The Mitsubishi
Monitor talks with Tadashi Hirota, president of Ryoshoku,
a Mitsubishi company that distributes processed food products.
Ryoshoku is Japan's biggest wholesaler in that sector, with
annual revenues of $6 billion. A subsidiary of Mitsubishi
Corporation, it joined the Mitsubishi Public Affairs Committee
in April 2001. |
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 The
president stands beside the ISO 14001 certification
his company earned for excellence in environmental
management. |
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Your
company is new to the Public Affairs Committee. But it has
a long history.
Yes. Mitsubishi Corporation established our corporate predecessor
in 1925 as a regional wholesaler. We and three other regional
wholesalers owned by Mitsubishi Corporation merged in 1979
to create Ryoshoku. Our managements foresaw the modernization
that was in store for Japanese distribution. They recognized
that national scope would become both possible and necessary
in our industry.
Byzantine distribution
networks epitomize the structural inefficiencies that plague
the Japanese economy. But processed food products are a
model of distribution efficiency. What's the story?
Japanese did most of their grocery shopping at tens of thousands
of tiny "Mom and Pop" shops until the 1960s. Serving
those shops required close, personal attention by a vast
web of regional wholesalers. Most of those wholesalers dealt
with producers through a tier of larger wholesalers.
Distribution became simpler as grocery stores
and other modern retail channels became common in the 1960s
and 1970s. About 80% of our business is a matter of moving
products directly from producers to retailers, mainly supermarkets,
large general retailers, and convenience stores. Most of
the remainder consists of supplying products from producers
to smaller wholesalers who serve small retailers.
Some big
trading houses have kept their wholesale business in house.
But you have outperformed your competitors by operating
as a semiautonomous enterprise. Last year was your 15th
consecutive year of growth in sales and earnings. Why has
your approach worked better?
A
narrowly focused unit is bound to be more responsive than
a big, all-purpose organization. Another advantage of autonomy
is motivation: people know that their futures depend on
the survival and prosperity of their company. Yet another
advantage has arisen from the psychology of business relationships.
The Mitsubishi connection, to be sure, is tremendously reassuring
to the producers and retailers we work with. On the other
hand, buying cans of coffee or boxes of oatmeal from a huge,
global corporation like Mitsubishi Corporation can be a
little intimidating. Our name and autonomy have made us
a more approachable partner. |
 You
have grown by streamlining the flow of goods from producers
to retailers. What happens to you if and when producers
and retailers start dealing directly with each other?
We have grown by focusing distribution on real consumer
needs and wants. Our business will continue to grow as producers
and retailers work to streamline logistics by linking supply
to demand. They will focus on core operations and outsource
logistics functions to specialists, such as Ryoshoku.
Wholesaling used to be simply a matter of carrying
goods from one place to another and storing them temporarily
along the way. Today, it is a set of specialized, value-added
services in support of supply chain management.
Producers like to work with us because we distribute
products to retailers more efficiently than they could on
their own. That's partly because of the efficiencies we
generate by supplying retailers with shipments from multiple
producers. It's also partly because of our pioneering work
in computerizing logistics.
Retailers, meanwhile, like to work with us because
we keep their stores supplied efficiently and reliably with
the right mix of products--the products that consumers are
buying. That eliminates the need for maintaining large inventories
at each store.
Convenience stores
are the fastest- growing sector in Japan's retail market.
But your business portfolio remains centered on supermarkets
and general retailers. Mitsubishi Corporation recently became
the biggest shareholder in Lawson, Japan's second-largest
convenience store chain. Does that herald an expanded presence
in the convenience store sector for Ryoshoku?
We already do a lot of business with convenience stores,
including the industry leaders, Lawson and Seven-Eleven.
In answer to your question, yes, our business in that sector
will contribute a growing share of our revenues. And yes,
I have great expectations for our relationship with Lawson.
But I want to note that Lawson's management abides wisely
by a policy of purchasing from a full range of wholesalers.
They have seen examples in their sector and in other sectors
where companies have hurt themselves by relying exclusively
on affiliated suppliers. Determined to avoid that mistake,
they are promoting competition among their suppliers. We'll
need to work for every bit of business with Lawson.
We've discussed
your relationship with Mitsubishi Corporation. What are
your thoughts on your place in the larger community of Mitsubishi
companies?
Integrity
is everything in the business of wholesaling. Producers
and retailers literally stake their livelihoods on our reliability.
And the Mitsubishi connection is an implicit guarantee of
integrity in business dealings. While benefiting from that
guarantee, we will do our part to reinforce the positive
identity of the Mitsubishi companies |
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