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NKE and the power behind BBS

Interview - June 14, 2023

Staying true to its BBS concept, NKE Corporation produces high-performance factory devices.


What do you believe to be the core strengths or competencies of NKE that set you apart from your competitors?

It's challenging to express this in certain words, but as you saw, the hardware we use is not something that anyone else can imitate or copy. However, our core strength lies in the production process, not in the products themselves.

In other words, we can say that the core strength lies in the capacity or capability of each one of our employees. This capability includes creativity, a passion for monozukuri, attention to detail, and care for the production process. These invisible abilities contribute to our strength.

For example, our engineers have a passion to contribute to society and solve social problems using the technology they have. Looking at the manufacturing side, our employees really enjoy the monozukuri process and have a passion for paying detailed attention to it. For example, when they encounter challenges or problems during the monozukuri process, they are eager to find solutions on their own, and are persistent in doing so.

For example, if you receive a call from a customer at 5:00 PM on Friday, then maybe you don't want to take that call and you just want to switch it to auto response, but our employees are willing to take customer calls even after hours and prepare to address their issues. They are even willing to visit customers on weekends.

We are a manufacturer of factory automation devices and components, but as you can see in our factory, our production line is not automated. The engineers and the workers are working on their steps in the process and they have a passion for monozukuri. It’s as if they were conducting traditional craftsmanship, so they have a very strong passion and they have that kind of spirit for manufacturing. I think these are further strengths that are not visible.


You talked about the core strength of the production process and the capacity of your employees. I think it links very well to the slogan "BBS". I had an interesting conversation with one of your employees on the gemba floor. Even though each block is standardized, every finished system is unique. It's customized, and I think that's such an interesting business model and demonstration of that concept. Could you tell us a little more about your “BBS” concept?

BBS stands for Block Building System. It is a way to build complex systems by combining blocks with high accuracy in a short time. Naturally, this requires blocks, and the first and most important step in the BBS methodology is to develop good blocks. By identifying predictable, stable, and common basic patterns in a seemingly complex system and standardizing them into a reproducible form. We call the blocks that result from this process “standard units”. Based on that BBS concept, we developed standard units such as “Air Grippers”, “Cylinders”, “Conveyors”, and a wire saving system called “Uni-Line”.

The advantage of these standard units is, above all, their high degree of perfection. If standard units that demonstrate excellent and stable performance and are competitive in the market are created as new products, modules (including custom-made products based on standard units) and equipment built using these blocks will also inevitably be competitive due to their excellent and stable performance. With superior blocks, value innovation that lowers the cost and increases the value of equipment and modules becomes possible, and profitability across the entire range of standard product units, modules, and equipment is greatly improved, resulting in a highly profitable business.

The BBS approach of standardizing responses to each event as a logical, coherent, and reproducible pattern, rather than recognizing each event as a separate thing, is applicable not only to the specific field of automated equipment development, but also to a wide range of fields, including knowledge work, and improvement of operational processes and flows.


Japan is suffering from a labor shortage due to an aging, declining population. On one hand, it is true that it's hard to secure labor. On the other hand, the market for factory automation solutions is in great shape for a country like Japan. Could you tell us a little more about the impact of Japan’s aging population on your company, and what advantages or challenges you see to be had from the situation?

When we tried to find the value of “humanized automation”, we found that the value lies not only within the factory, but outside the factory in different areas like nursing or agriculture as well. We believe that we are able to utilize our know-how that has been accumulated for factory automation manufacturing. We use that know-how in different sectors and industries, and we believe that we are able to create new markets domestically.

”Humanized Automation” In order to give back human beings the time to spend on meaningful things in their lives, we must leave only meaningful tasks to human beings and let machines do what machines can do. This is the concept of Humanized Automation and the true value we are pursuing as the goal of automation.


Traditionally, automotive components have been a core market for you, but there is this desire to diversify and use these core technologies to enter new markets, like you said, in medical welfare, agriculture or food, for example. Are there any particular segments that you’re focusing on, and how will you adapt your solutions for these new fields?

Especially in the nursing sector, we have a lot of problems, and one of them is nursing for elderly people. The more our demography goes towards an aging society, the more we will need to take care of elderly people, and that's going to create a lot of problems that will give a lot of physical burdens to caregivers.

As we studied the nursing industry, we found that a lot of aged people don't like to be touched, and because of that, they feel a lot of stress and their body stiffens. That is a problem, especially for aged people and people suffering dementia.

I believe that there is an opportunity to automate the process for nursing so that people will feel more comfortable and have more humanized lives because of the automation, so we believe there is an opportunity.


Whilst you are trying to automate as many of your processes as possible, some work is still going to have to be done by people. How can we support those people in that work? I was hoping you could tell us more about Airsapo. Can you tell us a little more about how it differs from conventional back braces, and how it can help support the people who use it?

As you mentioned, all the process steps cannot be automated and we would like to provide support for those process steps. You may be aware of devices like power suits, but if you look at it carefully, you can find big motors on the clothes, and if you wear it you will lose the human touch. We don't want to pursue something that will be a mechanical part of a human, but we would like to develop something that humans can wear, like regular clothes that have a soft touch or flexibility, so that they can assist the physical mobility of those humans. That is the goal for this project.

We firstly pursued the actuator, which will be the core unit of this product, which is based on the concept of BBS, and then we developed the artificial muscle, so that is the first development for this product, and we are still halfway towards the final goal for this project.

You have three main pillars of your product line up, which are the chucks, the conveyors, and the electric products. As you mentioned earlier, there was a desire to expand and find a new pillar for growth, a new kind of business. I'm very curious about what your thoughts are in that regard. How are you going to use your core technology for new areas, and what kind of new areas are you exploring?

Actually, we don't have a specific idea for new areas at this moment. We have only 150 employees, so we know everyone's face and name. Each one of us works every day and comes up with a certain idea at some point, and then if that idea is good, we would like to pick up that idea and try to give form to it. That's our development process.

Of course, we receive requests from customers, and based on those requests, we do the new development, but the other way is to pick up the passion of the employees and give form to that passion.

That is the important point for our development. We still don't know what idea will come up from the employees, but we will be ready to give form to that idea quickly. I think that is one of the strengths we have.


You mentioned the strength of your company being this collaborative spirit, this frontier spirit, especially as it extends to your overseas activities. Even if you have the best designs, the best sourcing and the best manufacturing, it can be very challenging to operate in overseas environments if you don't understand the local needs. This is where collaboration can play a very important role for companies like yourselves. Can you tell us a little more about how this collaborative model works in your overseas activities, and if you've had any experience collaborating with overseas partners?

Our strength is the ability to plan or come up with new ideas or designs. These abilities are easily brought outside the office. When we entered China, we just brought one briefcase and went there to just introduce our ideas – the plans and designs - to them, and then we established the local supply chain there and started manufacturing there.

Once we started manufacturing, we started hearing the local voices and demands, and we incorporated them into our products and services. Then we brought them back to Japan and introduced those products to the Japanese market. That's the kind of cycle we created for China, and we would like to replicate that in other countries like Vietnam or Thailand.


You have a unique structure of having about 80% of products outsourced by suppliers and around 20% manufactured in house. I would imagine that for your China business, having this kind of model became very complicated during the lockdown when there was the zero covid policy. Can you speak to us a little bit more about the impact of these logistical challenges for your supply chain management?

We used to use the Chinese market to secure our supplies. However, because of the rise of the labor cost, we are seeing fewer merits to having China and using that market to source supplies. We are therefore shifting our idea to local supply, both in China and Japan. We have a supply chain in Japan, and locally, we have a supply chain in China, so we will shift our focus to ‘made in that market’, and that is also a good alternative way based on the BCP (Business Continuity Plan) concept, so we are now locally supplying ourselves.


You just mentioned trying to grow your network and adapting this model to some new markets. You mentioned Vietnam, for example. What next steps are you facing in that pursuit? Is it an issue of awareness, communication or branding in that market?

The challenge is how we can find the human resources who will be responsible for that local market, who will be willing to take up the challenges there. She will go to Thailand to be in charge of that market, so it's a matter of whether we are able to find human resources like her.

We have a basic direction for a particular market, but we never know what's there unless we actually go there. Finding a person who will be responsible for that particular market is going to be the key.


Often when we see SMEs like your company, when they go overseas, they’re following Nikkei based companies. Their clients are all Japanese companies that they partner with, but as they stay longer in that location, they start to supply the local companies. You've been in China over 10 years, and of course, you've expanded in Korea and Thailand, where you have offices. Could you tell us about how that phase of your business is going? Are you looking for clients beyond Nikkei based ones in those overseas markets?

In our case, we didn't follow any Nikkei companies, but we went out to China by ourselves, and that's because I felt a sense of fear when we saw manufacturing equipment made in the overseas market. It is just brought to the Japanese market as it is.

Conventionally, about 10 years ago when we wanted to establish a manufacturing line, we used to manufacture the components and the equipment in Japan and we tested them in Japan. Then we brought them to the overseas market, but I started seeing that they wanted to produce those devices locally and consume them locally. Due to that, we decided to go out to the overseas market without following any Nikkei company, and we did so carrying just one briefcase.


We're very curious to hear your thoughts in terms of your overseas development. You have partnerships with companies all over the world. How do you see your international development playing out, and are there any particular countries like India, for example, that you consider the focus of your expansion?

We would like to go to the country where we want to go because the overseas business is not the core of our overall business, so we just want to choose wherever we want to go. I just look forward to expanding the network overseas.

As for China, thanks to our efforts, we were able to foster a very good business manager locally, and he will be responsible for the further growth of the local business there.

I think that's a very good business model and I would like to implement that model in other places around the world. I would like the business to grow locally, not just sticking to our existing business, and I'm looking forward to further growth for that kind of local business.


Your company was founded in 1968, so if we came back in five years’ time to conduct this interview all over again, you would be celebrating your 60th anniversary. In five years’ time, is there any personal goal or ambition that you, as the president, would like to have achieved?

What I would like to achieve by then is not having many big businesses, but I would like to have a lot of small units in this company, and I would like to grow employees who can share the perspective of the management. I would like to place these people across these small units, and we would like to grow NKE as a whole, together with these employees.