Two Ways of Modularization Strategy in Japan

Topics: Automotive industry, Assembly line, Production line Pages: 29 (10169 words) Published: June 17, 2013
TWO WAYS OF MODULARIZATION STRATEGY IN JAPAN TOYOTA - HONDA VS. NISSAN - MAZDA Masayoshi IKEDA Yoichiro NAKAGAWA

Today, as the end of the 20th century draws closer, European and US auto industries are several years ahead of Japanese counterpart in their effort for modularization. However, of all European and US automakers, the modularization effort made by the Big Three in the US is not so conspicuous, because of obstructions such as opposition from UAW. Meanwhile, German automakers are mainly leading the modularization effort made by European auto industry, of which threshold centered around 1996 and 97. When we study how the modularization process was generated and then evolved over the years, we can find that it occurred in the process of auto industry’s effort in pursuing lean production. Today, modularization is highly evaluated as an innovative cost reduction method, which transcends production system improvement in a traditional sense. Nevertheless, as we are going to discuss in this paper, there seems to be still some need for consideration as to the validity of such a high evaluation, which is given to modularization as a method of achieving cost reduction. Ø

The aim of this paper is, in the end, to examine the effort made by Japanese automakers with respect to modularization. The effort is now becoming more concrete, and it begins to predict its future scope as well. But, before clarifying the characteristics of Japanese-style modularization, we consider it necessary to elucidate the characteristics of modularization by European auto industry, especially German auto industry, as well as the background with respect to how it was formed in advance to Japanese counterpart. So, this topic is discussed firstly in this paper. It was conventionally considered that the Japanese auto industry had more advanced supplier relation system than that of European auto industry. But, Japanese auto industry fell far behind its European counterpart in the case of modularization. So, the reasons for that are examined in the second part of this paper. Unlike European-style modularization, Keiretsu (business group composed of affiliated suppliers and their main customer) supplier system, which is specific to Japanese auto industry, has played a unique role for Japanese auto makers to conceive “corporate community”-

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style modularization system concept, with an automaker playing the central role in the community. We will examine the reasons in the next step. Ø

Across the board, Japanese auto industry, which had fallen behind European auto industry with respect to modularization, actually embarked on its effort toward modularization on full scale since 2000. This was triggered by the recent dissolution and reorganization of Keiretsu supplier relationship initiated by the international tieups between Ford and Mazda, and Renault and Nissan. Curiously enough, the rationalization procedures of Nissan and Mazda is actually encouraging further actualization of “corporate community” style modularization by Keiretsu suppliers of Toyota and Honda, which stand at the polar opposite of modularization style led by Nissan and Mazda. As a result, it is considered that there are two opposite types of modularization evolving in Japan at present. One is the European-style modularization led by Nissan and Mazda, and the other is so-called “Corporate community”-style modularization led by Toyota and Honda.

In this paper, we will also examine characteristics and future scope of each of these two types of modularization evolving in Japan. Ø

What is expected from modularization differs subtly by times, countries and companies. Even so, there seems to be some rough common expectations concerning introducing modularization into Japan at present and also concerning planned introduction in future, which is different from what is expected of modularization in Europe and the US. In an attempt to clarify the difference of expectations...
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