Solve business issues by integrating IT and management
What is Business + IT?
Login
Newsletter registration
What is Business + IT?
Related genres
Why is the number of fans steadily increasing due to the amazing "swipe strategy" of the EC powerhouse Monotaro?
[Series] "Business course" of successful companies
While the world is facing a difficult situation due to the influence of the new corona, we have introduced the latest equipment for automation and labor saving, such as unmanned shelf transfer robots and automatic packing machines. There is a company that has decided to operate The name of the company that does not slow down its growth even in Corona is MonotaRO (hereafter, Monotaro). Known as the Amazon of tools, it is a rapidly growing company. Why is it possible to continue to grow even in the corona misfortune? When I explored the reason for the growth of Monotaro, there was an excellent "slide strategy". Using charts, I will explain the secret of the company's strength.
Management Consultant Daichi Shimizu
Management Consultant Daichi Shimizu
Field Management Executive Officer/Principal After working at Nomura Research Institute, Accenture Strategy Group, and Frontier Management, he assumed his current position. He has over 13 years of consulting experience. He believes in unrefined consulting that commits not only to planning, but also to results through execution support and execution support. Co-authored "Winning with Time Consumption" (Nihon Keizai Shimbun, Inc.), "Discovering Financial Statements of the Distribution Industry by Management Consultants" (Commercial Industry), etc.
- "Direct materials" and "indirect materials" in the manufacturing industry
- "Inconveniences and dissatisfaction" in the indirect materials market...why SMEs bear the burden < li>Characteristics of Monotaro's mail-order business
- What is the mechanism that "sells well" even though it is a long-tail product?
- Continuing to increase customers, the essence of Monotaro's "swapping strategy" li>
- What is the next development that the master of the Zurashi strategy is aiming for?
"Direct materials" and "indirect materials" in the manufacturing industry
In order to understand the advantages of Monotaro's strategy, let's first briefly review the business of the manufacturing industry. I want to keep Normally, the manufacturing industry purchases raw materials and raw materials, manufactures and processes them, and then ships them as products. At this time, raw materials and raw materials that are directly transformed into products are called "direct materials." On the other hand, products that accompany manufacturing and its surroundings are called "indirect materials" (also called MRO: Maintenance Repair and Operation). For example, in a food factory that manufactures rice balls, rice and salmon (ingredients) are "direct ingredients" because they are transformed into rice balls. Since onigiri has a direct impact on the quality and price of onigiri, manufacturers frantically search for better raw materials and hold negotiations with suppliers until the last minute, including competitive quotations. However, in addition to rice and salmon, onigiri production requires a wide range of indirect materials, such as stationery and light bulbs used in offices, as well as maintenance parts and cleaning tools for machines at manufacturing sites. ”, the company conducts its activities. Unlike direct materials, indirect materials do not have a direct impact on the product quality of their core business, so companies (honestly) have little interest in them. Furthermore, indirect materials are characterized by (1) a wide variety of types and (2) a wide range of users (therefore, the places where they are used are also scattered), making collective management difficult. Due to these circumstances, the purchasing department of a company generally has the mission of procuring and managing direct materials, and the reality is that even indirect materials are beyond their control."Inconvenience and dissatisfaction" in the indirect materials market...why SMEs bear the burden
As a result, the procurement of indirect materials for each company is left to the person in charge, and regular cost cutting is also implemented. (It is often said that there is a lot of room for cost cutting because it is an area where you can easily and quickly achieve results rather than raising a few percent of operating income in your main business.) Indirect materials are scattered throughout the company and have room for cost reduction, but when it comes to large companies, they are cumbersome and the procurement amount is large. Therefore, the sales representatives of companies that sell indirect materials are dispatched to large companies as "order collectors" to carefully receive orders and supply supplies. However, when it comes to small and medium-sized companies that are inferior in scale, the sales companies that want to sell indirect materials do not put much effort into sales, so it is not possible to "listen carefully". As a result, in some cases, the people in charge of small and medium-sized companies have to purchase indirect materials themselves, and they often have a hard time. Another characteristic of indirect materials is that their prices are not disclosed, which is the so-called "multiple prices for one product". For this reason, estimates are obtained each time, and even at this time, small and medium-sized companies with inferior volumes are often forced to get higher prices than large companies. In other words, the "disadvantages" of the indirect materials market, such as inconvenience, disadvantages, and dissatisfaction, were unevenly distributed among SMEs. Related articles▲ Close▼ Show all
Characteristics of Monotaro's mail-order business
Monotaro started as a joint venture with Granger, Inc., which handles indirect materials. While the market size of indirect materials is 10 to 20 trillion, players such as ASKUL in stationery and MISUMI in assembly have been developing their business targeting small and medium-sized enterprises, but no one has touched on "tools". rice field. Focusing on this, Monotaro considered it repeatedly, and decided to start as a mail-order business targeting metal processing companies. In general, in a mail-order business, it is said that the breadth of the product lineup and the number of customers are the keys to scaling the business, so Monotaro also went in that direction. However, here Monotaro aims for growth based on the concept of "narrow and deep". Monotaro avoids unnecessarily widening the range of customers and expanding the products it handles, narrowing down the target customers to metal processing companies, narrowing down the products to those they want, and thoroughly expanding the product lineup. We pursued the concept of “sa”. However, even though we have narrowed down the area we handle from indirect materials to tools, there are still countless products when viewed at the SKU (stock keeping unit) level. Therefore, adding these products to the product lineup increases inventory risk, but without handling so-called “long-tail products” that have even higher inventory risks, it cannot be a true one-stop shop for customers. What kind of measures did Monotaro take to reduce inventory risk while handling long-tail products? [next page] What is the mechanism that "sells well" even though it is a long-tail product?Recommended article
Manufacturing IT genre seminar
To list
Manufacturing IT Genre Topics
To list
IT introduction support information for manufacturing industry IT genre
To list
PR
SB Creative Co., Ltd.
Business + IT is operated by SB Creative Corp. of the SoftBank Group.
By registering as a business + IT member, you can subscribe to members-only content and e-mail newsletters, and be invited to special seminars!
