how to engineer your own keiretsu
the keiretsu system can be a useful model for a company that wants to deepen its relationships with its suppliers in order to gain long term benefits in the west companies typically have relationships with suppliers that are distinct from the keiretsu system in that they take an arm s length approach however a few manufacturers in the west have engineered their own unique hybrid sourcing programs that borrow certain elements from the keiretsu system for example scania the swedish bus and truck maker has tried to deepen its loyalties to its manufacturers in order to improve the company s supply chains it has accomplished this by holding workshops for its suppliers on the scania production system which emphasizes continuous improvement and lean production scania has incorporated an additional element of keiretsu into its purchasing system suppliers identify with the hub company and the hub company works with them to improve their processes and make them more competitive although it doesn t hold shares in them ikea s approach to supplier relationships also resembles the structure of keiretsu the company works to build committed partnerships with its suppliers based on mutual advantage trusts its vendors with significant tasks and collaborates with its vendors in order to maximize efficiency companies interested in engineering their own form of a keiretsu should keep these general principles in mind 2 if you want to develop long term relationships with suppliers it s important that they are competitive today you can work together with them to help them achieve this and demonstrate your commitment to forming a lasting relationship by showing them that the benefits of cost reduction strategies will be shared 2there s no way you can improve a supplier s processes without first understanding them you should visit suppliers workplaces and instead of outsourcing all components establish joint ventures with your suppliers on key parts 2 you can build trust with your suppliers by communicating that the relationship is mutually beneficial the relationship will help them improve their operations and become more competitive 2 if you only emphasize explicit communication it can lead to mistrust if you only emphasize implicit communication it can result in misunderstanding 2 once you ve identified your portfolio of suppliers decide which ones are worth improving you might ask which ones have the greatest potential to be globally competitive and assign performance scores according to quality cost delivery people and development it s important to keep in mind that suppliers that demonstrate a willingness to learn and understand the root causes of mistakes are the most likely to improve 2 cultivate personal relationships between your company and the management and the employees at your suppliers meet your suppliers and find ways to collaborate with them perhaps this means shadowing your suppliers on the shop floor this kind of relationship can cultivate a willingness on the part of your vendors to make suggestions for problem solving 2 rather than switching suppliers if a supplier is underperforming give them opportunities to show how they could improve 2 your suppliers engineers should be involved in your development teams in addition to implementing process improvement activities in their factories in order to increase your competitiveness across the supply chain 2 example of keiretsumitsubishi is the driving force behind perhaps the largest and best known japanese horizontal keiretsu the bank of tokyo mitsubishi sits at the top of the keiretsu mitsubishi motors and mitsubishi trust and banking are also part of the core group followed by meiji yasuda life insurance company which provides insurance to all members together they aim to help each other distribute goods all over the world they may seek new markets for keiretsu companies help incorporate keiretsu companies in other nations and sign contracts with other companies around the globe to supply commodities used for the japanese industry as you might have already noticed many companies within this keiretsu have mitsubishi as part of their name 