AAA weekly
2020-12-21
Copyright FOURIN, Inc. 2024
Mitsubishi Motors Takes Local Procurement Strategy Through the Alliance and Suppliers
Mitsubishi Motors manufactures engines from the Kyoto plant and procures interior and exterior resin parts from a 100% subsidiary supplier, Suiryo Plastic. In 2018, the automaker also joined the APO, a joint purchasing organization, to achieve profitability and cost competitiveness. Also, Mitsubishi Motors plays a leading role in the alliance as a leader in the ASEAN and Oceania regions. The medium-term business plan, “Small but Beautiful,” announced in July 2020 also entails a course of action to focus management resources on ASEAN. It indicates that the automaker will further expand production in ASEAN. Along with this trend, the local procurement in the region is expected to increase. To fulfill the need, Mitsubishi Motors is strengthening the local supply chain with partners. For instance, Hiruta Kogyo and Asteer have established new production sites in Thailand for Mitsubishi Motors.
Procurement Policy and Strategies/Initiatives
| Procurement | Strategy/Initiative | Remarks |
|---|---|---|
| Overall Policy | Cost reduction | ・In October 2017, Mitsubishi Motors announced a three-year plan (Drive For Growth, until FY2019) to increase volumes, revenues, and profitability as well as optimize production cost. - Targeting an operating profit margin of 6% or more by the end of FY2019, up from 0.3% in FY2016. The plan combines a product renewal program with targeted market expansion and operating efficiency improvements. |
| Business continuity plan (BCP) | ・To reduce the risk of suspended manufacturing operations due to a largescale natural disaster, the company formulates BCPs in the supply chain and takes measures that include finding alternative production. - Asking its suppliers to register in the damage status confirmation system, so that in the event of a natural disaster, the damage status of each plant will be reported immediately. - As of September 2020, the automaker has created a special supplier map, grasping the status of damage and risk concerning not only tier 1 but also tier 2 and subsequent suppliers. | |
| Through the Alliance with Renault and Nissan | Joint purchase (APO) | ・In April 2018, Mitsubishi Motors, Renault and Nissan established the APO (Alliance Purchasing Organization), a joint purchasing organization. Expects to achieve cost competitiveness through the joint purchase method. - The APO seems to be contributing to cost reduction. |
| Utilizes each other’s bases | ・It seems that Renault, Nissan, and Mitsubishi Motors aim to utilize each other’s production sites. There is a possibility that the number of Nissan models produced at the Mitsubishi Motors' Indonesian plant will increase. In that case, local procurement is also expected to increase. | |
| Engines | Manufactures at the Kyoto plants | ・Mitsubishi Motors’ powertrains are manufactured at two locations, Kyoto Plant – Kyoto (Ukyo-ku, Kyoto) and Kyoto Plant – Shiga (Konan, Shiga). - Promotes to rationalize engine production (as of August 2020). |
| Procures engines from Nissan | ・In April 2020, it is reported that Nissan will supply petrol engines for Outlander. It will be the first Nissan engine adopted to a major Mitsubishi model, excluding mini vehicle models. | |
| Lithium Batteries | Procures from Lithium Energy Japan | ・Lithium Energy Japan supplied batteries for the 2019 Outlander PHEV model, which was launched in August 2018. The supplier also provide batteries for Mitsubishi i-MiEV. |
| Exterior Resin Parts & Interior Parts | Procures from Suiryo Plastic | ・Mitsubishi Motors procures in-house manufactured resin exterior/interior parts, such as instrument panels, bumpers, and door trims, from Suiryo Plastic (100% Mitsubishi Motors’ subsidiary). - Includes timing belt covers, engine covers, bumpers, pillar trims, headliners, instrument panels, quarter trims, and air conditioning parts. - Has been supplying battery covers for i-MiEV but will end the production within FY2020 due to the discontinuation of i-MiEV production. |
| At Mizushima Plant | Procures from nearby | ・As of April 2019, it seems that 91% of main parts are procured within a 20km radius of Mizushima Plant. - There is Wing Valley nearby, which holds many production sites of Mitsubishi Motors’ partner companies. |
| Makes the procurement system “in-site” | ・As of 2015, Mizushima Plant has invited 5 suppliers at its site (“in-site” production method). - This “in-site” system began through NMKV, a joint venture established with Nissan, as Mitsubishi Motors started a partnership with Nissan. - Regarding mini vehicle production, Mitsubishi Motors also received a list of recommended parts for on-site and in-site production/procurement from Nissan. | |
| Manufactures EV batteries for a new electric mini vehicle model in-house | ・Battery cases for the new electric mini vehicle model will be manufactured at Mizushima Plant. - In July 2020, Mitsubishi Motors announced that it would start capital investment in August 2020 for expansion of press, welding assembly, and painting equipment to prepare for the production. | |
| In ASEAN (through business partners) | Hiruta Kogyo in Thailand expands production | ・As of May 2019, Hiruta Kogyo started supplying parts for Mitsubishi Triton and Mirage in Thailand. - Has acquired land adjacent to the existing factory in Sriacha, Chonburi, and prepares for the capacity expansion. - Since Nissan Navara and Mitsubishi Triton are planning to sharing parts, the number of orders may significantly increase. In that case, the number of orders will be possibly about 400,000 units. |
| Asteer in Thailand expands production | ・Asteer will start supplying bodies and other products to the Mitsubishi Motors’ plant in Thailand from FY2022. - Includes pillars and frames inside of instrument panels. - In September 2020, it was reported that Asteer plans to establish the first manufacturing plant in Thailand in response to Mitsubishi Motors’ production expansion plan in ASEAN. Formerly, Mitsubishi Motors procured parts from a local manufacturer through Asteer. | |
| Others | Akebono Brake Industry | ・Akebono Brake supplies front disc calipers, brake pads, rear drum brakes, and brake linings for eK X Space and eK Space. ・In FY2019, about 4% of total sales were for Mitsubishi Motors. |
| Futaba Industrial | ・As of FY2019, the primary business partner of the Futaba’s Okazaki plant is Mitsubishi Motor’s Okazaki Plant, taking advantage of the geographical convenience. - About 60% of its products are for Okazaki Plant. |
In Japan, its major domestic bases are Okazaki Plant in Aichi and Mizushima Plant in Okayama. Since there are many suppliers around Mizushima Plant, Mitsubishi Motors takes advantage of its geographical convenience. The automaker started taking an “in-site” procurement/production method (lending some site space to suppliers so that parts can be manufactured at its own plant) as establishing a partnership with Nissan. As of 2015, Mizushima Plant has invited 5 suppliers to its production site. By utilizing this Nissan method, an automaker can expect reduction in transportation cost, in-process inventory, and the risk of damaging products during transportation. Mizushima Plant reportedly procures about 90% of the main parts from nearby, especially from Wing Valley, which is a Mitsubishi Motors' cooperating supplier group including Akebono Brake Industry and Hiruta Kogyo.