Absorbing Suruga Seiki and going holding-company: the end of pure distribution (2005)

A company remaking its own invention without discarding it

The heart of this decision lay less in the acquisition than in the judgement about which parts of a successful business model to keep and which to let go. What MISUMI actually held through its catalogue invention was a technique: standardize the specification of a part, and you compress both the customer’s choosing and the customer’s waiting. That value was preserved intact, while the function on the other side — feeding the standardized information into the production process — was pulled in-house. By taking back the “making” it had been leaving to contractors, the company could carry the benefit of standardization through into both lead time and cost. That Saegusa, brought in from outside, began by folding seven businesses, and that he then executed this integration, were two faces of the same judgement.

There was a price, all the same. The light balance sheet of the pure-distribution years was gone, and the company took on the weight of plant and the management cost of post-merger integration. Even so, improvements that only accumulate in a company with a shop floor of its own — the lead-time reductions at the Shimizu plant, for instance — ran on for nearly twenty years and led to something like meviy, where a part arrives if you simply send the design data. Defend the model you invented, or rebuild it wholesale: the 2005 choice is distinctive in taking the second path without throwing away the assets of the first.