts) 2.575 9.Toys and sporting goods 2.500 10. Electrical machinery 2.267 Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 10 Comparison of Most Important Requests by US and Japan Stock Holders 90 80 USA JAPAN 70 60 50 40 30 20 10 0 Rise of Stock Price Business Expansion Stability of Business Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 11 An Example of Successful Japanese Industrial Developments Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 12 An Example of Successful Japanese Management of Technology FANUC Ltd. And “Management Philosophy” of Dr. Seiuemon Inaba, CEO Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 13 FANUC The Success Story of FANUC LTD. (Japan) (Management Philosophy and Practice of Dr. S. Inaba President of FANUC) THEREE SLOGANS (a) RELIABILITY UP (b) LOW COST (c) WENIGER TEILE Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 14 1988 Rankings of Excellent Companies in Japan Source: Asahi Daily News, August 20, 1988 Rank Name of Company Points 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 13. 14. Toyota Auto Co. NIT Matsuhita Fuji Fillm FANUC Nintendo Yamanouchi Pharm. . Hitachi 7-Eleven Nissan Kyocera Toshiba Fujitsu Honda Sony Sharp 1000 942 930 927 917 910 891 884 872 871 854 849 848 838 813 796 15. 19. 32 39 Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 15 1990 Rankings of Excellent Companies in Japan Source: Nippon Kaizai, August 18, 1990 Rank Name of Company Points 1. 2. 3. 4. 5. 6. 7. 8. 9. 12. 16. 19. Toyota Auto Co. FANUC Nintendo 7-Eleven Fuji Film Matsuhita Tokyo Steel Mfg. Co. Hitachi Nissan Toshiba Honda Sony 1000 967 963 947 941 28. Sharp 823 33. Kyoeeta 816 Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 917 896 886 886 872 850 844 16 FANUC Products Development • Difference between Products” and “Commodities” FANUC’s definition of “Commodities” (merchandises): “Products which bring high profit and excellent competitive position”. • Develop “Commodities (saleable and competitive products) to be marketed throughout the world. Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 17 FANUC’s Procedures for New Product development (a) Through world-wide market survey. (b) Lower “price” than any other competitive items (worldwide) with better quality. FANUC price is decided at the beginning stage of design. (c) Profit rate must be more than 30%. Production cot is then decided to meet the above b) and © requirements. (d) The R&D staff design a product to meet the cost and quality requirements, and also are responsible to design the necessary manufacturing systems to produce products. (e) The same R&D staff will be assigned as a temporary production team to install the specific manufacturing systems, and will be relieved the job after the successful implementation. Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 18 FANUC’s Management Philosophy (Some Selected “Highlights”) (1) “Cost Down”, “Quality In” & “Fewer Parts”. (2) Continuously pursue “New Technological Innovation” and “Engineering Excellence”. (3) Invest “Money” & “Time” for “Technical Excellence”. (4) Better “Design” for “Economic Manufacture”. (5) “Quality” built into “Design” and “Production”. Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 19 FANUC’s Research Management (1) (2) (3) (4) For “Engineering”, the history is important. For “Engineers”, “Innovation” is important. No conventional library for the research staff (Because any published book is already obsolete). Pursue “New Idea”, “New Information”, “new Innovation”. “Product with new invention is not successful commercial commodity.” Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 20 QUALITY CIRCLE (FANUC”s View) “FANUC does not practice Quality Circle. Quality Circle activity is a sales’ ceremony. If shop-floor operators can provide any suggestion for further quality improvements, something is basically wrong with the manufacturing system. Any quality problem must be dealt with at R&D stage.” Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 21 FANUC’s Sales Motto (a) First “Friendship” and then “Sales”. (b) Never discount to bargain. If the price is high, go back to design drawing board. (c) Better service and maintenance. (d) More salesmen with engineering background. Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 22 FANUC emphasizes R, D & E • • • • “R” is not a primary function of FANUC. “D & E” are more important for FANUC. <ost important aspect is “Better Design”. No matter how you “automate” manufacturing systems, if “design” is not good, then the plan will fail. • “Better Design”: less parts, less trouble, better maintenance. • “Quality” built into “design” and “Production”. Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 23 (6) More “Engineers” 80% than “Administrative Staff” (20%). (7) Emphasis on balanced “Engineering Excellence” and “Efficient Management”. (8) Train and cultivate te “Next Generation of Executive Managers”. (9) Rational and Regimental Management is better than non-responsible loose democratic management. (10) Loyalty and Trust to the company is most important. Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 24 FANUC’s Research Management Philosophy (1) (2) (3) For “Engineering”, the history is important. For “Engineers”, “Innovation” is important. No conventional library for the research staff (Because any published book is already obsolete). Pursue “New Idea”, “New Information”, “new Innovation”. Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 25 (4) (5) (6) (7) Relax and enjoy your life with your family in weekends and come back on Monday with fresh ideas and new energy recharged. “Time” is precious and do not waste “Time”. CEO is briefed on all major developments. “Basic research” vs. “Product Development Research”. Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 26 FANUC’s Product Development Philosophy (1) Difference between “Products” and “Commodities”. (2) Develop “Commodities” (Saleable and Competitive Products) to be marketed throughout the world. (3) Lower “Price” than any other competitive items (world-wide) with better quality. (4) “Quality” is built into “Design” and “Production”. (5) The R&D staff design product to meet cost and quality requirements, and also are responsible to design the necessary manufacturing systems to produce the products. (6) The same R&D staff will be assigned as a temporary production team to install the specific manufacturing systems, and will be relieved the job after the successful implementation. (7) No matter how “Automate” production systems, if “design” is not good, the the system will fail. Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 27 Estimated Share of Companies Supplying US Machine Tool NC Controls Others Siemens FANUC Mitsubishi Cincinati Milacron Kearney & Trucker Allen Bradley Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 28 THE BUNSHA GROUP A diversified OEM network whose greatest strength is turning your 90000 biggest needs into your best assets. Growth in Sales (million yen) 80000 70000 60000 50000 40000 30000 20000 10000 0 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 29 Growth in BUNSHA Group 3500 3000 No. of Employees Captal (million yen) 2500 2000 1500 1000 500 19 77 19 78 19 79 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 0 Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 30 Sharp’s Basic Philodophy for Product Development (5 “S” Principles) • • • • • Speedy Simple Smart Successive Systematic Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 31 Growth in the BUNSHA Group 40 34 30 26 25 20 15 19 13 14 20 21 36 28 22 16 10 5 0 19 77 19 78 19 79 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 Number of Companies 35 Inyong Ham, Distinguished Prof. Emeritus, Pennsylvania Sate U, 32