Operations Strategy

Many Japanese companies are confident that they cannot lose to US or European competitors on front-line operations, even if they fall short on strategy. Indeed, they have maintained their competitiveness based on front-line capability. However, in recent years, there have been reports of mistakes and accidents heretofore unimaginable. Although initially met with surprise, such incidents have gradually become common. Meanwhile, European and US companies have eagerly studied outstanding Japanese operational practices and caught up. They have also skillfully incorporated IT and are achieving even greater efficiency and product and service improvement. Moreover, other countries, armed with cheap labor and total inspection practices and typified by China, are demonstrating a momentum that outstrips Japanese companies in terms of both costs and quality.

As the reason for the existence of second-tier companies wanes in today’s mature market, the heightening importance of having a unique strategy is unquestionable. However, no matter how outstanding one’s strategy, it is useless unless it can be steadily implemented. Now is the very time to strengthen operations and bolster company structure. Companies tend to think of strengthening operations as improving marketing and sales, production, or other functions. Indeed, in the past it was possible to raise overall competitiveness in this way, because the business model and strategy fought battles of the same nature. However, when a company has to compete on its business model or its strategy, the competition itself must change. A business model is a successive process of procuring resources, adding value and then providing customers with goods and services to secure profit. Thus, the key to success in strengthening operations to realize a business model is the linkage between functions: the operational chain.

We divide the operational chain into five modules: 1. CRM (customer relationship management), which covers customer contact; 2. SCM (supply chain management), which covers the process from the receipt of raw materials to manufacturing/processing and product delivery; 3. Procurement operations that secure the most appropriate resources at low cost; 4. R&D operations that create new value; and 5. Management and staff operations that support overall corporate activity. We help clients increase their overall competitive capability by reinforcing each of these operational chain modules.

A know-how sharing system that transfers and strengthens corporate DNA at an automobile manufacturer

Automobile manufacturer A is known for operational excellence and implementing company vision and methods in daily operations. Its philosophy of contributing to society by pursuing improved manufacturing has penetrated the front line, resulting in original management methods and front-line know-how. However, the source of A’s competitive strength lies elsewhere, in its deeply engrained corporate DNA that allows continuous front-line reform and quick response to environmental change, and employees to share convictions and values. However, globalization made A realize the limits of using traditional methods to transfer that DNA to people from different cultural and linguistic backgrounds. It thus began to transform its DNA and know-how into explicit knowledge. The entire company participated.

Roland Berger helped make explicit the tacit DNA and know-how of an entire CRM process - from overseas new car sales to after service - something considered particularly difficult, and to create a mechanism for communicating and sharing it.

We began this huge project involving dealers worldwide by tackling the issue of systematizing the DNA of corporate predecessors who had boldly opened new overseas markets and constantly created know-how. We systematically organized, summarized and put into statutory form A’s theretofore tacitly communicated management philosophy, values, methods and work-related know-how, This was then organized as a CRM goal and inserted it into the corporate vision and mission at dealers globally. Then, by linking the know-how cultivated in each country to the activities necessary to achieve the vision and mission, we completed the system framework.

Even DNA translated into explicit knowledge will lose its substance unless the activities for communicating it are systematized. To globally share the wisdom and know-how gained daily on the front line in every country requires a system to capture, crystallize and spread that information. We based the new matrix-like system on two-way and horizontal communication among dealers rather than one-way communication from headquarters. We also incorporated several mechanisms to encourage the active expansion of activities, including several motivational strategies.

A is now rolling out the system for communicating its DNA and knowledge globally. The CRM vision and mission, and DNA that has been systemized and made into explicit knowledge, have been gathered into a brochure distributed worldwide.

* Building of a mechanism for systemizing and entrenching CRM overseas for a major Japanese automobile manufacturer
- Globalization of R&D for a leading Japanese car manufacturer
- Cost cutting at a global car manufacturer through the use of standardized parts
- Improved efficiency and increased sophistication (e-engineering) in design and development for a major Japanese automobile manufacturer through the use of IT
- Benchmarking of R&D management at other companies for a leading Japanese automotive parts manufacturer
- Reform of the sales model of a major Japanese consumer goods manufacturer
- Restructuring of pension-related operations for a major pharmaceuticals manufacturer
- Restructuring of commercial and commodity distribution for a leading beverage maker
- Reform of companywide operations for a leading petroleum company
- Building of SCM for a leading domestic electronics maker
- Building of SCM for a major domestic parts manufacturer
- Restructuring of operations related to toll manufacturing for a major food manufacturer

Ken Mori
Managing Partner (Japan)
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Hisaji Yoneda
Partner
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Satoshi Nagashima
Partner
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Ryuji Ono
Partner
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