Lessons from seru production on manufacturing competitively in a high cost environment

Abstract High capital and labor costs, coupled with high rates of technological and competitive change, present challenges for manufacturers in developed countries, often spurring them to offshore production to low cost sources. However, the electronics industry provides an exception to this trend, where dynamic, high cost conditions have given rise to a new production system – seru – a cellular assembly approach. Seru evolved as an alternative to lean systems approaches, manifesting important differentiated system design choices that appear to offer promise for manufacturing in dynamic, high‐cost markets. This paper reports the results of in‐depth, longitudinal case studies of two electronics giants who have implemented seru. The case studies describe seru's fundamental extensions to, and departures from, lean production, agile production, and group technology‐based cellular manufacturing. We explain how Sony and Canon have applied seru to improve productivity, quality, and flexibility in ways that have enabled them to remain competitive. In addition, our findings elaborate the theory of swift, even flow, with implications for future research of trade‐offs related to production efficiency, responsiveness, and competitiveness in high‐cost, technologically dynamic markets.