1. What are Keiretsu?(P.NARI)
• Keiretsu is an organizational structure that is
comprised of several aspects:
– Financial - cross shareholdings
– Managerial - exchanging of management expertise,
advice, training
– Trade - preferential treatment given to partner firms
– Exclusion - keeps foreign competition out of
domestic economy
– Political - tightly interwoven relationships with
government
– Social - “old boys network” of presidents and senior
executives
• Six main keiretsu business groups in Japan today.

2. Types of keiretsu
• The two types
of keiretsu, horizontal and vertical,
• Horizontal keiretsu
• The primary aspect of a horizontal keiretsu (also
known as financial keiretsu) is that it is set up
around a Japanese bank. The bank assists these
companies with a range of financial services. The
leading horizontal Japanese keiretsu, also
referred to as the “Big
Six”, include: Fuyo, Sanwa, Sumitomo, Mitsubishi
, Mitsui, and Dai-Ichi Kangyo bank groups.

3. • Vertical keiretsu
• Vertical keiretsu (also known as
industrial keiretsu) are used to link suppliers,
manufacturers, and distributors of one industry.
• One or more sub companies are created to
benefit the parent company (for
example, Toyota or Honda).
• Banks have less influence on distribution keiretsu.
This vertical model is further divided into levels
called tiers.

4. OVERPRODUCTION AND EXCESS
INVENTORY.
• Another area of waste that is a special concern in
the Toyota system is excess inventory.
• The ideal is to produce without accumulating
inventory, a condition known as non-stock or
just-in-time production.
• In such a process the company produces goods
at the exact quantity and schedule that they are
required by its customers.
• To produce more than customers actually need
so than they need its considered overproduction,
leading to a build-up of stock or inventory.

5. • Overproduction can also occur internally when
different steps of a manufacturing process and
excess materials or semi-finished products
accumulate.
• Systems like the Japanese kanban established a
set of often simple visual cues in the factory (e.g.,
when no work-in-progress is waiting in a painted
square on the floor, it is a signal to advance the
next item into the process) to help coordinate
the flow of materials and work.

6. • Carrying inventory is wasteful because the
company must store it or perform other
additional handling that increases the total cost
of its operations.
• By minimizing the need for such storage and
handling, the company can reduce both the
direct costs of holding/handling inventory as well
as the indirect costs of tying up capital in the
form of excess inventory.