Thursday, October 05, 2006

Secrets From Japan

The Japenese, faced with the rising value of the Yen, have been investigating new ways to maintain profit. They have found three major problems hindering a return to profit.

These key problems were identified as:
  • too much variety
  • too much flexibility
  • too much customer satisfaction

They found that less choice is better than more, and some other very interesting ideas that challenge what is generally accepted as modern thinking.

If major Japanese companies are right, and consumers buy their cheaper but profitable products, Australian companies need to prepare to change fast.

Here is an example of what the Japanese have found and what they are doing about it.

  • Product Design. Reversing previous trends, it is not what you put into the product, but what can one take out of it. Simplicity cuts costs and saves time. Product design can account for as much as 80% of total production time. The new Honda Civic is an excellent example of how, by reducing little used features, previously developed parts, and American expertise, the current model is 20% cheaper in real terms than it was 2 years ago.
  • Product Range. By giving the customer less rather than more variety, a company can reduce stock levels, production runs and other wasteful tasks and give the customer lower prices. McDonalds are using these techniques to offer burgers cheaper than 5 years ago with huge increases in sales volumes.
  • Decision Making. Against all Japanese tradition of collective decision making, companies are equipping lone employees with access to high-tech information systems and authority to act, so that decisions are made quicker than ever before. This brings products and services to the market faster and cheaper.

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