Multi-functional Factories: Survey Study on Japanese Electric and Electronics Companies

: A questionnaire distributed to domestic factories belonging to Japan’s electric and electronics industry revealed three results: (1) regardless of the significant shift of production functions to sites outside Japan, approximately 90% of domestic locations are able to complete production functions to a high degree; (2) approximately 54% of locations are able to complete design functions to a high degree, whereas 24% are able to do so to a low degree; and (3) domestic production sites that are able to completely fulfill multiple functions (design/production engineering/production) have the following traits: 1) they are superior to their rivals at delivery accuracy and speed and better at responding to market needs and 2) they are superior to their transplants in China/ASEAN countries at making proposals and developing new products. This suggests that multi-functional factories are superior to their transplants in the area of new product proposal and development.


Introduction
Japan's electric and electronics industry has seen itself fall into a predicament from the latter half of the 1990s into the 2010s, owing to changes in the economy, a strengthening yen, and price pressure from players in emerging nations. Many players in Japan have shifted their mass-production sites to China and other overseas sites elsewhere, shrinking the scale of their domestic factories. As Japan's firms found their footing overseas, the question of establishing international sites for development, production, and sales functions has become a significant one (Amano, 2005;Oki, 2015Oki, , 2016. As this shift overseas continues to be stimulated and incentivized, Japan's domestic sites have assumingly come to serve the critical role of the "mother factory," supporting the growth and development of their transplants. However, what functions do these domestic sites actually have? There is a bevy of existing research that has empirically tested the relationship between a production site's competitiveness (i.e., Quality, Cost, Delivery, Flexibility [QCDF]) and its organization (organizational structure and coordination process) while considering its degree of cross-functional integration and sampling a wide variety of industries and nations/regions (Enz & Lambert, 2015;Frankel & Mollenkopf, 2015;O'Leary-Kelly & Flores, 2002;Swink & Schoenherr, 2015;Thomé & Sousa, 2016;Turkulainen & Ketokivi, 2012). This body of research shows that the advanced capability of integrating differing divisions/functions-design and production, production and sales-results in increased competitiveness at the location in question.
This research shall conduct an analysis utilizing the data yielded from a questionnaire survey issued to domestic factories in Japan's electric and electronics industry. Shintaku, Inamizu, Fukuzawa, Suzuki and Yokozawa (2014) note that highly-competitive locations in the electric and electronics industry 1) have multiple functions beyond production, including design and production engineering, and 2) have been able to survive by finding their own new business opportunities and altering product lines and operation structures based on superior productivity and design capabilities. For a production site to gain new businesses autonomously, the production site should possess multiple functions: development, production engineering, and sales. Shintaku Factory B had been transferred head office functionality, and with the intense function concentration, the factory conducted comprehensive initiatives on product development, quality, and productivity. It succeeded in bringing its total cost of production down to levels commensurate with overseas factories. Factory C had a wide variety of products, including those that were challenging to produce, and fluctuating production volumes. However, since the factory had been developing production facilities internally since its founding, it was able to react flexibly. This paper shall use its questionnaire data to quantitatively underpin these traits of highly-competitive locations, particularly 1) the number of functions that can be fully completed within a factory (self-contained functions), 2) factory competitiveness, and 3) the relationship between a factory's number of self-contained functions and its competitiveness.

Data collection
This paper uses data from a questionnaire survey conducted between December 2013 and January 2014 with factories holding production functionality and employing a minimum of 200 members of the Japanese Electrical, Electronic, and Information Union. 1 Three forms were distributed: the Factory Survey (Study A), the Workplace Leader Survey (Study B), and the Worker Survey (Study C). For this paper, we use data from Study A. Respondents to Study A included factory heads, administrative managers, and others who understand the overall state of the factory. Responses were received from 97 locations (response rate: 59.5%).

Measures
Questions on factory competitiveness were categorized into 1) market competitiveness and 2) productive competitiveness. 2 On 1 Inamizu (2015), Inamizu, Shintaku, Fukuzawa, Suzuki, and Yokozawa (2015), and Fukuzawa (2015a) base their research on this same survey. 2 The concepts of market competitiveness and productive competitiveness organization, questions were asked about the degree of the location's self-sufficiency in fulfilling design, production engineering, production, and sales.

Market competitiveness
For each location's market competitiveness in its primary business, respondents were asked to measure their degree of agreement with the five items below about the reason why they are rated highly by their customers versus their rivals, domestic and international, for their business with the most sales at that location. For each statement, respondents were given a five-point scale, where one point equals "completely disagree," three points equal "neutral," and five points equal "completely agree." MC1: Delivery of low-price products through cost cutting MC2: Delivery of unique products/services MC3: Accuracy/shortness of delivery times MC4: Responsiveness to customization demands from customer MC5: Strong customer service

Independent t-test
Once those with missing values were excluded-leaving 68 locations-the data show that i) 10 sites have no fully self-contained functions; ii) 19 sites have exactly one fully self-contained function (of which 15 have production as their self-contained function); iii) 19 sites have exactly two fully self-contained functions (with the most common combination as "production engineering and production", at 13 sites); iv) 17 sites have exactly three fully self-contained functions (all of which are the combination of "design, production engineering, and production"); and v) 3 sites have exactly four fully self-contained functions. To analyze the impact of a location's self-contained multi-functionality on performance, we split these into two groups-those with only one self-contained function and those with multiple self-contained functions-and calculate the differences of the means for each competitiveness measure as such, the results of which are found in Table 1.
We see the most significant gaps in competitiveness indexes in MC3 (delivery dependability and speed, t = 2.36, p < 0.5), MC4 (customer needs responsiveness, t = 3.6, p < 0.1), MC5 (customer service, t = 2.1, p < 0.5), and PC10 (new product proposal and development, t = 2.10, p < 0.05). Note that we also see a significant trend with PC4 (productivity) at the 10% significance level. In short, responses indicate that production sites that have multiple fully self-contained functions are 1) more highly rated in their accuracy and speed of delivery, as well as responsiveness to market needs, and 2) superior to their transplants in China/ASEAN countries at new product proposal/development.

Discussion and Conclusion
From the above-mentioned points, we can form the following conclusions: (1) Approximately 90% of domestic locations are able to complete production functions to a high degree despite a strong shift of production functionality overseas; (2) Approximately 54% of locations are able to complete design functions to a high degree, whereas 24% are able to do so to a low degree; and (3) Domestic production sites that are able to completely fulfill multiple functions (design/manufacturing/production) have the following traits: i) they are superior to their rivals at delivery accuracy and speed and better at responding to market needs and ii) they are superior to their transplants in China/ASEAN countries at making proposals and conducting development on new products.
The third result shows that multi-functional factories are superior to their transplant in the area of new product proposal and development. Our results suggest that to increase global market competitiveness and sustain superiority over transplants in new product proposal and development, it may be effective to build production sites that are fully self-contained in multiple functionalities. Multi-functionality at a production site may result in greater costs but is expected to also result in better dynamic capability (Fukuzawa, 2015b) to respond to environment changes through increased ability to create new markets via new product proposal/development.