Discussion Paper Series

2013-05
Improving R&D capability in auto parts manufacturers
through VA/VE experience
Motohiro Kurokawa

November 8, 2013

Discussion Papers can be downloaded:
http://www1.tcue.ac.jp/home1/c-gakkai/dp/dp13-05

Improving R&D capability in auto parts manufacturers through VA/VE experience1
Motohiro Kurokawa2

1. Introduction
Automotive industry of Thailand has been developed and expanded since
1960th, when Japanese car producers started to invest, it has already counting
over 50 years of history, production amount finally reached to 2.45 million in 2012.
During the period, QCD level of local parts producers in the industry was
successfully improved by their own effort and support from assemblers.
In addition to self-efforts of private sector, the Japanese government has
been assisting their improvement from various aspects, in recent case from FY
2006 to 2010, there was a 5-year development assistance program, namely,
Thailand Automotive Human Resource Development Program (TAHRDP), wasimplemented by the government.

Major purpose is to strengthen automotive

human resource in skilled labor level, accordingly, it is consisted with four main
pillars, those are;
1. Introduction of Toyota Production System (TPS),
2. Skill development for mold & die engineer and skilled labor,
3. Skill development and workmanship training for production technology
and
4. Introduction of skill certification system.
The project has successfully terminated and resulted to train sufficientamount of workforce with upgraded skill & knowledge.

After all, in response tocontinuous request from the Thai government and the Thai automotive industry
society, Japanese government has determined to launch another 5-year program,from latter half of FY 2011 to 2015, and renamed it to Thailand Automotive
Human Resource Development Institute (TAHRDIP).

In discussion for project

development, Thai parties demanded to contain advanced stage of training rather
than QCD level, government designed new program with involvement of “R&D
capability development program”, as new assistance menu for engineers.

Unlikemanufacturing training, incubating of R&D human resource is quite challenging,since technology transfer in R&D level has just launched among private firms,
and development assistance for R&D capability development has not introduced
well, except few cases.
So, in this study, through analyses of current business environment andpotential of Thai auto-parts manufacturers, strategies to develop R&D capability
in the Thai automotive industry are tried to figure out.

Then, tailor-madeprogram provided for TAHRDIP, which has just started to implement in 2012, isreconfirmed.
This paper is structured with 6 parts and Chapter 2 will define R&D
capability and way to develop is discussed.

Along with it, present situation of theThai automotive industry will be described too.

Chapter 3 will emphasize

importance to introduce value analysis and value engineering (VA/VE) for
stepping early stage to enhance R&D capability.

Effects to utilize VE method toimprove their R&D capability is mainly explained.

In the fourth chapter,collected information through observation of VE training course in TAHRDIP are
analized, and Chapter 5 will demonstrate indicators to scale R&D capability,
which is adaptable for evaluation, program development or benchmarking study,
and the final chapter will conclude discussions.

2. Definition of R&D capability and its process to develop
In this chapter, R&D capability in automotive industry is defined andessential knowledge for parts producers and process to develop those will be
discussed.

Those information is usable to acquire current situation of the Thai

auto parts producers.
As in chart 2.1., typical R&D process for automotive OEM, “Concept make”
is an origin and through processes like, “Product planning”, “Product engineering”,
and “Process engineering” are responsible to fix specification, and after
confirmation process through testing and modifications, mass production is finallylaunched.

Here, crucial parts to understand is that experiences, such are,learning from testing, accumulating past experience for design review, having
production knowledge and process change, and learning QA information of
ongoing products, are accumulated and fully utilized for development activities.
According to survey conducted in Takahashi and Kurokawa (2007) and Kurokawa

(2008), local parts producers are not eager to accumulate such experience toenhance basic knowledge for R&D, which make them difficult to be “Drawings
approved” producers.

For example, it is often found among local parts producers

that updates of drawing are not recorded in good condition, trial (testing) resultsfor production launch is not logged well, or QA information and sample inspection
results for current products are not treated as information resources for farther
production.

Considering enormous efforts historically carried out by Japaneseparts producers, currently involved into development process of OEM, local parts
producers are required to adjust above situations in daily production activities.
Advocating the importance of those experience should be a part of responsible for
R&D capability development program.

Original knowledge over OEM
Advanced development management
Marketing
Advanced drawing skill
Full testing function
Harmonization with OEM
Efficient linkage among process
Development management
Capacity to change drawing
Production testing
Preparation of Jig and Die
Process design

Concept Making

Basic Production Planning

Production Engineering

Process Engineering

Needs to develop management

Chart 2.1. Essentilal needs to participate OEM
development process, by level
Source: Takahashi and Kurokawa (2007)

Chart 2.1. also explains essential needs for parts producers to participate
development process of assemblers, required knowledge are precisely shown inline with participation level.

Starting from process design, jig and diepreparation, after all, to be a “drawings approved” producer, advanced knowledge
and responsibility are gradually required. According to present position of local
parts producers, they would like to cope with the second level, which is toparticipate from production engineering.

In this regards, items depend on

managerial types of knowledge are strongly demanded as key items.

In addition

to agendas mentioned above, it can be reconfirmed again that such managerial
type of knowledge should be organized to improve development capability.

In

Thai firms, things often found like,
1. They are hardly hold proper staff for R&D,
2. They do not launch independent section for R&D,
3. They do not pay much attention to collect information systematically,
and they are easily telling us that they do not take it important to strengthen
management system3.
Chart 2.2. is one of outputs from Kurokawa (2008), three main problems
which prevent parts producers from developing R&D capability are analyzed.

As

discussed in the chart, main problems are found in purchasing, testing anddrawing, considering source of problems, as provisions, improvement ofmanagement system will task them to solve those.

In this point of view, same

issue could be raised and proposed, it accordance with the facts in site level.

Agenda 1. Purchasing

Agenda 2. Testing

Agenda 3. Drawings* Luck of stability with suppliers* Affects to QCD* Difficulty to provide quotation* Luck of organized testing log* Luck of dataset* Luck of revise record* Insufficient knowledge

Provisions

Provisions

Provisions

Purchasing management
Cost calculation
Supplier Management

Knowledge on products
Testing planning
Organization of test log

Development management
Information share with OEM
Introduction of IT system

Chart 2.2. Importance of managerial skill
Source: Kurokawa (2008)

When development of management-type knowledge is effective to upgrade
them to enhance R&D capability, introducing VA/VE is one of realistic approach tofill the gap.

Because VA/VE strongly demands data collection and its results ofanalyses, also recommend to log many information to realize valuable engineering
activities.

In this matter, as a training program for R&D, putting VA/VE

training into the central part can be customized model for Thai automotive
industry.

Chart 2.3. is assisting the idea, it briefly order methodologies to modify

products as development activities.

Difficulty
Creation of new functions
Creation of new processintegration of functions
Change in function
Change in design

Change in material
VA/VE
Small change in design
Change in process
Cost reduction

time

Chart 2.3. Sequence to develop R&D capability
Source: by author

Except two methods shown on top, other minor modifications can not beunderstood as development activity in strict definition, rather than that, those aredefined as VA/VE.

If local parts producers will build up their capability from thebottom line of the sequence, challenging VA/VE is a relevant plan to have realistic
perspectives to conduct R&D in the long run.

By accumulating experiences from

VA/VE, they could enhance managerial knowledge, it partially solve current
problems and provide basis to stack R&D knowledge in their organization.

3. Effects to introduce VA/VE
In the last chapter, effectiveness of introducing VA/VE is once examined byconfirming problems ongoing in Thailand, this section once emphasize strong
point of VA/VE in terms of building managerial knowledge.
Chart 3.1. shows three importance contents of VA/VE, those are 1.
Definition of functions, 2. Evaluation of functions, and 3. Creation of alternativevalue, which is a general methodology to carry out VA/VE for manufacturers.

Step1. Definition of functions
Collecting information, Understanding
functions,
Organizing functions

Step2. Evaluation of Functions
Analyzing cost,
Evaluating functions,Targeting of development part

Step 3. Creation of alternative value
Brainstorming idea,
Realizing idea
Proposing alternative value

Chart 3.1. Composition of VA/VE
Source: Ueno (2011)

In each step, engineers are forced to investigate products very deep, andproducts have to be analyzed with objective framework.

This task automaticallydepend on data collection and information management, luck of log managementin testing, drawing and trial will be collected through VA/VE activities. Suchsystematic treatment of development experiences turn to be platform and seeds
for future R&D activities.

Step 1. is named “Definition of function”, which is toseparate parts composing products, function of each parts will be reviewed. In thisstep, engineer will try to judge needs of each parts and related functions.

In

Step2., it is an “Evaluation of functions”, functions brought by each parts areevaluated from two aspects, both value added and markets.

In those steps,

engineer is naturally think of validities in each parts level, knowledge on products
will be improved.

In the final step, “Creation of alternative value” will bepracticed based on information and results of analyses, maintained in previous
steps. Thus, VA/VE, sophisticated method to product data, will support Thaifirms to organize management system applicable for development activities.
Reviewing current concern to the Thai automotive industry, there arethree important issues to discuss.

One is how to keep competitiveness toemerging countries surrounding Thailand, those are Vietnam, Indonesia,
Myanmar and Laos.

Even low income countries have not been holding

automotive industry significantly, it is said that investment of OEM will beappeared in near future.

In terms that Thai has the longest history amongst,

having different level of capability could be an advantage for them, but there is apossibility that low-tech production will be pulled just by cheaper labor cost in
surrounding country, Thailand still need to increase its productivity.
Secondly, they have to catch up with increasing production volume.

It isquite nice condition that automotive production has been increasing rapidly inrecent years, but parts producer is meeting needs to increase their capacity forsufficient delivery.

Increasing capacity by expansion is the easiest way, but due

to shortage of labor force, which is laid as the third problem, will make parts
producer difficult to take such a strategy.

Here, importance of improving

productivity through QCD improvement is again a crucial matter.
The third problem is a requirement to enhance development capability.
It is difficult to improve development knowledge without holding certain QCD

capabilities, but shown in Chart 3.1., VA/VE will help them to improve both of
those simultaneously, because VA/VE is again an early stage of development andsometimes lead to change in production process for cost reduction. In this point,
VA/VE also contribute QCD improvement.

QCD

VE

R&D

Chart 3.1. Correlation between QCD and R&D
Source: by author

It is said that any firm can hardly enhance development capability
without improving their QCD, but development capability and QCD, on the other
hand, have correlative relation.

If situation permits, parts producers should

prioritize improving QCD, then gradually try to improve development capability.
But, it is also a possible idea to introduce VA/VE as a basis of R&D activity, parts
producers can improve both QCD and development capability,
As seen in the last chapter, VA/VE require advanced knowledge on QCD todefine function and calculate values.

This fact straightly explains the fact that

VA/VE activities would strengthen QCD level.

And VA/VE involves elementarylevel of development activities as Step 3, creation of alternative idea, it meansthat trying VA/VE is a good practice to experience development process.

VA/VE can take a role to bridge QCD and R&D by filling the gap which
local parts producers have been holding presently.

According to field information,

among local business owners, there are some misunderstandings occurring todescribe the image of R&D, they are apt to think R&D is a creative and different
from manufacturing activities. But, Clark and Fujimoto (1991) is telling, firm
also have to take care, cost efficiency, process management and routine jobs forpossible development activities.

VA/VE, doing pre-development activity in asystematic way, will task them to understand development process as
non-creative activities, which is unlike academic research without practicalefforts in manufacturing.
Having said that, introduction of VA/VE is effective and reasonable
solution to decline problems of parts producers.

4. Observation of VE training
In this chapter, results of observation of VA/VE training actually
implemented under the umbrella of TAHRDIP.4 The period of the training was 7
months, started in August, 2012 and completed in February 2013.

Training

period has separated into two phase, first two months was a basic course. In thistwo-month for basic course, among parts producers, 7 trainees (as candidates fortrainer in expansion phase) from 5 firms have participated, and trained 6hours/day and 3 days/week. In addition to 7 trainees, 2 trainee has also joined to
be a master trainer. They were sent from OEM and existence of master trainer isnecessary to keep sustainability of the training course after the end of TAHRDIP.5
Curriculum was fixed as following Table 4.1., nearly half of the total time
was spared for VA/VE to understand general methodology in three steps in thelast chapter.

In VA/VE lectures, by using half of the time, trainees have educatedunder workshop style and experienced to adopt V/VE tools in actual level.
have assigned to analyze small trash box used in a car.

They

Along with VA/VE

method, trainees were firstly started to collect information of current products inthe market and functions by parts were figured out.

Secondly, they haveestimated costs by functions and through use of analytical framework of VA/VE
table, target to modify was found.

In the last stage of workshop, new products

were presented by each working team.

Table 4.1. Subjects of training
Basic lecture(9h)Function ofparts (24h)Orientation

Quality,
performance
Operability

R&D general
Requiredconditions forcomponents

Maintenance

Automotiveengineering(27h)
EnergyVA/VE (54h)ElectricalsystemEnvironment

Process

Orientation

Definition offunctions

SafetyGasoline
Systematic
emission
diagram
Products
Diesel
Evaluation of
Liability
emissionfunctionIntellectual
Exhaust system Consideration
propertyof improvement
Brain storming Homologation Creation ofalternativeidea
TNI visit
Reliability
engineering
Power train
Source: by Author

Reviewing the first phase, there were some problems confirmed throughobservation and interview survey.

Firstly, TPA, vocational school fortechnological training, has been a counter part of this training course, but
sufficient commitment was not reconfirmed from them.

It has not made clearthat how much they are observing course works, without having necessarycommunication with instructor, it could be hard to organize training course in the
future.

In this point, sustainability in the expansion phase taught by incubated

Thai trainers is somewhat questionable.

Secondly, distinguished trainees sent

by each firms themselves are becoming the source of concerns.

Explained intable 4.1., this course work was basically designed to incubate R&D engineer inthe future, so general lectures for automotive engineering were additionallyinvolved, but those did not fit to capacities of trainees, there was a request that

this training course should be concentrated on VA/VE related subjects.
In the next phase, duration for another 4 months, only 2 trainees wereselected among them, based on their own firms, in-house workshop education was
intensively conducted by adopting their real product as case studies.

This

workshop must be beneficial in two ways, one is that trainee can experience
VA/VE in his professional area, enhanced knowledge is directly usable for daily
business. The other benefit is that the results of workshop could bring about realbusiness profit, which is like former TPS course ever achieved in TAHRDP.

But,

outputs of those two workshops has just shown in the final presentation,suggestion has not approved and adopted immediately by firms.

If their idea

could clearly bring benefit to those two firms, the training course could be more
appearing and brought secondary outcome.
Listing other problems of in-house workshops, “VA/VE workshop team”
was not ranked as high position in their organization structure, trainee could notintervene and deal with all production lines and parts by strong authority.

As aresult, trainee had to consider VE idea limited to parts that his previous division
was in charge.

Same as TPS, VE activity must be proceeded with corporate-wide

approach and the workshop team should be ranked next to top management.
Program has failed to provide such environment for workshop tem, it has
restricted trainee’s activity and output of workshop was uncompleted .

5. Evaluation framework to scale R&D potentials
As a final part of this study, indicator to analyze R&D capability is tried toconcrete, since it is usable to reconfirm growth of trainee after implementation
and adoptable to provide advanced course after learning in VA/VE training.
Table 5.1. shows 7 indicators to analyze R&D capabilities by firm level. In ourprevious studies have ever defined components of R&D capabilities, those aremostly consisted with technological items.

In this study, to emphasize theimportance of management knowledge for development, following 3 indicators outof 7 are directly investigating conditions of organizational management, those are
R&D related organization, QA/design data management and R&D training
system.

If firm makes effort to set up sufficient organization, those indicators

are easily raised.

But, strong commitment from top management with additional

investment should be shown, it sometimes cause larger impact to improve R&D
function, rather than improving technological skill.
In this regards, considering management side and organization form,
firms can develop their capability, when it will along with this framework.

Table 5.1. Evaluation framework for R&D capability
functionsLevel 1

Level 2

Level 4

Level 5

VA/VE

Cost reduction

Process change

Material change Design change

R&D relatedorganization

QA section for
testing capacity
only

ad hoc team for
new productlaunchProcess Design

100% bycustomer

Independent
organization
with testing
capacity
50% by own

QA/design data
Management

Documents notproperly stored

20% by own(can make somechanges)Documents
Documents
stored but rarely stored in goodusedorder anddifficult to seek
20% by own
50% by own
75% by own

FunctionalchangeIndependent
organization
with research
capacity
100% by own

Testing Capability 100% by
customers
Drawing
All drawings
supplied

R&D Training
SystemNone

Level 3

Independent
organization
with design
capacity
75% by own(need customer
certification)
Documents
integrated inelectronic data

Drawings
Drawings
Drawings
supplied but
supplied andapproveddetailed drawing modify it
preparedExternal system Original system Off-JT operated
by independent
divisionDatasystemicallymanaged andtraceable
100% done
Drawings
approved withoriginal
knowledge
Proper trainer
available

Source: by author and VA/VE training development group

6. Conclusion
This study tried to reconfirm and discuss current agendas of local autoparts producers to enhance R&D capability, putting main focus to improve their
managerial knowledge is focal point to reform.

And findings from site

observation explained the impact to adopt VA/VE training, after theoretical
discussion to reconfirm accountability and usability to conduct VA/VE as
pre-development activities.
listed.

Oppositely, problems occurring in training site areAs a result, it is noted that development program settling VA/VE training
as a core subject meets the potential needs and current capability, trainees could
upgrade their Kaizen and cost reduction knowledge up to VA/VE knowledge by the
specialized training.

Having proper VA/VE methodology will help them toaccumulate VA/VE experience strategically, the knowledge will partially consist
their future R&D capabilities usable for “Drawings approved” works or new
product development.

Additionally, 7 indicators to scale R&D capability can beused for benchmarking, firm-level study to adopt this methods will be planned infarther study.

References
Caffyn, Sarah (1997) Extending Continuous Improvement to the New Product Development,
R&D Management, Vol.27, No.3, pp.253-267.
Ichiro Ueno, You Ueno, Masayasu Tanaka and Yoshio Nakagami (2011) ValueEngineering Handbook, Society of Japanese Value Engineering
Motohiro Kurokawa (2008) Development of the “Monozukuri” Capability in the Thai
Automotive Industry, Strategies of Local Auto-parts Producers to cope with “Drawings
Approved”, Annual report of Japan Academy of international Business Studies, Vol.14,
pp.113-124
Prajogo, Daniel I. and Amrik S. Sohal (2006) The Integration of TQM and Technology/R&D
Management in Determining Quality and Innovation Performance, Omega, Vol.34, No.3,
pp.296-312.
Yoshi Takahashi and Motohiro Kurokawa (2007) Effects to improve QCD management todevelop R&D capability in LDCs,

Annual report of Japan Academy of international

Business Studies, Vol.14, pp.69-81
Yoshi Takahashi, Motohiro Kurokawa and Kriengkrai Techakanont (2009) Learning and
Behavioral Change through Participation in Thai Automotive Industry Skill Certification
System, Abstract Journal for the 8th International conference of the Asia Chapter in Bahrain,
Academy of Human Resource Development

1

This is a revised version of two papers presented in “International Workshop, Economic

Integration in Asia” held in February, 2012 and “2nd International Workshop on Assistancefor Developing Manufacturing Human Resources: Cases of Thai and Malaysian Supporting
Industries” held in March, 2013
2

Associate Professor, Faculty of Regional Policy, Takasaki City University of Economics,

Japan, kurokawa@tcue.ac.jp
3

In this paper, the ward ‘management’ does not simply mean financial matter, but includes“coordinating things”, “organizing things” and “controlling things” in a company.
4

In this second 5-year, name of program has changed from TAHRDP to TAHRDIP, since theThai government is slightly projecting to establish new organization to handle those
implemented training course, “I” as “Institute” is added.
5

All course of TAHRDIP is a trainer’s training, from the second phase, Thai teaches Thai is

expected.

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