Lessons from seru production on manufacturing competitively in a high cost environment

• Date: 01 March 2017
• DOI: http://doi.org/10.1016/j.jom.2017.01.003
• Published date: 01 March 2017

Lessons from seru production on manufacturing competitively in a

high cost environment

Yong Yin

a

,

b

,

*

, Kathryn E. Stecke

c

, Morgan Swink

d

, Ikou Kaku

e

a

Graduate School of Business, Doshisha University, Karasuma-Imadegawa, Kamigyo-ku, Kyoto,602-8580, Japan

b

International Research Institute for Sustainable Operations, School of Management, Northwestern Polytechnical University, China

c

Ashbel Smith Professor of Operations Management, University of Texasat Dallas, School of Management, P.O. Box 830688, SM30 Richardson, TX 75083-

0688 United States

d

Eunice and James L. West Chair of Supply Chain Management, Texas Christian University, Neeley School of Business, Box 298530, Fort Worth, TX 76129

United States

e

Faculty of Environmental and Information Studies, Tokyo City University,Ushikubonishi 3-3-1, Yokohama, 224-8551, Japan

article info

Article history:

Accepted 16 January 2017

Available online 24 January 2017

Accepted by: Mikko Ketokivi

Keywords:

Marketing-operations interface

Case study

Assembly cell

Electronics industry

Organizational reform

Flexibility

Lean production

Agile production

Cellular manufacturing

Quick response manufacturing

abstract

High capital and labor costs, coupled with high rates of technological and competitive change, present

challenges for manufacturers in developed countries, often spurring them to off shore production to low

cost sources. However, the electronics industry provides an exception to this trend, where dynamic, high

cost conditions have given rise to a new production system eseru ea cellular assembly approach. Seru

evolved as an alternative to lean systems approaches, manifesting important differentiated system

design choices that appear to offer promise for manufacturing in dynamic, high-cost markets. This paper

reports the results of in-depth, longitudinal case studies of t wo electronics giants who have implemented

seru. The case studies describe seru's fundamental extensions to, and departures from, lean production,

agile production, and group technology-based cellular manufacturing. We explain how Sony and Canon

have applied seru to improve productivity, quality, and flexibility in ways that have enabled them to

remain competitive. In addition, our findings elaborate the theory of swift, even flow, with implications

for future research of trade-offs related to production efficiency, responsiveness, and competitiveness in

high-cost, technologically dynamic markets.

©2017 Elsevier B.V. All rights reserved.

1. Introduction

The past three decades have witnessed waves of offshoring by

manufacturers in developed countries pursuing low-cost sources of

production. Companies like Canon and Sony provide exceptions to

the popular offshoring trend. Recognizing that their markets

required responsiveness that extended supply chains could not

provide, these companies pioneered a production system known as

seru that has made it possible to manufacture competitively and

profitably in Japan. Sony, for example, kept more than half of total

production in Japan, offshoring substantially less than other Japa-

nese global electronics companies (Nikkei Monozukuri, 2005).

Producing locally has then strengthened their capacity to innovate.

In ensuing years, hundreds of Japanese companies, especially

electronics makers, have adopted seru, touting impressive benefits

(Economic Research Institute, 1997). The seru experience provides a

useful lens for understanding how manufacturing can be compet-

itive in a high-cost economy.

The seru production system (Yin et al., 2008; Stecke et al., 2012;

Liu et al., 2014) is a type of cellular manufacturing that is distin-

guished first by the cells being configurable rather than fixed; and

second by its use of cells for assembly, packaging, and testing rather

than fabrication alone. Seru is defined by its prioritization of

responsiveness over cost reduction in setting the firm's operations

strategy.

In this paper, we analyze the case histories of Canon and Sony,

examining the factors leading to the development of seru systems

and their successful implementations. We make use of several

paradigmatic and theoretical lenses to aid understanding of these

factors, including lean and agile manufacturing paradigms, cellular

manufacturing concepts, and the Theory of Swift, Even Flow (TSEF,

*Corresponding author. Graduate School of Business, Doshisha University,

Karasuma-Imadegawa, Kamigyo-ku, Kyoto, 602-8580, Japan.

E-mail addresses: YYin@mail.doshisha.ac.jp (Y. Yin), KStecke@utdallas.edu

(K.E. Stecke), M.Swink@tcu.edu (M. Swink), Kakuikou@tcu.ac.jp (I. Kaku).

Contents lists available at ScienceDirect

Journal of Operations Management

journal homepage: www.elsevier.com/locate/jom

http://dx.doi.org/10.1016/j.jom.2017.01.003

0272-6963/©2017Elsevier B.V. All rights reserved.

Journal of Operations Management 49-51 (2017) 67e76