Japan has faced a severe economic situation since about 1990, and the country has been unable to achieve a full economic recovery over the last ten years, despite its efforts to overcome the problem. The reality consists of negative factors such as the vast portfolio of bad loans at financial institutions, the deflation phenomenon, weak consumer confidence, stock price declines in an array of industries and a loss of international competitiveness because of Japan’s high-cost structure. Another critical issue is action to reduce the burden on the environment.
To address these factors, the Japanese government is trying economic structural reform, and industries are looking for a way to create new demand while pushing ahead with reconstructing initiatives. Meanwhile, the rapid economic emergence of China observed since the country’s entry into the WTO, and corporate Japan’s shifting of production to China to take advantage of lower labour costs have both had a great impact on Japan.
And along with these trends, supply chain management, which encourages the stable development of both supply and demand, is advancing in a borderless manner, penetrating all sectors of the manufacturing, distribution and freight industries. This indeed is the pursuit of logistics advancement and efficiency.
Best-practice supply chain is essential
Both for corporate management and the domestic economy, building a total best-practice supply chain is essential for a recovery, as it will have the huge benefit of reducing unwanted inventory, shortening lead-times and reducing logistics costs. In other words, there is a great need in Japan for the construction of highly advanced logistics systems based on full cooperation among industry, government and academia. Below, we look at the prevailing views and issues encountered by industry:
1. Moving from partial best practice to total best practice –
Corporate activities from a cycle of development, procurement, production, sales, delivery, collection and recycling. It is important to pursue total best practice, achievable by individual companies.
2. Expanding the application of IT.
To make logistics activity more sophisticated and more efficient, it is increasingly important to take full advantage of IT such as EDI and the internet. To reduce excess inventory, shorten lead-times and cut total costs, it is necessary to create supply chain management structures that share information on all levels within the entire process.
Japanese companies are increasingly undertaking borderless and global activities, including best-practice procurement and best-practice production in foreign countries, especially China. A bigger global network based on logistics needs to be prepared, and we should seek to build on our close alliances with specialist logistics organisations around the world.
4. Addressing environmental issues
Reducing the burden on the environment is mandatory, and this directly involves logistics activities, such as exhaust gas, noise/vibrations and packaging disposal. Also, it is important to pursue total best-practice from a logistics angle, for example by preparing an effective disposal collection system. At the same time, it is important to build a circulatory society by constructing environmentally balanced logistics and ensuring wide adoption.
5. Making advances in standardisation.
Achieving advances in logistics and making logistics more efficient requires better standardisation of logistic equipment systems and information and communication systems. The government and industry must keep globalisation in their sights, and join hands to transcend company and industry boundaries in improving standardisation.
6. Preparing the social infrastructure.
Social infrastructure such as roads, railroads, airports and ports are vital for the development of logistics. And to improve the efficiency of economic activities and strengthen international competitiveness, there is need for reform in the sphere of social infrastructure application, for example a simplifying of administration procedures.
People involved in logistics in the broad sense must address these issues. And in doing so, they need to comply with demands for an improved labour environment and the diversification of labour styles, given the ongoing aging and low birth rate trends in Japan. This will require a nurturing of talented people with specialist knowledge and extensive information, through systematic education in logistics.
It is equally important for all involved in logistics to maintain a sense of pride about their work since they are, after all, making a contribution to society.