Targeting a Strong Financial Structure
In 1995, while Canon posted just under ¥2.9 trillion in consolidated net sales, it had ¥840.0 billion in borrowings and an interest-bearing debt ratio of 33.6%. The company’s financial position made it difficult for it to sustain the kind of long-term investment in research and development that is required in the manufacturing industry.
Phase I of the Excellent Global Corporation Plan pivoted on building a strong financial structure. First changing the company’s mindset—from partial optimization to total optimization and from a focus on sales to profit—we initiated management reforms designed to address common issues concerning all of the company’s businesses, including production methods, development infrastructure and global logistics.
Becoming No. 1 in All Major Areas of Business
Under Phase II, we worked to bolster product strength thoroughly by initiating various reforms among our business divisions and affiliates worldwide with the goal of becoming No. 1 in the world in all our major areas of business. As a result, 2005 marked our sixth consecutive year of sales and profit growth. To deliver new value in an increasingly networked world, we have stepped up efforts to digitize our products. Compared with 1995, the year before we launched our management innovation activities, net sales have increased 1.8 times, net income has expanded 6.2 times, and ROE has jumped from 6.5% to 16.8%.
Change of Mindset
To achieve total optimization of Group management, we shifted from a focus on individual business divisions to a consolidated business performance evaluation system that encompasses subsidiaries and affiliated companies. As the pursuit of profit is essential to the sustained growth and development of a company, we implemented cash-flow management and switched our mindset from a sales orientation to a focus on profits.
Production Reform
We eliminated conveyor-belt assembly processes at all plants worldwide and introduced the cell production system, in which an individual worker performs multiple processes. Driven by the applied expertise of individual employees, including their workplace and process knowledge, this system has increased productivity dramatically. The cell production system also contributed to the introduction of supply chain management, allowing greater flexibility in high-mix low-volume production and changes in production volumes.
Development Innovations
By 2001, we had completed the introduction of 3D computer-aided design (CAD) systems throughout the company. Aiming for a “prototype-less” model with a substantially reduced number of physical prototypes, we bolstered our computer measurement, analysis and simulation technologies. As a result, we progressed to using computer simulations to create virtual prototypes and perform virtual trials, substantially accelerating product development times, reducing costs and raising quality and safety levels.
Development of Key Components and Devices
Supporting the high added value of its products, Canon develops a steady flow of proprietary key components and devices—such as the CMOS sensors and DIGIC image processors used in digital cameras, the Full-photolithography Inkjet Nozzle Engineering (FINE) units used in inkjet printers, and the iR controller used in digital multifunction devices. In the era of digital networking, such developments have proven a key driver of company growth.
