Supplier Relations in Japan: An International Perspective

This paper describes major characteristics of Japanese supplier relations in an international perspective. The supplier relations in Japan, particularly automobile industry, is examined in comparison with those in the United States. The primary purpose of the study is to identify significant features of Japanese supplier relations and to provide economic rationale for those relationships. In addition, comparing suppliers relations in Japan and the U.S., convergence in the nature of those are discussed. Significant features of Japanese supplier relations are identified: long-term relationships and commitments with effective communication; forced competition among few suppliers; willingness to make transaction-specific investments in plant, equipment, and human capital as well as to share technical information; significant involvement of suppliers in product development with sharing of information. Suppliers relations in the U.S. are changing and moving close to the Japanese counterpart. There has been a limited, yet noticeable, convergence in the nature of the U.S. and Japanese supplier relations.