Exceed, not Just Meet, ExpectationsSat, 09/01/2018 - 13:10
Growing production volumes may be a clear sign of growth but for Yasushi Nishikawa, President of Sumitomo Corporation de México, the real measure of a company’s success lies in finding new and better ways to cater to its clients’ demands. “Only complying with the expectations OEMs have is not enough for Sumitomo,” Nishikawa says. “We need to be stronger and more powerful to offer clients a counterproposal and exceed their expectations. By doing so, we become more competitive and clients have the confidence to choose us as their preferred option.”
Sumitomo has a long history in Mexico after launching operations in the country in 1954 and forming Sumitomo Corporation de México in 1971. Today, the company has 21 subsidiaries in the country, 14 of them focused on the automotive industry, which according to Nishikawa is a clear reflection of Sumitomo’s commitment to Mexico. However, as the new President of the company, Nishikawa has outlined three key strategies that Sumitomo must follow to ensure ongoing success. “First, we must raise the value of our existing operations. Second, we must innovate and develop our next-generation business. Third and most important of all, we must develop a cross-business platform between our subsidiaries and among our customers.” Rather than just bringing more business and increasing production volumes, Sumitomo’s goal is to build synergies to better address its clients’ demands.
In Mexico, Sumitomo is a shareholder in Mazda’s operations in Guanajuato and it has brought several subsidiaries to support the OEM’s growth, including providers of stamped body parts and aluminum components, as well as raw materials. Nishikawa wants to replicate the integration strategy Sumitomo has implemented with Mazda in the rest of the company’s operations. The company already has a good relationship with other OEMs, such as GM, Mercedes-Benz, Nissan and Honda, which Nishikawa sees as an opportunity to expand Sumitomo’s business model. “Companies’ expectations regarding quality, cost and time of delivery are always increasing and we must find ways to keep up,” says Nishikawa. Lightweighting is one of the most recent demands from OEMs as companies try to meet their targets regarding sustainability and performance. Generally, introducing new technologies and replacing components demands investment and lighter materials are often more expensive than traditional solutions. However, Nishikawa says that if the difference in cost can be justified through better performance and a lower cost in the overall production process, clients will prefer to go for the better option. “For us to truly understand the decision criteria of our customers, we must maintain a close relationship with them,” he says.
While adapting to industry trends, the company also has found key areas of opportunity in the local market. Although steel production is among Sumitomo’s range of expertise, most of the steel used and sold by the company in Mexico is imported from Japan and other Asian countries. The company is open to and considers supplier localization an advantage for any company. However, Nishikawa fears its customers’ demands in terms of quality, cost and deliveries are extremely high. “To meet and exceed expectations, we continuously make an effort to improve our operations and we would like any potential partner to be on that same wavelength,” he says.
Willingness to invest in equipment and modernization is important for these companies to have a stronger presence in the supply chain, according to Nishikawa. However, what he considers most important is investment in best practices, methodologies and talent development through training and education. “Mexico is a great place for manufacturing operations but not yet for engineering and technology development,” he says. Sumitomo is exploring all opportunities to develop business beyond its current status. The company is analyzing startups in Silicon Valley and new business opportunities where it can invest to support the growth of the industry and Nishikawa says that same strategy can be adapted to Mexico. “We are already investing in an electric-vehicle manufacturer in the US and we think that same mobility vision should be translated to Mexico,” he says. “In the meantime, we must continue strengthening our operations to be ready for when that happens.”