Book Introduction

Published by The Japan Times, Ltd.
First edition: November 2006

BUILD-TO-ORDER MANUFACTURING
WINNING STRATEGIES

Author

Hirotoshi Shibuya
CEO & President
Shibuya Corporation

Hirotoshi Shibuya was born in September 1931. He graduated from the Department of Economics of Kyoto University in 1953, and in April of that same year, joined Shibuya Corporation. In 1973 he was appointed Vice-President, and promoted to President in 1983. Mr. Shibuya also served as the chairman of Ishikawa Machinery and Electronics Association in 1973, a guest professor at Kanazawa University in 2000, and Councilor of KEIDANREN (Japan Business Federation) in 2008. Mr. Shibuya has received recognition awards from Kanazawa City (1999) and Ishikawa Prefecture (2009) for his contributions to the local economy, and he was conferred the prestigious Order of the Rising Sun, Gold Rays with Rosette from the government of Japan (2010).
Mr. Shibuya, his brother Ryoji Shibuya, Hideyuki Kamiryo and two other colleagues, formed the Shibuya Foundation for the Promotion of Science, Culture, and Sports and are devoting their efforts toward the promotion of local culture and sports.
Mr. Shibuya’s mottos are “Always be cheerful and positive onward,” and “Business first and golfing second.” Regarding his golf game, Mr. Shibuya has shot his age more than 300 times, and has seven hole-in-ones. His previous publications include: Challenge to Single Player (in Japanese) in December 1999, Productivity Improvement in April 2000, Build-to-Order Manufacturing Winning Strategies in May 2006, and Youthfulness Is a State of Mind (in Japanese) in June 2014.

CONTENTS

Preface
ix
Foreword
xi
An Introduction to Shibuya Kogyo
xix
(1) The History of Shibuya Kogyo
xix
(2) The World-leading Technologies of Shibuya
xxvii

PART I

THE FUNDAMENTALS OF BUSINESS FINANCE
 
1. Understanding the Balance Sheet
3
2. Statement of Cash Flow and Statement of Funds
7
3. Understanding the Income Statement
11
4. Understanding Financial Ratios
13
5. Elements of Productivity
19
6. Understanding Working Funds
25
(1) Required Working Funds
25
(2) The Timing of Revenue, Expenditure, and Cash and Deposits
27
(3) The Relation of Trade Terms and Conditions and Required Working Funds
30
(4) Notes Receivable-Trade Discounted and Loans
36
7. Capital Investment Strategy
37
(1) Effective Capital Investment
37
(2) Capital Investment, Depreciation, and Interest
40
(3) Capital Investment and Leasing
41
8. Development of the Break-Even Point
44
(1) The Break-Even Point (BEP) by the Straight-Line Method
44
(2) The Break-Even Point by the Hyperbolic Method
48
9. The Physical Unit
52
10. Productivity of Labor
59

PART II

ANALYZING PRODUCTIVITY: CASE STUDIES
 
Case 1. Analysis of Required Funds and Productivity
69
Case 2. Long-Term Business Planning and Productivity
77
Case 3. The Physical Unit and Productivity of Labor
86
Case 4. Comparison Between Inside and Outside
Manufacturing
92
Case 5. Subcontracting and Comparing the Productivity
of Subcontractors
104

PART III

BUSINESS MANAGEMENT AND FINANCE: CASE STUDIES
 
Case 1. Company Leaders and Company Finances (Working Funds)
115
Case 2. Plant and Equipment Investment and Management Policy
124
Case 3. Mortgages and Growth
131
Case 4. Organizational and Financial Management
136
Case 5. A Productivity Analysis: Shibuya Kogyo Over the Past 43 Years
147

PART IV

YO-JITSU COST CONTROL
IN BUILD-TO-ORDER MANUFACTURING
 
1. Build-to-Order Manufacturing and the Importance of Cost Control
163
2. Costs and Profits in Build-to-Order Manufacturing
167
3. Management Indexes for Cost Control
174
4. Cost Control Systems at Shibuya
178
5. Yo-Jitsu Cost Control Procedures
187
6. Results of Shibuya’s Yo-Jitsu Cost Control
200
7. “Yo-Jitsu” at S・I Seiko Co., Ltd.
204

PART V

ESSENTIALS FOR SUCCESSFUL MANAGEMENT
 
1. Sharing the Company Vision and Philosophy
211
2. Practicing the Three KAIs:
Kaizen: Improvement
Kaikaku: Innovation
Kaihatsu: Development
217
3. The Three KAIs through BMBO
226
4. Timely Review of the Business Plan
236
Afterword
241
Appendix:
“TFP and the Measurement of Capital and Rents by Sector:
With the Data-sets of Thirty Countries,1995–2004”
by Hideyuki Kamiryo
245

PREFACE

A fine book has been published which should be very useful for those who want to make their comparatively small company one of the strongest companies in its field.
The author entered the small company run by his father after graduating from the department of economics of Kyoto University, becoming its president in 1983. Now that small company is one of the strongest companies in the world in the field of bottling-system machines.
Therefore, this book has been a best seller in Japan, and his management theory and practice have attracted the attention of many people.
This book gives managers confidence and points the way to solid results. Many rely too much on instinct or the advice of experts in financial affairs, and are apt to act either too cautiously or too boldly. In addition, experts in financial affairs may not always know well the important characteristics of each company. So the author of this book emphasizes the importance of managers themselves becoming educated in financial analysis and investment policy. Using a variety of illuminating case studies, he presents in an easy to understand way a number of effective accounting methods and shows their practical use in making good managerial decisions.
However, even if rational decisions are made, this may not always bring the high results expected. For, in a management situation, a decision and its realization are two different matters. Therefore, this book also gives valuable advice in various concrete management methods to strengthen the technological, managerial, and sales skills that will bring real results.
The author has performed a valuable service indeed in distilling what he has ｌearned in his five decades in business for the benefit of those who are working managers or aspiring to such positions.

ISAO AKAOKA
President, Prefectural University of
Hiroshima