A Model Of Cooperation

A few years back I had the opportunity to visit a number of Japanese job shops, all of which were doing medium volume production work. While there were many differences from shop to shop, what most struck me about them as a group was how hugely focused they all seemed to be on constantly improving efficiency on their shop floors.

The entire Japanese supplier system encourages just that. Shops typically only have a few customers and a single customer frequently accounts for the majority of the business. But that customer takes care of its suppliers--demanding a great deal, but also providing a stable business environment as well as broad technical support. Freed of a large and fickle customer base, the shop can afford to concentrate on a more narrowly defined range of repetitive processes and devote a much larger share of its discretionary resources to their improvement.

Consider what happens when this model is replicated throughout the entire product manufacturing process. Component production is concentrated in clusters of small but extremely skilled and efficient manufacturers. Collectively, they share high productivity, low administrative and transactional costs, and high utilization of resources, both financial and human. In short, the system is designed to put work in the hands of people who are really good at it and that have the best tools.

Coming back to America, I wondered: Could something like that ever work here? Not an exact duplication necessarily, but an American version that achieves the same objectives. And since, I've kept an eye out for similar models.

They've been hard to find. We're just not trusting enough to nurture such interdependent business relationships. Shops don't want to be dominated by a single customer that just can't seem to resist making the shop do things that are bad for its business. Customers just can't believe they'll get the best deal overall without the constant threat of competition. And so we waste precious resources keeping each other "honest."

I'm very happy to report, however, that at least one such model can be found in Warsaw, Indiana, at Othy Inc. Hopefully, we'll find many more.