Strategic Industrial Sourcing

Why is it that Japanese manufacturers can produce such a great variety of goods with breathtaking speed and quality while outsourcing so extensively? Strategic Industrial Sourcing provides the first comprehensive look at the evolution of a powerful system of supplier relations in Japan. Indeed, supplier relations are at the heart of world-class manufacturing in Japan's two most successful industries, automobiles and electronics. Through a path-breaking exploration of the historical and current practices of subcontracting in Japan as well as other advanced economies, Toshihiro Nishiguchi reveals the shortcomings of existing theories of contractual relations. A wealth of evidence shows that current Japanese sub-contracting practices are a product of complex interactions among socioeconomic, political, technological, and firm-level strategic factors. Taking issue with conventional thinking, this book questions the notion that the practices that have made Japanese firms successful are a direct result of national culture. Rather, it is argued that those practices amount to a new paradigm of collaborative manufacturing that can be adopted by firms in other industrial societies. A product of more than eight years of research, hundreds of field visits, and more than one thousand interviews with managers of firms in fourteen countries including Japan, the United States, and Britain, this book brings original insight to the historical, institutional, and economic development of a unique manufacturing system that has enabled Japanese firms to outperform their competitors in key markets. Based on principles of inter-firm collaboration and mutual problem solving, this revolutionary system, analyzedin depth in the automobile and electronics industries, drives core firms and their subcontractors toward continuous improvement in product quality, cost control, and technological excellence. Strategic Industrial Sourcing reveals the compelling logic behind these relatio