- Did you choose the company as an example of effectiveness or ineffectiveness? Why?
“DASSAI” is the best seller and most famous Japanese rice wine (“SAKE”), which was presented to the President Obama from Japan’s Prime Minister Abe during the visit in 2014. I chose this example as a successful and intriguing example of integration between an innovative operation process and a successful business model. Asahishuzo (“the company”), the manufacturer of DASSAI, was once in danger of bankruptcy due to the failure of diversification of its business. However, after the current CEO took over his position and changed its SAKE making process dramatically, DASSAI now became the most popular Japanese SAKE and known throughout the world. Its sales are expected to increase by 32% in 2015, despite its shrinking “SAKE” market in Japan.
- Describe the company’s business and operating models. What is interesting about them?
The most interesting feature of its operating model comes from its data-oriented “SAKE” manufacturing process. Traditionally, “SAKE” manufacturing process was largely dependent on the experience and feelings of experts with long period of severe training. Therefore, most part of the process including manufacturing, production plan, and inventory management was led by these experts and literally the “black box”. However, after the crisis of near bankruptcy, the CEO of Asahishuzo tried to establish more efficient and reliable process by analyzing all the manufacturing process by using “Excel” and control the process without these experts. He computed as many data/figures as possible, including weight of rice used, time of washing rice, water temperature, humidity, etc. By enormous trial and error, he finally found an ideal process which enable the company to create best quality Japanese “SAKE” without help by experts.
This “scientific and industrialized” method of SAKE manufacturing enabled Asahishuzo to establish successful business model. One interesting element is the company expanded its target market from within Japan to throughout the world. Typically, Japanese SAKE manufacturers aim for domestic market because the manufacturing process limit production volume of its SAKE. However, thanks to Asahishuzo’s new method, the company obtained mass production capacity which enabled the company to enter into overseas markets with enough amount to export to these markets. Especially, the company intensively explored its sales route in France and the United States, where there are biggest potential and influence over other markets. The company now envisions to increase the sale outside of Japan from current 10% to more than a half. As a result of continuous efforts, DASSAI won several awards outside of Japan, which boosted its sales in the overseas markets.
Another successful element is that Asahishuzo can manufacture SAKE throughout the year while keeping its quality very high, thanks to the data oriented process. Normally, Japanese SAKE is made in winter, but Asahishuzo was not affected by this seasonality because its process enabled the company to find the way to adjust to the weather, temperature, and seasonality differences which used to be huge obstacles for year-long production. This enabled the company to manufacture SAKE steadily and, as a result, increase production volume to ship to its markets. Consequently, the company become able to conduct marketing throughout the year, which contributed to increase in sales and expanding its recognition.
- Do the models align and support each other? How? What specific features of the operating model are designed to create and sustain competitive advantage? What features of the business model leverage unique capabilities of its operating model? What are the implications for performance?
As such, the data oriented innovative SAKE manufacturing process enabled the company to establish successful business model. This new process helped the company to achieve 10 times of production capacity over the 15 years, with keeping its high quality and reputation over the taste. This data oriented manufacturing process is not some thing novel in other industries, but introducing very old fashioned SAKE making process delivered the value to the market. Also, with the continuous “Kaizen” process, Asahishuzo continues to improve its manufacturing process, which enable the company to keep the competitive advantage over other competitors. These models combined, Asahishuzo’s performance is far exceeding under the sharply shrinking SAKE market in Japan.
- Nikkei Shimbun, Dec 5, 2015
- TOYOKEIZAI Online, July 7, 2014
- nippon.com, Dec 16, 2013
- Asahishuzo Website (Dassai’s manufacturer)