Reduction of Development Lead Time Through Improvements in the Development Process and Innovations in Production Technology — Reconfirmation of Japanese-Style Supplier Relations. Evidence from a Case Study

Abstract

In the 1990s lead time for product development has been cut dramatically in the Japanese auto industry. While Western companies, behind in this field, have cut lead time to 30 months over the decade, Japanese companies have managed to reduce it to about 20 months within the same time frame. The general driving force behind this development has been intensified competition among auto makers during the 1990s recession years. As a consequence, auto makers have been urging parts makers to reduce prices by as much as 10% a year and to help them rationalize development processes, mainly by sharply reducing lead time. Parts makers have been forced to slash production costs and beef up their own development systems in order to secure orders. This has prompted a change in traditional Japanese-style relations between customers and suppliers.