Coordination between production and distribution in a globalized network of firms : assessing flexibility achieved in the Japanese automobile industry

Abstract

Production and distribution of today's typical goods is conducted by a network of firms developed by a core manufacturer with its suppliers and dealers, and anatomy of this network is becoming an urgent task as transition toward more flexible manufacturing proceeds. Focusing on the process of order processing and production control, this paper investigates from a comparative viewpoint how coordination is made between the downstream and upstream sides in the operation of a globalized network developed by typical large automobile manufacturers. According to a measure constructed in the paper, it is suggested that domestic operation of one or two Japanese firms has achieved relatively high flexibility. The paper then addresses the following questions. (1) To what degree can production be based on orders entered by consumers ? (2) What elements are universally found in a network developed by large automobile manufacturers regardless of the country-origin of the core firm ? (3) What are the factors that enabled some Japanese firms to achieve high flexibily in their domestic operation ? (4) Why has their operations for overseas market lagged behind and what are the prospect of their offshore production from the viewpoint of flexibility ? The analysis on these points illuminates the role played by the rganizational skill formed and accumulated in the constituent firms of a network.