New York — Chrysler is a victim of a huge problem that plagues Japanese industry and which our new CORPORATE INNOVATION PROJECT is designed to obviate: a fatal lack of demand management. The lack of demand management in Japan is so bad that companies there have never heard of it. Chrysler’s inability to manage demand — a company problem in most of the world — plagues the entire Japanese nation, and that, in turn, is a problem for everybody who sells to, or buys from, Japan.
The chart shows how demand management works. Companies with IT good enough to generate high cash velocities also get the customer information premium that comes from those velocities. Companies without effective demand management IT have low cash velocities and, therefore, customer information deficits. Often they don’t know what they don’t know.
In Japan the chronic lack of demand management IT means that demand and supply are never synched well enough to ensure operating margins commensurate with market share or sales growth. This is how a large operator like Sony can have strong sales and weak operating margins while non-Japanese companies like Proctor and Gamble, Apple, and HTC get both high growth rates and high margins.
It is the difference between scaling profitably and not.