Supply-Chain Culture Clash

Manufacturing practices popularized by the Japanese, such as total quality management and just-in-time procurement, have become the worldwide gold standard for producing high-quality products. One might expect the same to be true of Japanese methods of logistics management (planning and arranging the transport and storage of goods and materials). However, research shows that Japanese-owned logistics companies in Europe struggle to meet those expectations.

Although an ethos of supply-chain efficiency dominates the logistics business worldwide, traditional concepts of service, flexibility and quality still take precedence in the Japanese approach. In Japanese-owned logistics companies in Europe, Japanese managers and their domestic work force have difficulty reconciling those conflicting philosophies. That contributes to the weak performance, say researchers René de Koster, professor of logistics and operations management at Erasmus University’s Rotterdam School of Management in the Netherlands, and Masato Shinohara, professor of international logistics at Tokai University’s School of Marine Science and Technology in Shizuoka, Japan.

In their 2004 paper Japanese Logistics in Europe: Will East Meet West? de Koster and Shinohara report that, in their 2001 survey of 65 manufacturers’ European distribution centers — of which 12 were American and 14 Japanese — the Japanese logistics subsidiaries failed to deliver superior logistics support. In follow-up interviews, the Japanese managers described a clash of cultures underlying their operations. Non-Japanese staff was frustrated that, among other things, proposals moved slowly through multiple channels before decisions could be made and that high-ranking Japanese managers spent so much time apologizing for service failures and focused less on planning.

The interviews also revealed that European managers did not fully understand the ultimate payoff of the Japanese service strategy. Since many of their customers were Japanese who demanded the same high level of service in Europe as in Japan, Japanese logistics managers were willing to put in the extra effort in order to build trust and maintain a long-term relationship with the customers. European managers were less willing to do so. They were more focused on the short-term costs.

The authors conclude that the Japanese subsidiaries would better adapt to Western business practices if they were to take into greater account the conditions and mores of the country where they are doing business.