Roles of Japanese Assemblers in Transferring Engineering and Production Management Capabilities Tech

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Roles of Japanese Assemblers in Transferring
Engineering and Production Management
Capabilities Technology A case of Toyota

• Kriengkrai Techakanont
• Faculty of Economics, Thammasat University
• 17 December 2007

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Why?

• MNCs view their global production as a network or
  GPN
• Lack of understanding of the impacts of being a
  global production network on technology transfer
• GPN will create new opportunities for host
  economies to upgrade their industrial sectors and
  promote technological capabilities

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Aims of this research

• To study the roles of automobile assemblers in
  promoting Thailand as part of GPN and in
  transferring technology
• To draw lessons for local parts firms and policy
  recommendations for policy makers to promote the
  industry

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Thailands Automobile Industry

• The government had specific and clear goal to
  promote the industry
• Reliance on foreign firms to promote supporting
  industries
• Relatively short historical development
• Export orientation industry
• Integrated into part of global production network
  of many firms

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Thai Automobile Industry
Production capacity was 1.57 mil.units in 2006
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Car exports by brand (1997-2005)
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Production and Export in 2005
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Data collection (2005-2006)

• Visits assemblers (in Japan and Thailand)
• In-depth interview with Toyota staff in Thailand
  and Japan
• Visits part suppliers

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Technology Transfer as a Knowledge Conversion
Process (Nonaka and Takeuchi 1995, McKelvey 1998)
Codified and tacit knowledge of the Technology
owner
Codified and tacit knowledge of the Technology
recipient
Internalization of knowledge by the recipient
Recipient
Transferor
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Model of Knowledge Conversion

• Nonaka and Takeuchi (1995) proposed SECI model to
  analyze knowledge creation process
• Socialization (Tacit-to-Tacit) Share of tacit
  knowledge among individuals
• Externalization (Tacit-to-Explicit)
  Articulation of tacit knowledge to explicit
  format
• Combination (Explicit-to-Explicit) Combining of
  discrete pieces of explicit knowledge to make a
  new whole
• Internalization (Explicit-to-Tacit)
  Internalization of new explicit knowledge into
  individual tacit knowledge

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Intra-firm Technology Transfer and Knowledge
Conversion
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Inter-firm Technology Transfer and Local
Capability Formation
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IMV project
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Stages of Toyotas Global Production
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Toyotas Production and Supply Network (IMV
project)
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Processes that are Likely to be Transferred to
Thailand
Source Adapted from Mori (2002) Fig. 2, pp. 33,
and from interviews with manufacturers.
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Toyotas Roles

• Necessity
• Competition in the world market
• Advance in IT and computer technology
• Pressure to shorten time-to-market
• Toyota tries to promote
• More efficient product development
• More efficient production management
• Technology transfer is necessary

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Toyotas roles in transferring

• Product engineering and design technology
• Establishment of TTCAP-TH
• Investment 2,700 m.baht
• Train engineers in Japan (more than 200 persons)
  through Inter-Company Transfer (ICT) Program
• Technology Toyota Development System (TDS),
  V-Comm (Virtual Visual Communication), digital
  mock-up

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Toyotas roles in transferring

• Process engineering and manufacturing technology
• Train local staff in Japan
• Dispatch Japanese expert to Thailand
• Establishment of Global Production Center
• Visual manual
• Lower training cost
• Lower technical support to overseas plant
• Establishment of AP-GPC in August 2006
• Establishment of TMAP-EM in April 2007

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Visual Manual
Training steps
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Target of GPC
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Toyotas roles in transferring technology

• Management technology (Toyota Production System
  TPS)
• Establishment of Toyota Academy in 2004
• In-house training (production skills)
• Train suppliers, dealers, and affiliates
  (conceptual and managerial skills)
• Diffuse TPS concept to suppliers through Toyota
  Cooperation Club
• Key Successes of Knowledge-sharing Network
• (1) motivate members to participate and openly
  share knowledge (2) prevent free rider problem
  (3) efficiently transfer knowledge.

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Toyotas roles in transferring

• Production management technology to suppliers
• Toyota Cooperation Club
• TPS Activity
• Jishuken activity
• Set up a TPS Promotion Team
• Provide consultant service to suppliers
• Rove experts to suppliers

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Knowledge-sharing Network in Quality Assurance
(QA), Toyota Production System (TPS), and Quality
Control Circle (QCC)
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Number of Firms Participated in TPS Activities
TPS Promotion Activity Concept
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Implications to Local Suppliers

• Heighten quality and capacity requirement.
• Automakers require design capability
• QCD E M
• Local firms lack of process engineering and
  design capability so they have limitation to be
  a part of supplier network
• Acquiring foreign technology may be possible
  means to sustain business
• Support from public sector is necessity

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End of Presentation

• Questions and comments are welcome