TS TECH’s Value Chain

The TS TECH Group achieves value creation through manufacturing that yields high-quality products and services.
We aim to maximize corporate value by leveraging mutual cooperation and synergies among the functions ofeach value chain. In this effort, we make optimum use of all the management resources we have developed overour 60 years in business with the support of our stakeholders.

Value chain

Research and Development
The transformation of mobility brought about by recent technological innovations iscompletely changing the value that has been demanded of automotive interior products in the past. We are leveraging this change as an opportunity to drive our Group’s
further business growth. We are focusing on creating new value not only in the seats
but also throughout the entire vehicle interior space. In order to achieve sustainablegrowth together with society, we will conduct research and development from various
perspectives, including technological evolution from both the development and manufacturing axes, with the aim of quickly commercializing environmental technologies
that are ahead of other companies.
Companies cannot create value simply by accumulating conventional technologies. Based on our corporate philosophy of being “A company dedicated to realizing
people's potential,” we strive to foster product developers, innovate with the diverse
ideas they generate, and create unique technologies that have never existed before.

Basic Policies on Value Creation

Research anddevelopment• Creating and delivering appealing products and technologies• Enhancing our system and software development capabilities
beyond the framework normally required for a parts manufacturer• Developing environmentally friendly products and manufacturing
technologies that help build a sustainable world• Ensure reliable quality assurance from the outset of development

Creating innovative,
attractive products and technologies

Basic Policies on Value Creation• Offer appealing products that exceed customer expectations atcompetitive prices• Proposing new vehicle interior value to customers using internal
collaboration including regional and functional corporate divisions• Proposing products based on existing commercial rights(expanding adoption to derivative models)• Pursuing strategic sales development focusing on target
commercial rights to increase the likelihood of securing orders

Sales
Proposing competitive products
to satisfy customers’ demands

Eiji Toba

Director, Managing Officer
Corporate Development and Engineering Division
Executive General Manager

Offering stable provision ofcomponents by maintaining
a strong supply chain

Manufacturing
Operating highly efficient mass
production systems in 13 countries

Quality
Using a quality control system
to ensure stable supply of safe
and secure products

Feedback

S

Purchasing• Building a supply chain that outperforms those of other companies• Building a supply chain that supports new business expansion• Streamlining and rationalizing procurement routes• Improving QCD capabilities by enhancing supply chain management• Improving our manufacturing for higher efficiency andsustainability• Providing innovative production technology to Group companies
and strengthening control functions• Building highly efficient production lines using automation andmore advanced equipment and molds• Provision of safety and security to customers• Stable provision of products with the same high level ofquality worldwide• Earn top quality rating from customers all around the world andestablish TS-Quality brand•C reating and delivering appealing products and technologies•E nhancing our system and software development capabilities beyond theframework normally required for a parts manufacturer•D eveloping environmentally friendly products and manufacturing
technologies that help build a sustainable world•E nsure reliable quality assurance from the outset of development

trengths•W ide range of development andtechnological capabilities forphases from product planning
through development andperformance evaluation•G roup-wide development system
based on projects managed byLarge Project Leaders (LPLs)*1• C reating new value through active
collaboration with other industries

W eaknesses

O pportunities

T• S peed of global development
aimed at sales expansion• S peed of mass production
realization of innovativetechnologies• E xpansion of the EV market where
advanced technology is being
actively adopted• P roviding the new value required
for next-generation vehicle
interiors•G rowing need for environmentallyfriendly products• Intensifying competition intechnological development andchanges in product development
styles driven by the entry of companies from other industries into
the automotive industry• Tighter regulations in various areas to promote carbon neutrality

hreatsSecuring cabin coordination capacity

Ongoing pursuit of environmentally friendly technologies

The Group is working to secure cabin coordination capacity tocreate the new functions and technologies that will be requiredin the next-generation vehicle market, characterized by advanced autonomous driving technology and widespread transition to EVs. This will enable us to propose products for the entire
vehicle cabin, and go beyond our conventional business areas ofseats and doors. We aspire to propose the entire vehicle interior
space as an appealing product. Toward this end, we are accelerating basic research related to the needs of people as the ridersof next-generation vehicles. We are also promoting R&D aimed
at establishing completely new functions and technologies created through collaboration with other industries. Moreover, byworking on the development of highly efficient mass production
technology that can easily be adapted to new construction andmaterials, we are building a production system that will allow us
to deliver the technologies we develop as competitively priced
products.

In order to help reduce the environmental impact of automobiles and help build a more sustainable world, we are working tobuild EV-compatible technologies that help reduce the weight ofvehicles, as well as those that allow non-sustainable materials tobe replaced by sustainable ones,*2 such as recycled and biomass
materials. To address issues such as a decline in seat cushioning
performance caused by sustainable material adoption, we arereexamining vehicle seat construction based on the unique expertise that the Group has accumulated over the years. This approach will enable us to deliver both environmental performanceand comfort. The Group is also proposing seats constructedwith a low hip point, which helps in the creation of streamlined
designs for EVs with lower air resistance and improved powerusage efficiency. Our aim is to keep growing along with society
by creating new environmental technologies that automakers
cannot achieve on their own.

*1 A development system that assigns LPLs to coordinate all departments, including overseas bases, and provides total management from planning tomass production*2 Raw materials that are derived from continuously available resources and have a low environmental impact throughout their life cycle

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TS TECH’s Value Chain

Sales (Honda Group)

Sales (New Businesses)
Approximately 90% of the TS TECH Group’s consolidated revenue comes fromsales to the Honda Group, consisting of Honda Motor Co., Ltd. and its affiliates.
While acquiring new customers remains an important part of our plans forfurther business growth, the business relationship with Honda will continue tobe an important foundation of TS TECH’s operations, forming the backbone of
the Group.
Currently, our products account for approximately 60% of the seats installedin vehicles sold by Honda. Our goal is to increase this share to 70% by 2030. We
aim to further increase our market share with Honda not only by developing
products that meet the needs of end users but also by providing a variety of
proposals that meet the specific needs of Honda.

Takahiro Kobori
Director, Managing Officer
Corporate Sales and Purchasing Division
Executive General Manager

S

trengths• Sales proposal capabilities basedon close cooperation between
global information-gatheringsystems and QCDDM*• Total coordination capacity forvehicle interiors

Basic Policies on Value Creation

Basic Policies on Value Creation•O ffer appealing products that exceed customer expectations at competitive
prices•P ermanently secure customers’ unwavering trust•P roposing new vehicle interior value to customers using internal
collaboration including regional and functional corporate divisions•O btaining commercial rights orders with high added value using planning proposals that
anticipate customer needs• P roposing products based on existing commercial rights (expanding adoption to derivativemodels)• P ursuing strategic sales development focusing on target commercial rights to increase thelikelihood of securing orders• S trengthening the competitiveness of our European sites to promote commercial rights expansion

W eaknesses

O pportunities

T• Overemphasis on earnings fromthe seat business and slow growthof other revenue sources• Proposing new product value
needed for next-generation
vehicle interiors• Proposing new products andtechnologies created throughcross-industry collaboration• Profit structure transformation
due to soaring energy costs• Intensifying competition fororders due to the rise of emerging
local suppliers

Business development that leverages our strengths
In order to further increase our market share in Honda, in addition to acquiring new commercial rights, we need to ensure that
we continue to receive orders for commercial rights for models
for which we have already received orders, even after modelchanges. We will achieve this by creating value that is unique to
TS TECH. We do this by further enhancing customer satisfaction
through the creation of products that exceed expectations andby co-creating products with the Honda Group from the earlystages of development to propose seat products that combinefunctionality and design in line with customer needs in an unprecedented way.
Moreover, through close cooperation between relevant internal divisions under our Corporate Sales and Purchasing Division, which oversees the Honda-related business, the Group isable to offer high-quality, competitive products in any global region. We aim to acquire further commercial rights by taking fulladvantage of the geographical advantages provided by ouroverseas sites, which span 13 countries worldwide.
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TS TECH Integrated Report 2023

In order for the TS TECH Group to achieve further business growth, we will expand sales not only to the Honda Group but also in new business areas beyond
that customer, by acquiring new clients and expanding commercial rights. We
have long regarded this as an important issue and have undertaken a variety of
relevant initiatives, which are steadily delivering results. We are seeing clear
signs of future sales expansion, including more commercial rights with Suzuki
Motor Corporation and Volkswagen AG, as well as orders from multiple new customers.
The Group’s target for 2030 is that 30% of revenue would come from new
businesses. This figure is 7.8% as of March 2023. To achieve the goal, we willleverage the leadership of the New Business Management Division to carry out
strategic sales activities that reach customers worldwide.

hreatsExpansion of parts orders, leading to vehicle
seat commercial rights
A vehicle seat is made up of various parts, such as the seatframe and trim cover. The Group has acquired commercial
rights not only for the seat itself but also for these parts, andis developing products tailored to each vehicle model.
Among the seat components, the frame is closely related tothe seat itself, and is an important factor in obtaining orders
for a particular seat to be developed later. By quickly andaccurately identifying customer needs, and by promotinginternal collaboration including the Corporate Development
and Engineering Division, the Group is working to create astandard seat frame that can be installed in a wide range ofvehicle models. By proposing a competitive standard seatframe, we will expand seat frame orders, leading to futureorders related to seat commercial rights.

Isao Kawashima

Managing Officer
New Business Management Division
Executive General Manager

S

trengths• S ales activities in cooperation withbusiness partners•M aking product proposals before
model development, andpromoting collaboration activities
with customers•G lobal supply capabilities basedon sites in 13 countries worldwide

W eaknesses

O pportunities

T• K eeping pace with the global
acceleration of shorter
development cycles• I ndependence of overseas bases• I nformation gathering network on
needs of new customers• E xpanding opportunities topropose new vehicle interiors
toward next-generation mobility•D eveloping new, appealing
products in collaboration withbusiness partners• Rapidly changing customer needs• Decline in profitability due tostiffer competition and entry ofcompetitors from other industries

Ongoing new business expansion
We will gain the trust of customers worldwide and acquire
new commercial rights by carrying out highly strategic sales
activities that make the most of the Group’s resources. We
will quickly expand orders by implementing optimal sales
approaches utilizing our Group’s geographically advantageous bases according to the customer’s location, and by
making technical proposals for specific target vehicle models,
including horizontal deployment to derivative models of technologies that have been highly rated under existing commercial rights. In addition, through collaboration between the
Corporate Sales Division and the Corporate Development andEngineering Division, we will identify latent customer needs,
regularly hold presentations on the functions and technologies required of next-generation vehicle interiors, and participate in customers’ advanced development that will set thedirection for future mass-produced models, thereby ensuring
the acquisition of commercial rights.

hreatsStrengthening the competitiveness of theGroup’s new European operations
With sites in Germany and Poland, the TS TECH Group is focusing on further expanding its transactions with European
automakers, such as the Volkswagen Group. Thanks to its
location, our new vehicle seat production company in
Poland, which will begin full-scale operations in fiscal 2024,
will be able to supply products at competitive prices to European automakers located in Germany, the Czech Republic,
Slovakia, and other countries. Using this as a key site to actively implement sales development in Europe, we will not
only expand commercial rights with existing customers but
also build relationships with new ones. Not only expanding
production capacity, we will also optimize our production
system, including the supply chain, to further grow our business and improve profitability.

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TS TECH’s Value Chain

Purchasing

Manufacturing
The TS TECH Group works hard to ensure that its business activities help to address social issues, fulfilling its policy of realizing ESG management. We are helping to build a sustainable world by promoting sustainability initiatives not onlyinternally but across our entire supply chain.
The Group is striving to advance its core procurement functions by practicing supply chain management to enhance price competitiveness and improving
its business continuity capabilities to ensure stable product supply even during
emergencies. In addition to this, we are further strengthening our sustainability
initiatives by addressing issues such as climate change and human rights. We
are working to share our objectives not only with our business partners in Japan,
but with all partners worldwide, in order to forge a strong, sustainable global
supply chain.

Manufacturing is the core activity of the TS TECH Group, so one key to achieving further
growth will be to improve our manufacturing capabilities. We must do this in a way that willallow us to effectively respond to an increasingly uncertain business environment, alongwith changes in raw material and product construction requirements resulting from industry trends such as CASE and MaaS. By building a highly efficient manufacturing systemthat outperforms those of other companies, for instance by adopting more automationand digital technology, we aim to forge a corporate structure that can respond to any
sudden changes that can affect production, such as semiconductor supply shortages.
Meanwhile, we are working to establish new technologies that will undergird the creation and mass production of unprecedented products. To do this, we will develop environmental technologies that prevent or reduce environmental impact, as well as
next-generation technologies suitable for EVs and autonomous vehicles. The Group’s development and manufacturing areas will work together to create these technologies,
thereby promoting further business growth and helping to build a sustainable world.

Basic Policies on Value Creation

Takahiro Kobori
Director, Managing Officer
Corporate Sales and Purchasing Division
Executive General Manager

S

trengths• Development of activities tostrengthen structures together
with business partners• Ability to gather and analyze
information to maximize
purchasing resources acrossthe Group•B uilding a supply chain that outperforms those of other companies•B uilding a supply chain that supports new business expansion•S treamlining and rationalizing procurement routes• I mproving QCD* capabilities by enhancing supply chain management

W eaknesses

O pportunitiesT• Supply chain restricted bytraditional frameworks• Supply chain specialized for
Honda’s needs• Developing new procurement
routes with cross-industry
collaboration• Expanding business withemerging local suppliers• Supply risks for components andraw materials due to climatechange, infectious diseases,
conflicts, etc.
• Impact of procurement costs due
to rising costs for energy andlabor, etc.

hreatsBasic Policies on Value Creation

Yasushi Suzaki
Director, Managing Officer
Corporate Manufacturing Division
Executive General Manager

S

trengths• Advanced technology development
and mass production verification
capabilities through in-houseproduction of molds and equipment• Achieving high standardization ofeach QCD capability within theGroup• Employing a flexible production
system that supports multi-productproduction• Improving our manufacturing for higher efficiency and sustainability• Providing innovative production technology to Group companies andstrengthening control functions• Building highly efficient production lines using automation and moreadvanced equipment and molds

W eaknesses

O pportunities

T• Still in the process of reducing
environmental impact fromproduction and adopting a resilient
manufacturing framework*• Possibilities for reducing humanintervention in quality control
processes• Collaboration effectivenessbetween sites in different countries•G reater need for new production
technology to make products with
reduced environmental impact• I ncreased demand for high-valueadded products suitable for CASE
and next-generation vehicles• Rise of emerging local suppliers• Greater cost-based competition• Rising costs for labor and raw
materials

hreatsEnsuring the supply chain boosts competitiveness

Building a sustainable supply chain

Ongoing advancement of TS TECH manufacturing

Sustainable production system

The technological transformation of mobility is expected tolead to intensified competition among suppliers, including
new entrants from other industries. To survive in this environment, the TS TECH Group is working on various measures to increase its competitiveness in the area ofpurchasing as well. In addition to further enhancing collaboration with business partners, we are completely updating
the supply chain we have built over the years. Our aim is toboost competitiveness by increasing the Group's profitability
based on a thorough streamlining of procurement routes
and an expansion of procurement of parts at sites outside
Japan. Moreover, we will establish procurement routes to accommodate the expansion of sales to non-Honda customers and to ensure a stable supply of increasingly diverse andmultifunctional products. In this way, we will strive to optimize the supply chain from various perspectives and seek tomaximize added value across the Group.

The TS TECH Group works together with business partners
to mitigate various risks and build a sustainable supply chainthat complies with relevant laws and social norms. Using the
TS TECH Supplier Sustainability Guidelines, we ask our business partners worldwide to understand and adopt sustainable practices. In the environmental field, our aim is toachieve carbon neutrality across the supply chain. We areworking to improve calculation accuracy for Scope 3 emissions and encourage business partners to further reduce
their CO₂ emissions by improving communication with them.
The Group updates its supplier guidelines as necessary,
while striving to remain a company sincerely appreciated by
all across its supply chain.

The TS TECH Group is optimizing its manufacturing system tobetter respond to the diversifying needs of customers, while delivering a stable supply of high-quality competitively priced
products to the world. In addition to thorough efficiency improvements using digital transformation, IoT, and other advanced technologies, we are also promoting further quality
improvements, such as strengthening assurance of defect-freeprocesses using a quality determination system based on AI
analysis. Due to the nature of vehicle seats, which are made up
of numerous components with different properties, many processes still need to be completed by hand. It is therefore important not only to adopt more automation but also to provide agood working environment for every employee involved in manufacturing. Accordingly, we will strive to promote employee
diversity on production lines. This includes strengthening ourability to develop in-house equipment to reduce workloads, aneffort that will be driven by employees with a deep understanding of the front lines.

The Group’s long-term environmental goal is to achieve carbon neutrality in its business activities, and it is working to
reduce its environmental impact by taking measures suchas conserving energy. While advancing technologies to increase production efficiency, we are planning to further
improve the efficiency of our production equipment by,for example replacing outdated equipment and installinginverters. Additionally, we intend to reduce CO₂ emissions
and energy costs from various angles. This includes horizontal deployment of energy conservation diagnoses by facility
experts from Japan to other sites around the world. We will
also build a production system that is sustainable from a variety of perspectives by, for instance, developing equipmentthat uses regenerative energy and devising karakuri mechanical ways to automate work without using electricity.

* Framework to create a financial structure that generates a certain amount of profit even when earnings drop

* Quality, Cost, and Delivery

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TS TECH’s Value Chain

Quality

Important Departments That Support the Group’s Value Chain
The TS TECH Group’s products are essential vehicle components that help protect
human life. This is why we believe that quality is the most important reason that automakers choose TS TECH. It forms the basis of their trust in us as a manufacturer. The
mission of the Corporate Quality Assurance Division is to consider all the measuresthat need to be taken to ensure that the Group never produces or ships defective
products. Its mission also includes overseeing the implementation of quality assurance measures, and ensuring that everyone in the Group fully understands the importance of quality. We work not only within the Group but also in cooperation withbusiness partners who supply our parts and raw materials.
By promoting the universal awareness that every individual is responsible for
quality, and linking this mindset to quality improvements, we are building a quality
control and assurance system that will ensure TS TECH continues to be the choice ofcustomers—an objective the Group cannot achieve without partner cooperation.

Basic Policies on Value Creation

Yoshiaki Kida

Operating Officer
Corporate Quality Assurance Division
Executive General Manager

S

trengths• Quality control and assurance
system based on international
standards• Initiative for evaluating productappearance quality using AI
image diagnosis•P rovision of safety and security to customers•S table provision of products with the same high level of quality worldwide•E arn top quality rating from customers all around the world and establish
TS-Quality brandW eaknesses

O pportunities

T• Delay in establishing fully
automatic assembly technology toeliminate human error• Now in the process of developing
expert human resources for
quality assurance• Improving quality assurance
accuracy by automating productionlines and utilizing digital technology• Increasingly sophisticateddemands for quality assurance
accompanying a trend toward
multifunctionality in products• Diversification of customer quality
requirements as a result of new
business expansion• Greater scope of impact when
quality defects occur as a result ofpart standardization• Advanced software quality
verification capabilities areneeded to make high-value-added
products to be installed in
next-generation vehicles

Developing intellectual property strategies using bothproactive and protective approaches
One of the important ways for the Group to maintain its long-term competitive advantage is to protect and utilize the results of its R&D operations, which become intellectual property (IP). When it comes to its proprietary technologies that can help build asustainable world and innovative technologies, the Group works to maximize the valueof this intellectual property by implementing a variety of proactive initiatives to build astrong patent network. We also implement protective measures to develop products
while minimizing the risk of IP disputes by strategically utilizing patent searches andrespecting the intellectual property rights of others, for instance. Our performance onthese initiatives has also been recognized by external stakeholders. The Group has
been ranked first among all similar suppliers in both Japan and the United States in athird-party survey of the comprehensive patent strength for an entire vehicle seat lineup.* We will continue to support the Group’s manufacturing with these proactive andprotective intellectual property initiatives, while ensuring that we leverage R&D outcomes to improve corporate value.

Fully utilizing IT to maximize the Group’s performance

hreatsThe Group implements defect prevention in all processes of
its value chain, from product planning, design, development,
and manufacturing, to procurement, equipment maintenance, and maintenance of quality control systems. By implementing upstream management that requires investigationof issue root causes and then conducting a series of fundamental process improvements, we have built a reliable quality
assurance and management system. This system has led tothe creation of product specifications that prevent defects
and the automation of production and inspection processes
that make quality assurance more effective. We also conduct
Group-wide continuous quality assurance training and TC Circle activities (improvement activities undertaken by small
groups) in order to keep increasing each employee’s knowledge and awareness of quality control and business improvement, and strive to improve product quality in each process.

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Enhancing quality management
In April 2023, the Group established a new quality control department with the aim of enhancing quality management. This
department will take the lead in improving the Group’s quality
auditing function by conducting physical inspections at eachsite, and by thoroughly monitoring and managing operations toensure that quality assurance is being carried out using theproper processes. The department will also prepare importantmanagement points for quality assurance and communicate
them throughout the Group. By carrying out quality control inline with these key points at all sites, we will build a system that
ensures early resolution of quality issues and keeps the productsupply system healthy. By building a quality assurance and management system that enhances corporate value, leveraging
close cooperation between the Corporate Quality Assurance Division and Group sites worldwide, TS TECH will continue to be “A
company sincerely appreciated by all” for delivering safe andreliable products.

Corporate Development and Engineering Division
Intellectual Property Department General Manager* Patent Result Co., Ltd. objectively surveys the levels of stakeholder interest in the patents of different companies based on statistics relating to the use of
expedited examination processes for individual patents, the number of times rejection reasons are cited, and existence of any objections or appeals.

Yoshihisa Masubuchi
Corporate Administration Division
IT Department General Manager

Ensuring quality assurance through defectsource management

Akira Miyoshi

The IT Department collaborates with Group sites and departments worldwide to investigate optimal system specifications. We are working on updating old systems that hinder digital transformation efforts, automating operations, and digitizing businessprocesses including performing electronic approvals. Additionally, as part of work-stylereform, we are building a remote work environment, while maximizing the performance of the entire Group in terms of both online applications and infrastructure.
In recent years, information leaks and suspension of business operations due tocyberattacks and system failures have become significant risks for companies. Addressing this, we are providing IT security training for employees using email, eliminating
vulnerabilities in internal systems, and conducting external monitoring to detect unauthorized system access and suspicious online behavior. By working to strengthen information security Group-wide through activities such as these, we are protecting ourintellectual capital and building a solid business foundation that can maintain the trustof our stakeholders.

Trade management to promote a competitive supply system
We promote the local procurement of parts and materials at sites outside Japan as apriority strategy of the 15th Medium-Term Management Plan. At the same time, we also
work to stabilize and improve the efficiency of supply and procurement activities thatinvolve international trade.
In order to facilitate trade procedures and provide the flexibility to respond tochanges in the international situation, we have established a system for handling customs procedures internally. By meeting the trade security standards set by the Japanese government, we have obtained Authorized Economic Operator status for customs
procedures in Japan. This allows for more efficient customs clearance, including theomission of cargo inspections. In the event of any maritime transport delays, we canquickly obtain export permits for alternative shipping options. These capabilities give
the Group’s worldwide production network superior reliability and flexibility.
Moreover, when utilizing the Group’s trade network, we take into account the complex economic partnership agreements that exist between countries. By making fulluse of this knowledge, we are reducing customs costs and helping supply Group products at competitive prices.

Ryuto Kusumoto

Corporate Manufacturing Division
Manufacturing Planning Department
Foreign Trade Management Section Manager

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