The New Improved Keiretsu

• Keiretsu:- Close and long –lasting relationships between buyers and suppliers.
• Traditional Keiretsu:
 Obligational relationships based on trust &goodwill.
 OEM would draw an exclusive decades- long relationships with key suppliers which owned
significant shares.
• New Keiretsu:-
 Flexible Sourcing by keeping costs down.
 Favourable target prices.
 Demanding integrated systems.
 Involving in product development.
• Why Keiretsu so durable?
 Cost
 Innovation
 Quality
 Anshin
 A Smarter way to Buy
• The biggest cost for most businesses is procurement.
• To help companies uncover the costs involved in the procurement they developed a framework called
activity based costing.
• The framework gives managers a systematic way to identify and organize the full costs of a company’s
relationships with its suppliers.
• Using this framework can lead to smarter buying decisions & lot of savings.
• Horizontal axis lays out steps in the procurement of value chain from acquisition to elimination or recycling.
• Vertical axis represents three main levels at which costs are aggregate.
 Supplier level.
 Order level.
 Unit level.