It is often said that the worldwide economic recession has made worldwide consumers smart, who have become severe on price, prefer valued brand and switch channels of purchasing products and services as appropriate.
In a similar manner, the Japan earthquake and tsunami disaster that occurred on March 11, 2011 is assumed to change the consumers in Japan. For this reason, Boston Consulting Group (BDG) in Japan executed a survey to approximately 3,000 consumers in Japan 1 month after the earthquake and tsunami disaster.
Their conclusion was that the companies need to know “how consumers in Japan are to change in the future” rather than “when consumers will start to proactively spend their money”.
In this article, the author would like to introduce the essence of the survey and some possible insights at the end.
1. How was the survey planned and executed?
The outline of the survey by BCG in Japan is as below.
Period: April 8, 2011 (Fri) – April 10, 2011(Sun)
Methodology: online survey
Number of respondents: 3,091 in total
Information about the respondents:
Region: Toyoku (Akita/Yamagata):103, Kanto (excluding Ibaragi):2,060, Midland/Kinki:618, Other Western Japan: 310
Age/Gender: male and female of 20 – 69 years old, same constituent as that of population in Japan
1) Consumers are becoming smart in the long-term
(1) Background to Japanese consumers becoming smart is long-lasting stress
The background of “consumers becoming even much smarter” is the stress from the disaster which can be seen nationwide, attributing to “anxiety to the future”. It is possible that the stress proliferates for a long time because 60% of the respondents said that the stress will not eliminate/will remain for a long time. In the case of Kanto (eastern Japan), much of the stress attributes to “anxiety of radiation”, “fear from the disaster” and “anxiety of black out”.
(2) 6 consumer trends making consumers smart
6 consumer trends are revealed from the survey, which are “economy and saving”, “staying at home”, “risk diversification/evasion”, “healing”, “energy-saving” and “safe/security”. The first two “economy and saving”and “staying at home” are the short-term trend.
As in one of the previous article Impact of “Jishuku” (Self-Restraint) in the Japan Disaster Aftermath many people in Japan has been restraining from spending their money and was evident from the survey result as well; 40% of Kanto consumers replied that “consumer spending should be restrained” and “actually restraining from spending”. This trend is prominent among people above 60 years old (i.e. with relatively large disposable income); 50% of them answered that they are to cut spending on travelling/trip. Indeed, spending on travelling, entertainment and eating out has been cut when online shopping has been decreasing a little.
In addition, approximately 50% of Kanto respondents answered that they now spend more time at home. This trend is evident among females; 60% of them answered so. From the survey results, people spending their time at home enjoy their hobby, watching TV, reading and online shopping.
The remaining 4 trends “risk diversification/evasion”, “healing”, “energy-saving” and “safe/security” are regarded to be of long-term trend; 50-60% of respondents answered so. Regarding “energy-saving” already over 90% of Kanto residents and over 80% nationwide have been saving energy in some way or other and majority of them are to continue saving energy in the future. Regarding “safety/security”, approximately 60% answered that now they value food safety than they used to and more than 50% do not intend to change their stance at least for a while after the radiation/contamination issue is solved.
2) Social media (twitter, YouTube) is gaining more popularity especially among people in 50s and 60s
Twitter broke out in 2010 mostly among early adaptors of younger generation. And with the Japan disaster, Japanese people on twitter increased from 5.6 million to 7.5 million. This attributes to the fact that people online realized anew that the Internet is a valuable infrastructure, and that the Japanese government recommended public sectors to leverage social media.
In fact, 10% of the respondents answered that “they started using twitter” or “they would like to start using twitter”. This trend is conspicuous among people in 50s and 60s; 13% of them answered so. Similar trend can be seen for video such as YouTube.
3) More consumers have more social mindset
30% of the respondents answered that “they love their country more than they used to” when only 7% answered that “the hate their country than they used to”. 32% answered that they are determined to proactively donate and 16% answered that they will get involved in volunteer activities. In addition, 80% answered that they would like to help Tohoku (the hard-hit region) by proactively purchasing Tohoku products and services.
3. The author’s final thoughts
Although one of the consumer trends is spending less, the change in Japanese consumers can be a good opportunity for companies to exploit new market and create a new business model.
In fact, there have been some products and services that started to draw attention from consumers such as car sharing, cloud services and renting a house instead of owning a house because consumers realized “risk of owning something” from the disaster. Also, more people are now willing to pay for products and services of power generation and energy saving.
Online shopping has been one of the industries that were not negatively impacted by the worldwide recession and it is possible that this industry plus social media can be a source of a new business model as well. At least companies need to review and change their marketing mix considering the trend of increasing use of the Internet and social media.
Talking about marketing, with more consumers with social minds, it is possible that it is more effective to deliver the stance and philosophy of the company and safety/security of the products and services rather than functions of the products. Moreover, even though social marketing, very often collaborating with NPO and NGO, has been unpopular in Japan, with rise in social minds, social marketing may start to come in and spread also in Japan.
Thus, the disaster can trigger a positive change, an opportunity for companies to gain competitiveness, by being creative and innovative.
References:-
Ohtani, Naoki and Saito, Naoto from Boston Consulting Group in Japan (April 28, 2011), The Japan Disaster is to Change Japanese Companies – Do Not Miss the 3 New Trends (in Japanese)
http://business.nikkeibp.co.jp/article/topics/20110426/219657/
Resources:-
The Japan disaster is changing consumers in Japan in 3 ways; making them smarter, making them leverage social media, and making them with more social mindset. By understanding such changes in consumers, it is possible for companies to create new market and develop new business model by being creative and innovative, thus gaining competitiveness.
2011年4月30日土曜日
2011年4月29日金曜日
The Japan Disaster Cuts Revenue of Japanese Companies
Osaka - Friday, April 29, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that the Japan disaster of the earthquake and tsunami is negatively affecting revenue of Japanese listed companies. Consolidated net profit for January – March 2011 was minus 32% from those of 2010. This is the reduction in revenue/profit when their revenue/profit has been improving consecutively for the last 6 quarters.
The main reasons include the extraordinary loss attributing to the damage to production equipment and the profit cut due to decrease in revenue.
As a result, the loss attributing to the damages of listed companies totaled approximately 1 trillion yen as of April 28. This clearly indicates that the Japanese companies had overcome the worldwide economic recession (Lehman's fall) and their profitability had been recovering but their management environment is now deteriorating to negatively affecting their profitability.
1. How did Nikkei come to the conclusion?
Nikkei collected financial data of 544 listed companies (excluding financial and new companies) whose financial announcement including revision of the previous estimation for January – March 2011 has been made by April 28 and calculated consolidated net profit of the 544 companies.
Nikkei also collected financial data of approximately 1000 listed companies whose financial announcement including revision of the previous estimation has been made for February and/or March 2011 and calculated their extraordinary loss.
2. What is the conclusion?
January – March 2011 was reduction in profitability. However, with accumulative profit of April – December 2010, their revenue and profit increased from those of previous year for fiscal year ending March 2011.
Financial performance of the Japanese companies has been recovering due to demand increase of emerging countries since they had overcome the worldwide recession.
However, for January – March 2011, the Japan disaster from earthquake and tsunami that occurred on March 11 negatively impacted their financial performance. This is why companies such as Seiko Epson and ANA ended up being in red for January – March 2011.
With calculation of the extraordinary loss from the disaster and other negative impact from the disaster across the industry, the total loss from the disaster of all companies is estimated to teach more than 1 trillion yen.
3. How the Japan Disaster affected the financial performance of Japanese Companies?
According to the calculation by Nikkei, the extraordinary loss totaled approximately 600 billion yen. This is more than that of the Kobe earthquake in 1995, which was approximately 400 billion yen.
Major Companies with Loss from the Disaster over 10 Billion Yen (in billion yen)
(Source: Nikkei, translated by the author)
Industry / Company Name / Loss / Main Reasons
Electronics & Machinery / Hitachi / 50.0 / Damaged power generation equipment plant
Electronics & Machinery / Fujitsu / 11.6 / Damaged factories, recorded loss of fixed cost due to operation halt
Electronics & Machinery / IHI / 10.5 / Eliminating production equipment, recovery cost
Iron & Steel / Sumitomo Metal Industries / 62.0 Damaged Kashima plant
Iron & Steel / JFE / 28.3 / Tsunami directly hit factory in Sendai
Iron & Steel / Nippon Steel / 23.7 / Kamaishi plant in Iwate flooded by tsunami
Oil & Chemical / JX Holdings / 126.0 / Damaged oil factory in Sendai and Miyagi
Oil & Chemical / Shin-Etsu Chemical / 21.0 / Damaged Kashima plant that produces vinyl chloride
Telecommunication & Transportation / NTT / 110.0 / Damaged power poles, optical cables, base station of mobile phones
Telecommunication & Transportation / JR East / 58.7 / Damage of railroads and bridges of Tohoku Shinkansen Lines
Telecommunication & Transportation / KDDI / 17.5 / Damaged base stations of mobile phones, loss from eliminating optical cables
Retailer / AEON / 30.0 / 200 damaged supermarkets
Retailer / Seven & i Holdings / 26.0 / Damaged supermarkets in North East Japan
* Loss of some companies excludes those of insurance
The extraordinary loss of the top 4 iron and steel companies totaled 114 billion yen. The main loss is of Sumitomo Metal Industry which is more than 60 billion yen. Another is of 23.7 billion yen of Nippon Steel that made financial announcement on April 28, with half of the extraordinary loss of Kamaishi plant in Iwate flooded by tsunami.
The impact of the disaster is not limited to extraordinary losses. There are some cases in which operating profit was negatively impacted by the disaster such as of Hitachi and Canon. The loss from the disaster excluding the extraordinary loss totals approximately 400 billion yen.
The loss from the disaster is to negatively impact the revenue for April – June 2011 of many companies, especially that of automobiles. It is estimated that the loss for retailers for fiscal year ending February 2012 is to total 80 billion yen.
Some experts say that the revenue across industries would start to recover from October 2011 benefitting from increased demand attributing to recovery from the disaster; however, many company executives are extremely anxious of the future.
Resources:-
Nikkei, Japan’s leading newspaper specialized in business and economy, estimated that although financial performance of Japanese companies has been recovering lately, the loss of Japanese companies across the industry from the Japan disaster (earthquake and tsunami) is to total more than 1 trillion yen.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that the Japan disaster of the earthquake and tsunami is negatively affecting revenue of Japanese listed companies. Consolidated net profit for January – March 2011 was minus 32% from those of 2010. This is the reduction in revenue/profit when their revenue/profit has been improving consecutively for the last 6 quarters.
The main reasons include the extraordinary loss attributing to the damage to production equipment and the profit cut due to decrease in revenue.
As a result, the loss attributing to the damages of listed companies totaled approximately 1 trillion yen as of April 28. This clearly indicates that the Japanese companies had overcome the worldwide economic recession (Lehman's fall) and their profitability had been recovering but their management environment is now deteriorating to negatively affecting their profitability.
1. How did Nikkei come to the conclusion?
Nikkei collected financial data of 544 listed companies (excluding financial and new companies) whose financial announcement including revision of the previous estimation for January – March 2011 has been made by April 28 and calculated consolidated net profit of the 544 companies.
Nikkei also collected financial data of approximately 1000 listed companies whose financial announcement including revision of the previous estimation has been made for February and/or March 2011 and calculated their extraordinary loss.
2. What is the conclusion?
January – March 2011 was reduction in profitability. However, with accumulative profit of April – December 2010, their revenue and profit increased from those of previous year for fiscal year ending March 2011.
Financial performance of the Japanese companies has been recovering due to demand increase of emerging countries since they had overcome the worldwide recession.
However, for January – March 2011, the Japan disaster from earthquake and tsunami that occurred on March 11 negatively impacted their financial performance. This is why companies such as Seiko Epson and ANA ended up being in red for January – March 2011.
With calculation of the extraordinary loss from the disaster and other negative impact from the disaster across the industry, the total loss from the disaster of all companies is estimated to teach more than 1 trillion yen.
3. How the Japan Disaster affected the financial performance of Japanese Companies?
According to the calculation by Nikkei, the extraordinary loss totaled approximately 600 billion yen. This is more than that of the Kobe earthquake in 1995, which was approximately 400 billion yen.
Major Companies with Loss from the Disaster over 10 Billion Yen (in billion yen)
(Source: Nikkei, translated by the author)
Industry / Company Name / Loss / Main Reasons
Electronics & Machinery / Hitachi / 50.0 / Damaged power generation equipment plant
Electronics & Machinery / Fujitsu / 11.6 / Damaged factories, recorded loss of fixed cost due to operation halt
Electronics & Machinery / IHI / 10.5 / Eliminating production equipment, recovery cost
Iron & Steel / Sumitomo Metal Industries / 62.0 Damaged Kashima plant
Iron & Steel / JFE / 28.3 / Tsunami directly hit factory in Sendai
Iron & Steel / Nippon Steel / 23.7 / Kamaishi plant in Iwate flooded by tsunami
Oil & Chemical / JX Holdings / 126.0 / Damaged oil factory in Sendai and Miyagi
Oil & Chemical / Shin-Etsu Chemical / 21.0 / Damaged Kashima plant that produces vinyl chloride
Telecommunication & Transportation / NTT / 110.0 / Damaged power poles, optical cables, base station of mobile phones
Telecommunication & Transportation / JR East / 58.7 / Damage of railroads and bridges of Tohoku Shinkansen Lines
Telecommunication & Transportation / KDDI / 17.5 / Damaged base stations of mobile phones, loss from eliminating optical cables
Retailer / AEON / 30.0 / 200 damaged supermarkets
Retailer / Seven & i Holdings / 26.0 / Damaged supermarkets in North East Japan
* Loss of some companies excludes those of insurance
The extraordinary loss of the top 4 iron and steel companies totaled 114 billion yen. The main loss is of Sumitomo Metal Industry which is more than 60 billion yen. Another is of 23.7 billion yen of Nippon Steel that made financial announcement on April 28, with half of the extraordinary loss of Kamaishi plant in Iwate flooded by tsunami.
The impact of the disaster is not limited to extraordinary losses. There are some cases in which operating profit was negatively impacted by the disaster such as of Hitachi and Canon. The loss from the disaster excluding the extraordinary loss totals approximately 400 billion yen.
The loss from the disaster is to negatively impact the revenue for April – June 2011 of many companies, especially that of automobiles. It is estimated that the loss for retailers for fiscal year ending February 2012 is to total 80 billion yen.
Some experts say that the revenue across industries would start to recover from October 2011 benefitting from increased demand attributing to recovery from the disaster; however, many company executives are extremely anxious of the future.
Resources:-
Nikkei, Japan’s leading newspaper specialized in business and economy, estimated that although financial performance of Japanese companies has been recovering lately, the loss of Japanese companies across the industry from the Japan disaster (earthquake and tsunami) is to total more than 1 trillion yen.
2011年4月18日月曜日
Global Components Shortage - Time for Companies to Become Competitive
As in the previous article 40 Trillion Yen Loss from Broken Global Supply Network – the Japan Disaster as much as 40 trillion yen loss is estimated to occur due to broken global supply chain of critical components of automotive and electronics, attributing to the Japan disaster and its aftermath. Negative effects on business and economy from the broken links have been one of the hottest topics about the disaster, both English and Japanese sources, such as the fact that Toyota has been halting operation in its plants in Japan and cascading that it may affect operation in their dealers in the U.S.
On the other hand, there was an online Japanese article that insists that this critical situation of shortage of electronics components can be converted to an opportunity to strengthen the nature of companies to become competitive.
The author would like to first briefly explain why the broken global link occurred then introduce the essence of the article published on April 14, written by a Japanese management consultant, Kishira, Yuji.
1. What is the reason for severe shortage of critical electronics components due to broken global supply chain?
According to Nikkei, Japan’s leading newspaper specialized in business and economy reported on 9th April, it is ironically the management innovation of Japanese electronics components suppliers.
With “kaizen” spirit, many of the Japanese components suppliers, although they might be small in size, radically improved productivity while boosting quality to become extremely competitive globally. Such companies became (almost) “the only one” supplier in their respective business domain, with worldwide market share of 70% or more in some cases. Also such companies integrated their plants in pursuit of efficiency and productivity to plants in Tohoku (the hard hit region from the disaster).
And, with the disaster that made such plants to operate for weeks and/or broke physical distribution network because roads are piled with wreckage and requires clearance etc., the global supply chain of critical electronics components collapsed, affective automotives and high-tech industries in particular.
As Kishira points out, finished products cannot be made even if one single component out of hundreds and thousands of components lacks. Thus, worldwide finished product makers and trading companies supporting them are making upmost efforts to assure components, when finished makers had been minimizing inventory of components with long year cost reduction and just-in-time efforts and thus have no additional inventories.
2. How can this critical situation of component shortage be converted into an opportunity to become competitive?
1) Check inventory of finished products recorded in financial statement
Kishira agrees that inventory of components are likely to be drying up but insists that inventory of finished products needs to be checked and if it is equivalent to 2 months supply to the market it means in average supply of 2 months is secured.
In addition, there should be inventories of finished products in whole sellers and retailers, meaning that it is quite possible that there are more inventories of finished products than recorded in financial statement.
This means that although it is of extreme view, while the inventories of finished products are available, it is possible that the actual loss turns out to be smaller even if the production stops. And, if inventories are cleared out without drop in sales during period, it is possible that the profitability of the company improves drastically.
2) Focus resources (including components) only on selling well products from end-to-end total optimization perspective
Of course there can be many types of inventories, such as those of selling well products with very little inventories from those of slow moving products with too much inventory because few consumers buy. Products with much inventory will not be produced, and this means components of such products will become overabundant.
Although finished products are different, there are many cases in which same components are used. If that would be the case, the overabundant components can be used to product selling well products.
This approach is of utilizing components exclusively to selling well products with scarce inventories, meaning providing only products that consumers buy. This would also mean gradual decrease in inventory of slow moving products. This really is about focusing resources on what the market really needs.
With 2 months inventory, the products made from how will in average reach market 2 months from now. When critical components are insufficient finished product makers cannot afford to produce products that “might” be necessary in 2 months time. Many of production touch time (time actually required to manufacture products) are constituted by processes in (ten) minutes. It is not necessarily required to have 2 months inventory if products can be manufactured in such a time.
The minimum inventory required is total of manufacturing time, lead time to restock including transportation time and estimated maximum number of products to be sold at the peak. Production planning can be made and implemented with minimum inventory plus trend in demand.
This approach requires sharing such information with component suppliers as well, to maximize efficiency of limited capacity to make and provide finished products to market from end-to-end (component suppliers to retailers) total optimization perspective.
If this approach is taken appropriately it would mean optimization of constituents of finished product inventory, leading consequently to improvement in profitability.
3) Make the operation of new approach permanent
Many companies may well be executing operation mentioned above to some degree and it is in crisis that many companies come up with great discovery and implement thoroughly operation of new approach.
However, many companies go back to their old operation when the crisis passes by. That is what should be avoided. Companies need to embed the new productive approach in everyday operation to make it permanent. This would lead to sustainable growth of the company.
If there is a few months inventory recorded in financial statement, regard that few months as transition period to switching to the operation of the new approach and establish a system to make that operation sustainable. Then the company will be able to transform to a productive operation and process system with minimum inventory of optimum constituents, a requirement for high performing and sustainable company.
3. The author’s final thoughts
What Kishira says reminds the author of the objective and concept of Change Management based on the book “Leading Change” by Professor John P. Kotter of Harvard.
This is of 8 steps in managing change, change in processes, systems, and how people do everyday business. This requires cultural change, as mentioned in step 8, in which the new way of doing everyday business is “embedded” in the organization. In many cases, such change management starts with some kind of “trigger” that creates sense of urgency as mentioned in step 1. Sense of urgency usually comes from some kind of crisis.
To the author, what Kishira want to say is to take this opportunity to make and manage change to make the company competitive, and that is what the author would like to advocate, taking this opportunity.
This is to start with creating sense of sense of urgency under the current crisis (shortage of critical components attributing to the broken global supply chain), to change processes, systems, operation and how companies engage in everyday business. And the companies need to make sure to complete until the last step so that the operation with the new approach is becomes a part of their DNA and they would not go back to old way of doing business/operation.
References:-
Kishira, Yuji (April 14, 2011) Electronics Component Shortage is Serious – But No Need to Worry. Now is the Time for Companies to Become Competitive. This is Why
http://diamond.jp/articles/-/11893
On the other hand, there was an online Japanese article that insists that this critical situation of shortage of electronics components can be converted to an opportunity to strengthen the nature of companies to become competitive.
The author would like to first briefly explain why the broken global link occurred then introduce the essence of the article published on April 14, written by a Japanese management consultant, Kishira, Yuji.
1. What is the reason for severe shortage of critical electronics components due to broken global supply chain?
According to Nikkei, Japan’s leading newspaper specialized in business and economy reported on 9th April, it is ironically the management innovation of Japanese electronics components suppliers.
With “kaizen” spirit, many of the Japanese components suppliers, although they might be small in size, radically improved productivity while boosting quality to become extremely competitive globally. Such companies became (almost) “the only one” supplier in their respective business domain, with worldwide market share of 70% or more in some cases. Also such companies integrated their plants in pursuit of efficiency and productivity to plants in Tohoku (the hard hit region from the disaster).
And, with the disaster that made such plants to operate for weeks and/or broke physical distribution network because roads are piled with wreckage and requires clearance etc., the global supply chain of critical electronics components collapsed, affective automotives and high-tech industries in particular.
As Kishira points out, finished products cannot be made even if one single component out of hundreds and thousands of components lacks. Thus, worldwide finished product makers and trading companies supporting them are making upmost efforts to assure components, when finished makers had been minimizing inventory of components with long year cost reduction and just-in-time efforts and thus have no additional inventories.
2. How can this critical situation of component shortage be converted into an opportunity to become competitive?
1) Check inventory of finished products recorded in financial statement
Kishira agrees that inventory of components are likely to be drying up but insists that inventory of finished products needs to be checked and if it is equivalent to 2 months supply to the market it means in average supply of 2 months is secured.
In addition, there should be inventories of finished products in whole sellers and retailers, meaning that it is quite possible that there are more inventories of finished products than recorded in financial statement.
This means that although it is of extreme view, while the inventories of finished products are available, it is possible that the actual loss turns out to be smaller even if the production stops. And, if inventories are cleared out without drop in sales during period, it is possible that the profitability of the company improves drastically.
2) Focus resources (including components) only on selling well products from end-to-end total optimization perspective
Of course there can be many types of inventories, such as those of selling well products with very little inventories from those of slow moving products with too much inventory because few consumers buy. Products with much inventory will not be produced, and this means components of such products will become overabundant.
Although finished products are different, there are many cases in which same components are used. If that would be the case, the overabundant components can be used to product selling well products.
This approach is of utilizing components exclusively to selling well products with scarce inventories, meaning providing only products that consumers buy. This would also mean gradual decrease in inventory of slow moving products. This really is about focusing resources on what the market really needs.
With 2 months inventory, the products made from how will in average reach market 2 months from now. When critical components are insufficient finished product makers cannot afford to produce products that “might” be necessary in 2 months time. Many of production touch time (time actually required to manufacture products) are constituted by processes in (ten) minutes. It is not necessarily required to have 2 months inventory if products can be manufactured in such a time.
The minimum inventory required is total of manufacturing time, lead time to restock including transportation time and estimated maximum number of products to be sold at the peak. Production planning can be made and implemented with minimum inventory plus trend in demand.
This approach requires sharing such information with component suppliers as well, to maximize efficiency of limited capacity to make and provide finished products to market from end-to-end (component suppliers to retailers) total optimization perspective.
If this approach is taken appropriately it would mean optimization of constituents of finished product inventory, leading consequently to improvement in profitability.
3) Make the operation of new approach permanent
Many companies may well be executing operation mentioned above to some degree and it is in crisis that many companies come up with great discovery and implement thoroughly operation of new approach.
However, many companies go back to their old operation when the crisis passes by. That is what should be avoided. Companies need to embed the new productive approach in everyday operation to make it permanent. This would lead to sustainable growth of the company.
If there is a few months inventory recorded in financial statement, regard that few months as transition period to switching to the operation of the new approach and establish a system to make that operation sustainable. Then the company will be able to transform to a productive operation and process system with minimum inventory of optimum constituents, a requirement for high performing and sustainable company.
3. The author’s final thoughts
What Kishira says reminds the author of the objective and concept of Change Management based on the book “Leading Change” by Professor John P. Kotter of Harvard.
This is of 8 steps in managing change, change in processes, systems, and how people do everyday business. This requires cultural change, as mentioned in step 8, in which the new way of doing everyday business is “embedded” in the organization. In many cases, such change management starts with some kind of “trigger” that creates sense of urgency as mentioned in step 1. Sense of urgency usually comes from some kind of crisis.
To the author, what Kishira want to say is to take this opportunity to make and manage change to make the company competitive, and that is what the author would like to advocate, taking this opportunity.
This is to start with creating sense of sense of urgency under the current crisis (shortage of critical components attributing to the broken global supply chain), to change processes, systems, operation and how companies engage in everyday business. And the companies need to make sure to complete until the last step so that the operation with the new approach is becomes a part of their DNA and they would not go back to old way of doing business/operation.
References:-
Kishira, Yuji (April 14, 2011) Electronics Component Shortage is Serious – But No Need to Worry. Now is the Time for Companies to Become Competitive. This is Why
http://diamond.jp/articles/-/11893
2011年4月12日火曜日
40 Trillion Yen Loss from Broken Global Supply Network - the Japan Disaster
Osaka - Tuesday, April 12, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy reported on April 9 that the Japanese government estimated the loss from the broken link of global supply network attributing to the Japan disaster to reach 40 trillion yen worldwide.
1. How did the Japanese government estimate the loss?
METI (Ministry of Economy, Trade and Industry) initiated to urgently investigate the negative effect of stagnation of production of components and materials of growth industries by performing survey regarding the worldwide production loss and possibility of the damage to Japan such as switching suppliers from Japan to other countries in the end of March.
The government estimated the loss based on the assumption that production of semiconductor related components are halted from the middle of March to the end of April. And the conclusion is that production and services equivalent to in total approximately 40 trillion yen will be negatively affected worldwide.
2. What are the examples of such losses?
1) Microcomputer
This is inevitable for controlling driving of cars. If the plants and other sites of the leader of this component production and supply based in Miyagi prefecture called Renesas Electronics should stop operating for 1-1/2 months it is possible that it leads to approximately 6.5 trillion yen loss of worldwide automobile production. It also could mean loss of flat panel TV production loss of 400 billion yen.
2) Silicon Wafer
This is the main material for semiconductors. The worldwide leader is Shin-Etsu Chemical and if its affiliate plant in Fukushima prefecture has damaged and its recovery is still unknown. If the production of the plant should stop for 1-1/2 months it is estimated that it leads to approximately 1/5 trillion yen loss in worldwide semiconductor production. It would also lead to decrease in sales of services of telecommunication, the Internet and broadcasting totaling approximately 30 trillion yen.
3) Smartphone
Japan has been enjoying market share of approximately 70% for LCD panel for smart phones but it is possible that sufficient production cannot be done and the conclusion from the hearing is that worldwide smart phone manufacturers may switch to LCD panel makers in other countries, meaning decrease in the market share that Japan has been enjoying.
Nikkei, Japan’s leading newspaper specialized in business and economy reported on April 9 that the Japanese government estimated the loss from the broken link of global supply network attributing to the Japan disaster to reach 40 trillion yen worldwide.
1. How did the Japanese government estimate the loss?
METI (Ministry of Economy, Trade and Industry) initiated to urgently investigate the negative effect of stagnation of production of components and materials of growth industries by performing survey regarding the worldwide production loss and possibility of the damage to Japan such as switching suppliers from Japan to other countries in the end of March.
The government estimated the loss based on the assumption that production of semiconductor related components are halted from the middle of March to the end of April. And the conclusion is that production and services equivalent to in total approximately 40 trillion yen will be negatively affected worldwide.
2. What are the examples of such losses?
1) Microcomputer
This is inevitable for controlling driving of cars. If the plants and other sites of the leader of this component production and supply based in Miyagi prefecture called Renesas Electronics should stop operating for 1-1/2 months it is possible that it leads to approximately 6.5 trillion yen loss of worldwide automobile production. It also could mean loss of flat panel TV production loss of 400 billion yen.
2) Silicon Wafer
This is the main material for semiconductors. The worldwide leader is Shin-Etsu Chemical and if its affiliate plant in Fukushima prefecture has damaged and its recovery is still unknown. If the production of the plant should stop for 1-1/2 months it is estimated that it leads to approximately 1/5 trillion yen loss in worldwide semiconductor production. It would also lead to decrease in sales of services of telecommunication, the Internet and broadcasting totaling approximately 30 trillion yen.
3) Smartphone
Japan has been enjoying market share of approximately 70% for LCD panel for smart phones but it is possible that sufficient production cannot be done and the conclusion from the hearing is that worldwide smart phone manufacturers may switch to LCD panel makers in other countries, meaning decrease in the market share that Japan has been enjoying.
2011年4月8日金曜日
Impact of “Jishuku” (Self-Restraint) in the Japan Disaster Aftermath
Osaka - Thursday, April 7, 2011
The Japan disaster, what Dr. Neal calls “natech” (nature + technology) disaster as explained in the article How the World and Japan Should Handle Japan Disaster is extremely complex. For this reason, topics reported by Japanese media about the disaster range from anything about victims such as the severe environment in which they currently live in and how large group of them (in hundreds) transfer to somewhere safer, to Fukushima nuclear plant accident and variety of issues affected by the accidents that are negative for recovery and reconstruction of the country.
One of such a topic is “jishuku”, the fact that many events and entertainments are cancelled as “self-restraint” throughout Japan. It is interesting to note that reports and discussions on this topic are triggered by the article by New York Times online on March 27 about this topic, using the Japanese word “jishuku”.
In this article, the author would like to summarize recent reports and discussions by Japanese media adding what she actually experiences on the topic, and present a possible option to minimize negative effect of “jishuku”.
1. How is “jishuku” (self-restraint) spreading after the Japan disaster?
Many events (concerts, sport games etc.) that were originally planned to be held are cancelled or postponed since the earthquake and tsunami on that hit north eastern Japan on March 11 and are replaced by charity concerts and events.
April is when new graduates start working in Japan and April 1 is their welcoming ceremony; however, many companies cancelled such ceremonies. Parties welcoming new members as well as usual entertainments (eating, dining etc.) are mostly cancelled and therefore sales of restaurants and hotels have dropped than more than 50%, some even as much as 80%.
April in Japan is also when people enjoy “ohanami” events and entertainments, which is to enjoy cherry blossoms while eating and drinking, at daytime and night time, as mentioned in What is the Message of Recent Cherry Blossom Phenomenon? thus is one of the peak for tourism and entertainment of individuals but this is also in “jishuku” mood.
Tourist spots famous for beautiful cherry blossoms would plan and hold events to attract tourists; however, many of them downsize events, do away with night time light-ups, open the facility (e.g. temples) for shorter hours and so forth. Inevitably, hotels, souvenir shops and restaurants that usually benefit from “ohanami” seasons are hardly hit.
2. What are some of the exceptions?
The baseball tournament in which high schools from throughout Japan in the end of March in Kobe was held as every other year with additional programme in consideration to the disaster. In the opening ceremony in which a participant of the tournament representing players makes a declaration of fair competition, moment of silent prayer was set first. Also, the team from Tohoku (the most hardly hit area) was warmly welcomed in particular and students from Kobe supported to encourage them because in this situation their own supports would not be able to come all the way from north eastern Japan to Kobe in western Japan.
National professional baseball tournament is also to be held like previous years but there had been a great discussion as to the date of the start and the time of the day being played to avoid night games, considering the situation in which saving electricity to minimize blackout is a critical issue.
A few “ohanami” spots famous for beauty of cherry blossoms decided to hold events and night time lightening shows to entertain and encourage people including victims. Such examples include Maruyama Koen Park in Kyoto.
3. What is the opinion of the Japanese people about “jishuku”?
Their opinion is divided between for and against “jishuku”. The Governor of Tokyo is for the “jishuku”, and a popular female minister responsible for renewal for administration is against “jishuku”. Both are very popular among media and the general public.
And, when Nikkei, a leading newspaper specialized in business and economy implemented a survey on April 5 and 6 about pros and cons of “jishuku” in which 4,823 people responded, 78% answered that currently it is too excessive and “consumption to assist economic recovery of Tohoku is necessary”.
1) People against (excessive) “jishuku”
What they meant is consumption directly contributing to recovery of the devastated area. For example, this is by proactively goods made in Tohoku, which are famous for high level rice, Japanese sake and many others, because it would have similar value with relief aid. Some others said that “everyone to proactively buy things and all business organizations could donate 1% of sales as relief aid” and “everyone could consume without feeling guilty if consumption tax is implemented to be used exclusively for issues related to the disaster”.
Some other comments from people who feels current “jishuku” is excess include “jishuku is not to be obligated (but done voluntarily)” and “jishuku and saving electricity/being frugal needs to be considered as something completely different”.
2) People in favour of “jishuku” and people who say “jishuku” cannot be avoided for economic reasons
It seems many of these people do not feel like enjoying entertainment if they think of victims in the devastated area. There was a comment such as “it may be necessary to have a certain period of “jishuku” nationwide so that everyone would remember the historic disaster”.
Some others seriously said that “jishuku” cannot be avoided due to economic reasons, worrying about their future, which implies secondary and thirdly negative effect of the disaster is spreading. Such people said that “In this situation surely the annual income will be reduced while tax will be increased”, “Our business has been shrinking since the outbreak of the disaster. It is quite possible that first comes overtime work cut followed by salary cut and then restructuring. Tax increase for recovery from the disaster is also quite possible. In such a situation how could you sped your money (on entertainment)?
3. How “jishuku” is better handled
Even people who are not directly affected by the disaster, they may well be forced to “jishuku” i.e. cut on spending for economic reasons as some commented in the survey; however, without sufficient consumer spending, the total economy would remain stagnant although there might be a little stimulant in general construction industry from reconstruction of social infrastructure (e.g. housing, roads, facilities).
What can be done is build consensus to hold events among the industry members then hold events saying that such consensus is formed in inviting people so that they will not feel guilty to participate in the events. This would require good communication among the industry members. This would be difficult normally because many organizations would like to keep their initiatives/plan secret; however, according to Naito, organizations have been exchanging information in depth even among rivals regarding countermeasure to aftermath of the disaster.
In addition, events could be tailored so that it could contribute to relief aids. Charity concerts, fund raising at the events, moment of silent prayers to the devastated area and victims, and other consideration are important.
Naito introduces a message from a business owner of Japanese sake in Tohoku at the end of his article, which is “please do not “jishuku” too much, but instead support us by enjoying our Tohoku sake”.
Excessive “jishuku” stagnates economy and this means lowing down of recovery and reconstruction. We all need to do what we can; save electricity, be frugal while consume appropriately and work hard, all to make our ends meet and keep the economy going, the requirement for recovery and reconstruction.
Resources:-
Naito, Ko (March 30, 2011) Truth of “jishuku of consumption” – countermeasures for minimizing “the fourth disaster” (In Japanese)
http://business.nikkeibp.co.jp/article/money/20110329/219215/?P=1
Naito, Ko (April 7, 2011) People who stand against “consumption jishuku” – Let’s do what we can if time allows (In Japanese)
http://business.nikkeibp.co.jp/article/money/20110406/219332/?P=1
Takagi, Koji (April 7, 2011) Japanese companies together cancelled ceremony welcoming new graduates and postponed welcoming parties – When should “jishuku” mood be eliminated when such mood has been spreading? (In Japanese)
http://diamond.jp/articles/-/11783
Nikkei (April 7, 2011) 78% responded “jishuku” is too much and “consumption to support” necessary – From survey (In Japanese)
http://www.nikkei.com/life/simple/article/g=96958A90889DE0E4E0E4E4E2E3E2E2E4E2E6E0E2E3E3E2E2E2E2E2E2;dg=1;q=F2F2F2F2F2F2F2F2F2F2F2F2F2F2;p=9694E3E6E2E4E0E2E3E2E4EAE1E3
The Japan disaster, what Dr. Neal calls “natech” (nature + technology) disaster as explained in the article How the World and Japan Should Handle Japan Disaster is extremely complex. For this reason, topics reported by Japanese media about the disaster range from anything about victims such as the severe environment in which they currently live in and how large group of them (in hundreds) transfer to somewhere safer, to Fukushima nuclear plant accident and variety of issues affected by the accidents that are negative for recovery and reconstruction of the country.
One of such a topic is “jishuku”, the fact that many events and entertainments are cancelled as “self-restraint” throughout Japan. It is interesting to note that reports and discussions on this topic are triggered by the article by New York Times online on March 27 about this topic, using the Japanese word “jishuku”.
In this article, the author would like to summarize recent reports and discussions by Japanese media adding what she actually experiences on the topic, and present a possible option to minimize negative effect of “jishuku”.
1. How is “jishuku” (self-restraint) spreading after the Japan disaster?
Many events (concerts, sport games etc.) that were originally planned to be held are cancelled or postponed since the earthquake and tsunami on that hit north eastern Japan on March 11 and are replaced by charity concerts and events.
April is when new graduates start working in Japan and April 1 is their welcoming ceremony; however, many companies cancelled such ceremonies. Parties welcoming new members as well as usual entertainments (eating, dining etc.) are mostly cancelled and therefore sales of restaurants and hotels have dropped than more than 50%, some even as much as 80%.
April in Japan is also when people enjoy “ohanami” events and entertainments, which is to enjoy cherry blossoms while eating and drinking, at daytime and night time, as mentioned in What is the Message of Recent Cherry Blossom Phenomenon? thus is one of the peak for tourism and entertainment of individuals but this is also in “jishuku” mood.
Tourist spots famous for beautiful cherry blossoms would plan and hold events to attract tourists; however, many of them downsize events, do away with night time light-ups, open the facility (e.g. temples) for shorter hours and so forth. Inevitably, hotels, souvenir shops and restaurants that usually benefit from “ohanami” seasons are hardly hit.
2. What are some of the exceptions?
The baseball tournament in which high schools from throughout Japan in the end of March in Kobe was held as every other year with additional programme in consideration to the disaster. In the opening ceremony in which a participant of the tournament representing players makes a declaration of fair competition, moment of silent prayer was set first. Also, the team from Tohoku (the most hardly hit area) was warmly welcomed in particular and students from Kobe supported to encourage them because in this situation their own supports would not be able to come all the way from north eastern Japan to Kobe in western Japan.
National professional baseball tournament is also to be held like previous years but there had been a great discussion as to the date of the start and the time of the day being played to avoid night games, considering the situation in which saving electricity to minimize blackout is a critical issue.
A few “ohanami” spots famous for beauty of cherry blossoms decided to hold events and night time lightening shows to entertain and encourage people including victims. Such examples include Maruyama Koen Park in Kyoto.
3. What is the opinion of the Japanese people about “jishuku”?
Their opinion is divided between for and against “jishuku”. The Governor of Tokyo is for the “jishuku”, and a popular female minister responsible for renewal for administration is against “jishuku”. Both are very popular among media and the general public.
And, when Nikkei, a leading newspaper specialized in business and economy implemented a survey on April 5 and 6 about pros and cons of “jishuku” in which 4,823 people responded, 78% answered that currently it is too excessive and “consumption to assist economic recovery of Tohoku is necessary”.
1) People against (excessive) “jishuku”
What they meant is consumption directly contributing to recovery of the devastated area. For example, this is by proactively goods made in Tohoku, which are famous for high level rice, Japanese sake and many others, because it would have similar value with relief aid. Some others said that “everyone to proactively buy things and all business organizations could donate 1% of sales as relief aid” and “everyone could consume without feeling guilty if consumption tax is implemented to be used exclusively for issues related to the disaster”.
Some other comments from people who feels current “jishuku” is excess include “jishuku is not to be obligated (but done voluntarily)” and “jishuku and saving electricity/being frugal needs to be considered as something completely different”.
2) People in favour of “jishuku” and people who say “jishuku” cannot be avoided for economic reasons
It seems many of these people do not feel like enjoying entertainment if they think of victims in the devastated area. There was a comment such as “it may be necessary to have a certain period of “jishuku” nationwide so that everyone would remember the historic disaster”.
Some others seriously said that “jishuku” cannot be avoided due to economic reasons, worrying about their future, which implies secondary and thirdly negative effect of the disaster is spreading. Such people said that “In this situation surely the annual income will be reduced while tax will be increased”, “Our business has been shrinking since the outbreak of the disaster. It is quite possible that first comes overtime work cut followed by salary cut and then restructuring. Tax increase for recovery from the disaster is also quite possible. In such a situation how could you sped your money (on entertainment)?
3. How “jishuku” is better handled
Even people who are not directly affected by the disaster, they may well be forced to “jishuku” i.e. cut on spending for economic reasons as some commented in the survey; however, without sufficient consumer spending, the total economy would remain stagnant although there might be a little stimulant in general construction industry from reconstruction of social infrastructure (e.g. housing, roads, facilities).
What can be done is build consensus to hold events among the industry members then hold events saying that such consensus is formed in inviting people so that they will not feel guilty to participate in the events. This would require good communication among the industry members. This would be difficult normally because many organizations would like to keep their initiatives/plan secret; however, according to Naito, organizations have been exchanging information in depth even among rivals regarding countermeasure to aftermath of the disaster.
In addition, events could be tailored so that it could contribute to relief aids. Charity concerts, fund raising at the events, moment of silent prayers to the devastated area and victims, and other consideration are important.
Naito introduces a message from a business owner of Japanese sake in Tohoku at the end of his article, which is “please do not “jishuku” too much, but instead support us by enjoying our Tohoku sake”.
Excessive “jishuku” stagnates economy and this means lowing down of recovery and reconstruction. We all need to do what we can; save electricity, be frugal while consume appropriately and work hard, all to make our ends meet and keep the economy going, the requirement for recovery and reconstruction.
Resources:-
Naito, Ko (March 30, 2011) Truth of “jishuku of consumption” – countermeasures for minimizing “the fourth disaster” (In Japanese)
http://business.nikkeibp.co.jp/article/money/20110329/219215/?P=1
Naito, Ko (April 7, 2011) People who stand against “consumption jishuku” – Let’s do what we can if time allows (In Japanese)
http://business.nikkeibp.co.jp/article/money/20110406/219332/?P=1
Takagi, Koji (April 7, 2011) Japanese companies together cancelled ceremony welcoming new graduates and postponed welcoming parties – When should “jishuku” mood be eliminated when such mood has been spreading? (In Japanese)
http://diamond.jp/articles/-/11783
Nikkei (April 7, 2011) 78% responded “jishuku” is too much and “consumption to support” necessary – From survey (In Japanese)
http://www.nikkei.com/life/simple/article/g=96958A90889DE0E4E0E4E4E2E3E2E2E4E2E6E0E2E3E3E2E2E2E2E2E2;dg=1;q=F2F2F2F2F2F2F2F2F2F2F2F2F2F2;p=9694E3E6E2E4E0E2E3E2E4EAE1E3
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