Supply Change
One thing the pandemic laid bare was the fragility of supply chains. Companies are taking the lessons learned, but for Japanese companies, shifting gears can be difficult. How can they connect with the right leaders?
Recruiter Robert Half on the evolving landscape of supply chain management.
From left: Kazuko Oya and Taku Yamashita (Photo: Yuuki Ide)
One thing the pandemic laid bare was the fragility of supply chains. When borders closed and restrictions to contain the spread of the coronavirus put a crimp on the movement of people and parts, manufacturers had to quickly adjust their logistics. As a changed world moves forward, companies are taking the lessons learned and looking to improve their supply chain management.
For Japanese companies, shifting gears can be difficult. Entrenched and outdated enterprise resource planning (ERP) systems, and even manual processes centered on Microsoft Excel, scream for digital transformation. But to make the change requires knowledge, experience, and leadership.
Specialized recruitment agency Robert Half is helping connect companies with consultants who can lead the way. Its team of supply chain management recruitment consultants has unique insight into the Japanese market, with extensive knowledge and established networks nurtured over 18 years. Taku Yamashita and Kazuko Oya shared with The ACCJ Journal the situation and trends in the Japanese market and how they are able to adapt to client needs to deliver exceptional value and results.
“Our unique differentiation is that we have ironclad relationships with supply chain management gaishikei [foreign-capital companies] seeking bilingual candidates,” explained Yamashita, director of supply chain management and human resources. “We completely understand skill sets, experience, and value for our clients.”
Oya, the senior division director for supply chain and procurement, noted that their extensive experience allows them “to consult with clients and collaborate to find candidates who offer the highest value and return on investment.”
Elusive Talent
Finding candidates is one of the biggest challenges that Japan faces as its domestic industries attempt to transform how they plan and manage supply chains that Oya and Yamashita said are “late to the party” and behind global standards. One big reason is education. Japanese university degrees are concentrated in areas such as finance, economics, sales, and marketing. An MBA is mandatory for supply chain management, but there are no MBA programs in Japan that focus on it. Consequently, there are few knowledgeable, educated candidates to lead the supply chain transformation.
“For a company starting or going through the transformation, it’s not just about the experience or skill set, but more about the leadership and mind-set.”
One situation that can create challenges for companies that are trying to take a step forward can come during a merger or acquisition. Domestic branches of a company may use outdated ERP systems, while the international branches run on more modern platforms and adhere to best practices. Getting the two systems to talk to one another is not possible. Changing the ERP system is the largest hurdle to overcome, and a consultant is usually brought in to get a new system in place, a process that can take a year or two.
What kind of candidate is needed to carry out such a transition?
“For a company starting or going through the transformation, it’s not just about the experience or skill set, but more about the leadership and mind-set,” said Oya. “There will be a lot of changes—not just to the system, but to the people, culture, and operational processes. So, somebody who is resilient is needed, somebody who is not afraid of making changes and can have an immediate impact from a planning perspective.”
Because of their knowledge of the industry, spanning almost two decades, Oya and Yamashita are able to consult with Robert Half’s clients, both domestic and international, on the challenges, needs, and hurdles they must overcome. They can go beyond recruitment and offer advice on who is the right candidate to fill this role, whether that be a domestic person or somebody from abroad with good Japanese language skills. They may even find the elusive, but highly sought-after, unicorn: someone half in Japan and half out.
“There are young Japanese workers who start in a Japanese company and then want to move to an international company,” explained Yamashita. “These workers may then come back to Japanese companies in their mid-forties or fifties.”
One path to this which Robert Half has noticed is for university graduates to join a consulting company, learn the supply chain methods for five years, and then return.
“They want to contribute to the development of their own country, so they come back to traditional Japanese companies,” Yamashita added.
Why It Matters
One reason that Oya and Yamashita feel that supply chain logistics in Japan lags far behind that found in the United States or other countries is that it isn’t viewed as equally important within traditional companies.
“There are various functions in a company—sales, marketing, finance, human resources—and supply chain is one of these. But in general, in Japan, I feel that it doesn’t get the same respect or visibility as the others, because supply chain is often seen as blue collar,” explained Oya.
But supply chain management is critical to the success of any business, whether a company is manufacturing a car or delivering fast-moving consumer goods to a customer’s doorstep.
““We’ve started seeing more Japanese companies trying to hire people coming from a global background and mind-set.””
One of the most important areas of supply chain management is sales and operations (S&OP), which is in charge of production and demand planning one month, one year, or two years out. Making S&OP more adept and resilient is growing in importance not only in Japan but the whole Asia–Pacific region as many international companies focus on APAC business.
A client that has been growing its overseas business and has its headquarters in Japan realized that, to win the global market, it needed to change its approach to supply chain management and bring S&OP up to speed. A specialty of Robert Half is helping Japanese companies bring international culture and methods from the United States and other countries into Japan, so the partnership is a perfect fit.
“We’ve started seeing more Japanese companies trying to hire people coming from a global background and mind-set,” noted Oya. “Mid-career hiring is something that traditionally hasn’t happened in Japan, but is becoming increasingly common. We’re seeing more people with 30 years of experience at American or multinational companies moving to big Japanese manufacturers with a very long history of hiring new grads and training them in their way, not hiring from outside.”
One of those seasoned veterans could be the missing talent to lead a transformation of your supply chain, and the Robert Half team are ready to partner with you to build resilience for today and the future.
Register now to learn, connect, and get inspired by Robert Half Japan networking events: roberthalf.jp
Supply Chain Woes
Nowadays, it is common to hear and to read in the news that the world is experiencing unprecedented supply chain woes. China lacks coal and paper. The United States has a shortage of toilet paper and toys. And India is low on microchips. Why is this happening? Here are four current issues that negatively impact the world’s supply chains.
Four causes of worldwide shortages and how to address them
Photo: Photo by Tom Fisk from Pexels
Nowadays, it is common to hear and to read in the news that the world is experiencing unprecedented supply chain woes. China lacks coal and paper. The United States has a shortage of toilet paper and toys. And India is low on microchips. Even we, the masses, have experienced delivery delays and found that certain items, previously one click away, are out of stock. Why is this happening? Below are four current issues that negatively impact the world’s supply chains.
1. Lockdowns (Still) in the World’s Factory: China
Economists say that companies with an overreliance on factories in China are the most vulnerable in this supply chain crisis. But this describes most companies. Back in the early 2000s, when an outbreak of severe acute respiratory syndrome, or SARS, forced China to temporarily shut its manufacturing capacity to control the virus, the country had just the sixth-largest economy in the world, with a nominal gross domestic product (GDP) of $1.4 trillion. Fewer than 20 years later, China’s economy had grown to be the world’s second largest, with a nominal GDP of $14.72 trillion in 2020.
China has also become the producer of 28.7 percent of all the world’s goods, and exports $2.6 trillion of worth of products annually. This makes it the top exporting economy. Coupled with its number-two ranking for imports, it’s no wonder China has garnered the moniker “the world’s factory.”
How did China achieve such a rise? By making itself a manufacturing powerhouse and primary recipient of foreign investments thanks to a large, cheap, but capable labor force and low tax rates. With these manufacturing credentials under its belt, and huge amounts of trade coming in and out, China became a key player on the world stage.
More than two years into the coronavirus pandemic, as vaccines were being rolled out and populations inoculated around the globe, Covid-19 became a norm in our daily lives. We all thought that lockdowns were a thing of the past. But China has continued to implement a zero-Covid strategy, loosening its grip on the population only as 2022 draws to a close under growing pressure from weary citizens.
China’s zero-Covid policy required strict quarantine, even if just a handful of cases are reported. As a result, tens of millions of people in at least 30 regions of China have been ordered to stay at home under partial or full lockdowns. How changes will affect the severity and impact of countermeasures remains to be seen. Until now, these lockdowns have caused massive disruptions to China’s manufacturing activities that have translated into worldwide supply chain interruptions.
2. Worldwide port congestions and bottlenecks
As we all get back to our normal lives and try to move on from the bad memories of the pandemic, economic activity has restarted and demand for various goods are returning to pre-pandemic levels. This hefty appetite from various economies—on top of the prevailing delivery backlogs and shortages caused by the pandemic—has put massive strain on the world’s ports. The situation has been exacerbated by various businesses trying to pile up their respective stocks in the face of supply uncertainties.
Ninety percent of global trade is transported via sea. Delays caused by port congestion have driven up the cost of many goods or, in the worst cases, caused depleted stock of some much-needed items. For example, the United States, the world’s largest importer and second-largest exporter, has seen its ports experience unprecedented cargo ship backlogs. Billions of dollars’ worth of goods are stranded off the coasts of the United States as there’s neither enough manpower nor resources to unload them. Ultimately, this causes delays in delivery to end users. The same thing is happening at major ports around the world.
This existing issue has caused cargo prices, as well as average port-to-port waiting times, to multiply to record levels.
3. Power levels: on red alert
As businesses around the world struggle to address the ongoing logistical and manufacturing disruptions caused by the pandemic and existing production backlogs, another problem has arisen: Where to source power?
It is a given that power is necessary to fuel manufacturing capacity around the world and keep goods in production, but meeting demand means overcoming challenges.
In the Pacific, China last summer experienced its worst heatwave and drought in six decades, and its power source portfolio suffered. Hydroelectricity, the country’s second-largest source of power, yielded an all-time low output due to the much lower water levels at hydroelectric plants. To conserve electricity, the government took steps such as ordering the closure of factories, demanding that air conditioners be set to above 26 degrees Celsius, or shutting down elevators for the first three floors in some provinces. The regions affected are key manufacturing centers for semiconductors, solar panels, and batteries, and the reduced production affected some of the world’s largest electronics companies.
Europe has been on red alert since March as economic sanctions imposed on Russia for its war in Ukraine, measures which include the cessation of gas imports from Russia, have diminished energy supplies. Russian gas normally accounts for about 40 percent of European Union (EU) fuel imports. As winter starts, the EU is bracing for two scenarios—one in which a few member states experience power cuts and another in which blackouts occur in many member states at the same time. Can you imagine the famous Eiffel Tower on a lights-off schedule? The EU is also the location of some of the world’s biggest manufacturing brands, hence this development will mean further disruptions to the global supply chain.
4. Russia’s economic embargo, Part II
As the West and its allies impose costly economic sanctions on Russia to cripple its economy and ability to fund its military operations in Ukraine, they have also cut themselves off from what Russia contributes to the supply chain. Aside from oil and petroleum products, industry relies on the country for metals, including nickel, palladium, platinum, rhodium, aluminum, and copper. These minerals are key components in the production of automobiles, semiconductors, aerospace components, packaging, renewable energy, and other industrial products.
Russia also specializes in chemical production, particularly of the potassium compound potash and ammonia, key ingredients in fertilizers. This area may be impacted most as Russia accounts for roughly 10 percent of ammonia and five percent of urea production globally, as well as 20–25 percent of global ammonia exports. The country is also a significant producer and exporter of potash, delivering about 18 percent of the world’s supply in 2021. Low or no supply from Russia, combined with the existing issue of high energy prices, is likely to result in significant disruption to the supply of fertilizers for the foreseeable future.
It is very evident that manufacturing companies were caught flat-footed as these developments were thrust upon us and found to be overly reliant on certain countries to produce their products. Many have preferred suppliers for materials and labor located in countries where conditions have impacted manufacturing. As these supply chain woes were often not considered in corporate contingency plans, it is normal to execute short-term reactive solutions, such as stockpiling supplies and chartering private container ships. But companies know that these are just temporary fixes and recognize the need for permanent solutions.
Recently, we began to see companies start to implement long-term strategies to “de-risk” their supply chains. Steps may include finding new and more diverse sources of raw materials, widening the list of suppliers, and setting up independent factories in multiple parts of the world to cater to demand in specific regions, diversify operations, and minimize risk.
Even though these long-term action plans will further exhaust significant resources, it is indeed worth the investment for a company to secure its operations and, most importantly, to ensure an uninterrupted supply chain to meet consumers’ unending demand for goods.
For more information, please contact Grant Thornton Japan at info@jp.gt.com or visit www.grantthornton.jp/en
Supplier D&I
While there is much talk in Japan about diversity and inclusion (D&I) in the workplace, another important, though less-discussed, aspect of D&I involves suppliers. Some major companies have long championed diversity in their supply chains, but the issue is now getting more attention—and progress is being made—thanks to the efforts of socially conscious leaders. This was the topic of a November 25 virtual event, hosted by the ACCJ-Chubu Programs Committee and entitled Supplier D&I: Three-Year Journey in the Japanese Market.
WEConnect International’s three-year journey in the Japanese market
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While there is much talk in Japan about diversity and inclusion (D&I) in the workplace, another important, though less-discussed, aspect of D&I involves suppliers. Some major companies have long championed diversity in their supply chains, but the issue is now getting more attention—and progress is being made—thanks to the efforts of socially conscious leaders.
This was the topic of a November 25 virtual event, hosted by the ACCJ-Chubu Programs Committee and entitled Supplier D&I: Three-Year Journey in the Japanese Market. Speaker Setsu Suzuki, chief executive officer and founder of Hunext, Inc., shared how sourcing from women-owned startups is shaping the Japanese economy.
Connecting Women
Suzuki is the Japan project director for WEConnect International, the Washington, DC-based non-profit organization (NPO) that expanded its certification and market access activities to Japan in 2018. She recalled how, in 2017, she was invited by Gary Schaefer, principal officer at the US Consulate Nagoya, to attend the Global Entrepreneurship Summit in Hyderabad, India. Some 6,000 women business owners took part in the three-day event. There she had her first contact with WEConnect International, which helps drive money into the hands of women business owners by enabling them to compete in the global marketplace.
“That’s fantastic, right?” Suzuki exclaimed. “So, I immediately said that I want to be a member of this organization.” After getting to know leaders of the enterprise during the summit, she was asked to become the director of WEConnect in Japan. Three months later, she signed a contract with the international body and led its expansion into the market. Noting that WEConnect International is the only certifying body in the world that supports supplier diversity, Suzuki explained that there are five categories:
- Women
- Challenged
- LGBTQ
- Racial minority
- Veterans
“And women are really key,” she said. Globally, just one percent of procurement by governments and corporations goes to women-owned business.
“WEConnect International began studying this 12 years ago, but the number is still only one percent. We want to push it to two percent,” she explained.
“According to a World Bank report, 32–39 percent of companies around the world are owned by women. So, definitely, women are key to a diverse economy.”
Next, Suzuki introduced the companies among WEConnect International’s 143 member buyers that are most active in Japan:
- Accenture
- Johnson & Johnson
- Intel K.K.
- IBM Japan, Ltd.
- EY
- P&G Japan G.K.
- Microsoft Japan, Co., Ltd.
- Micron Memory Japan, G.K.
“More and more Japanese corporations are starting to pay attention to supplier diversity,” she said.
Where Are the Women?
There are 3.8 million small businesses in Japan, but only 500,000 are owned by women. What constitutes a woman-owned business (WOB)? It seems straightforward, and Suzuki noted that we use the term a lot in English.
But to make it clear what this means by definition, she explained that it should be “an incorporated company with at least 51 percent of the business owned and managed, or governed, by one woman—or more.” The WEConnect certification standards state that ownership “is determined based on title to, and beneficial ownership of, stock, membership interests, or other equity in the business.”
WEConnect allows self-declaration as a WOB. Such registration in their database is free and carries limited benefits.
“WEConnect International … helps drive money into the hands of women business owners by enabling them to compete in the global marketplace.”
There is also the Women Business Enterprise (WBE) designation (pronounced “weebee”). This certification opens the door to the procurement departments of 143 member companies and enables business owners to connect with 12,000 women entrepreneurs in more than 110 countries.
In this case, there is a fee, and membership includes unlimited access to WEConnect benefits. The money is used to fund the NPO’s operations, which are driven by three pillars: certification, connection, and education.
Three-Year Journey
WEConnect International’s launch in Japan took place three months after Suzuki took on her role as country director. The expansion into Japan was made possible through the Strengthening Market Access for Women Business Owners initiative, a consortium that includes Accenture, Intel, and Johnson & Johnson. The founding members are working closely with WEConnect to leverage its powerful global networks and experience working with women business owners, and there are now 28 certified WBEs in Japan.
The launch was marked by a hybrid event, making it possible to connect women business owners from Hokkaido to Okinawa. It was supported by the American Chamber of Commerce in Japan, and Women in Business Committee Vice-chair Makiko Tachimori (Fukui) helped facilitate.
A business-to-business matchmaking event was held on November 26, 2020, in which 10 member buyers, 14 tier-one corporations, and 51 WOBs and WBEs participated. Suzuki said that three women business owners got contracts following the event, showing how even online meetings can really make business happen.
The session will take place again in February—rebranded as the P&G Academy Women’s Entrepreneurs Business Development Program—as an eight-day intensive series.
With the support of Johnson & Johnson and Dell Technologies, WEConnect conducted a survey of 191 Japanese female entrepreneurs in Japan between August and September 2020. According to results, the top challenges faced by WOBs are:
- Balancing work and family (65 percent)
- Gender discrimination (30 percent)
- Market entry (11 percent)
She also noted that many women who responded to the survey cited the issue of surnames as an obstacle to their business lives. Because Japan continues to require that women take their husband’s surname, some women said that they must use a false name in work, so that their husband’s family will not discover that they are entrepreneurs—a role that goes against traditional views of a woman’s place in society.
On the brighter side, Suzuki said that WOBs in Japan are thriving across a wide range of industries. Many fall under the United Nations (UN) Sustainable Development Goals (SDGs), which are an important part of WEConnect International’s activities. The organization is working with governments, the UN, and others to help achieve SDG number five: gender equality in the economy.
Japan WBEs
There are only 28 certified WBEs in Japan, but Suzuki is dedicated to expanding that number. She introduced two success stories during the event, starting with Yuko Takahashi, president of Osaka-based Japan Engine Valve Mfg. Co., Ltd. Known by the brand name Dokuro, the company began producing engine valves in 1949.
Takahashi, who was unable to attend due to a business event, delivered a short, vibrant video in which she flew a drone around the Dokuro offices and production facilities to explain how her company makes after-market auto parts. The parts are shipped around the world to meet the needs of those who own Japanese cars.
Next, Ayako Mochizuki, a Japan native who moved to the United States at the age of 22, shared her experiences running a small and medium-sized enterprise in Japan, doing business with large companies on a global basis.
In 2014, she became president of IBS Japan Co., Ltd., the 35-year-old value-added reseller of data communication products, founded by her father. She runs the company from her home in Boulder, Colorado, while her father remains involved as an owner in Ebina, Kanagawa Prefecture, where the corporate headquarters is located.
IBS Japan’s mission is to make life easier through the application of technology, and the company was certified as a WBE by WEConnect International in 2019. “Since then, I have had many successes [as a result of] being a WBE,” she said. One such success, she noted, involved the sale of thermal camera technology to a major pharma company soon after the start of the coronavirus pandemic.
Despite these successes, challenges remain—particularly with traditional mindsets about gender roles in business. Mochizuki shared an interesting example from within her own company.
“When I got certified [as a WBE] in 2019, one of my employees—a key person for me—actually told me that I should not be certified,” she recounted. “He said that if we are certified, if they find out that I’m a feminist—that’s the word he used—we are not going to get business, because it’s a male-dominated industry that we serve. He was very concerned.”
She noted that this worry is real in Japan, because the country remains very much dominated by men, and many of the business leaders are aged 60 and over.
So, the shift in mindset takes time. But through the efforts of Suzuki, WEConnect, and women business owners such as Takahashi and Mochizuki, that change is taking place.
Innovation Destination
As a super-aging society with a population of more than 100 million, Japan has the potential to become a destination for healthcare innovation. Its citizens have easy and equal access to quality healthcare services, with pharmaceuticals and medical devices playing important roles in improving quality of life. But there are technological obstacles to overcome. The US medical device industry is leading the effort to develop a data platform in Japan which will enable traceability in healthcare.
US-led platform to provide healthcare traceability and stability in Japan
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As a super-aging society with a population of more than 100 million, Japan has the potential to become a destination for healthcare innovation. Its citizens have easy and equal access to quality healthcare services, with pharmaceuticals and medical devices playing important roles in improving quality of life.
But there are technological obstacles to overcome. The US medical device industry is leading the effort to develop a data platform in Japan which will enable traceability in healthcare. The platform will allow the collection, storage, and sharing of information among stakeholders (e.g., manufactures, vendors, and hospitals). It will become a critical tool for improving the quality and efficiency of Japan’s healthcare system and will help ensure a stable supply of medical goods for healthcare providers.
Leveraging Tech
High-speed internet is nearly ubiquitous across Japan, but its benefit to healthcare is hampered by rules, systems, and business practices put in place before the internet era. Healthcare data is stored in a way that makes it difficult to share among stakeholders. This issue became obvious as the Covid-19 pandemic took hold and the country found it difficult to:
- Track medical supplies
- Monitor public health
- Analyze collected data
Medical devices in Japan now carry a unique device identifier and all products are labeled with a GS1-128 bar code that contains a Global Trade Item Number. Some products, such as those related to orthopedics, are even tagged with radio frequency identification (RFID) information so that every item can be tracked, traced, and reported on.
Currently, RFID is only used to improve productivity within an organization. But as more companies introduce RFID technologies, to minimize confusion and inconvenience, the industry has agreed to:
- Standardize the RFID format
- Develop a platform to store and share data
The platform will enable manufactures to offer products that allow stakeholders to use all associated information to improve the quality and productivity of the healthcare system and to stabilize the supply of medical products. Expected to be available in mid-2022, the platform is being developed under the Smart Logistics Service portion of the Japanese government’s Cross-ministerial Strategic Innovation Promotion Program.
Government Support
The US medical device industry is part of a study group supported by Japan’s Ministry of Health, Labour and Welfare (MHLW), which provides grants to help enable traceability of drugs and medical devices to improve safety and efficiency in hospitals. The goal of this study group is to set the basic feature requirements for electronic health-record systems used in hospitals. Guiding documents help hospitals and vendors introduce and use bar codes and RFID technology. With these two systems, traceability in the Japanese healthcare system can be dramatically improved.
Traceability in healthcare enables us to see the movement of prescription drugs and medical devices through the supply chain. We can trace the history of the transfers and locations of a product, starting from the point of manufacture. We can also look ahead to see the intended route of the product to the point of care. It also helps provide greater oversight of medical device performance for effective post-market surveillance in the event of adverse event reports or product recall alerts.
With increased traceability and productivity along the whole supply chain, the quality and efficiency of healthcare services provided in Japan will improve, and a stable supply of medical goods will be guaranteed. Data can also be collected automatically, and shared among stakeholders for analysis that will lead to improvements in care.