YKK A quiet success

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YKKA quiet success

• Group 2B FT 2005
• Simone Huijs Piercarlo Oddone
• Suraj Basnet Joan Moreau
• Ken Kodaka Eugene Kolesnikov

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Agenda

• Overview
• Business analysis
• Key success factors
• Key issues
• Future strategy

To be reviewed later
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History of the zipper
Overview
Analysis
Success factors
Future
Key issues

• Whitcomb Judson is credited for the first
  incarnation of the zipper at the Chicago Worlds
  Fair in 1893
• Gideon Sundback presented a modified version of
  the device 15 years later, calling it hookless
  fastener
• The name zipper was first used when
  B.F.Goodrich company manufactured a rubber boot
  in 1923
• In 1930s a sales campaign began for childrens
  clothing with a slogan Mommy, look! One zip and
  Im all dressed!

Gideon Sundbacks patent for Separable Fastner
Witcomb Judsons clasp locker
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YKK Products
Overview
Analysis
Success factors
Future
Key issues

• Three main divisions fastening products,
  architectural products and machinery and
  engineering
• Zippers in 1,500 styles in 427 standard colors
  and in as many special colors as customers
  require
• Other fastening products webbings, hook and loop
  self-closing fastening tapes, buttons, metal and
  plastic notions and buckles
• Serves apparel, automobile, sports, safety
  clothing, military, medical and other industries
• Storefront, entrance, widow, wall, sliding door,
  sloped glazing and other construction items

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History of YKK 1/2
Overview
Analysis
Success factors
Future
Key issues

• Tadao Yoshida at 20 founds San-es Shokai company
  in Tokyo
• During WW II he secures zipper supply contract
  with military
• During 1950s production is automated
• During 1960s Yoshida Kogyo K.K. captures 95 of
  Japanese zipper business
• In 1959 the company goes international first
  overseas affiliate in New Zealand, followed by
  US, Malaysia, Thailand and Costa Rica
• In 1961 company diversifies into aluminum
  building products which by 1990s constitute half
  of revenue
• In 1993 Tadao Yoshida dies and his son Tadahiro
  Yoshida takes control of the company
• In 1994 company changes name into YKK

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History of YKK 2/2
Overview
Analysis
Success factors
Future
Key issues

• 132 affiliates in 60 countries with 75 plants and
  four RD centers
• 36,000 employees
• Sales of US 5.9 billion in 2003 fiscal year
• Production of 7.2 billion zippers per year
• 45 of the world fastening product market
• 193 sales growth during 1994-2003
• Not a single year without net profit
• A family run closed company with 31 stake owned
  by Yoshida family and the rest by key partners
  and employees
• Tadahiro Yoshida on the Forbes billionaire list

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Leadership and strategic intent
Overview
Analysis
Success factors
Future
Key issues

• Andrew Carnegie and Tadao Yoshida
• Innovation -gt realization in product -gt quality
  of life
• Profit goes to customers, suppliers and employees
• We cannot remove profits from the host
  countries. We can accept the interest payments
  on our investment and nothing more. A bridge
  once built must not be withdrawn
• An office without walls
• Employee cooperative approach
• He ran the company as a religious cult
• A vow to never go public
• Sent his sone to study MBA at Kellog School of
  Management

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Global strategic management
Overview
Analysis
Success factors
Future
Key issues

• 1959 Yoshida Kagyo K.K. establishes its first
  overseas affiliate in New Zealand
• Follows the market, in 1960 enters US and
  establishes first production facility in New York
  in 1964 more than 20 years before Toyota
• New facilities follow in Malaysia, Thailand, and
  Costa Rica
• In 1972 YKK becomes the first Japanese company to
  open a factory in the UK (one year before Sony
  decided to build a TV plant in south Wales)
• Key management staff from Japan (broke this rule
  only in 2001)
• Overseas posting to last 10-15 years to ensure
  successful localization while still maintaining
  the ability to communicate with headquarters
• Application of Japanese management culture
• Respect of local culture
• Local procurement

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Product leadership
Overview
Analysis
Success factors
Future
Key issues

• Total vertical integration
• RD investment started in 1950s four RD
  centers functioning today
• Discoveries in materials and products (e.g.
  GIGAS)
• 27 trademarks
• Products featuring water proof, fire proof,
  flexibility, rigidity, durability,
  biodegradability (velcro straps)
• They waited until all our patents expired and
  then made their own improvements and
  modifications, Jonathan Markiles, an executive
  at Tag-It Pacific, the company that now owns
  Talon
• Unique production machines

- 95 added value - Superior product - Fair price
Proprietary manufacturing machines
Total vertical integration
Innovation
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Service leadership and IT 1/2
Overview
Analysis
Success factors
Future
Key issues

• Shop in New York, competition with Talon and
  Optilon.Motto Delivery yesterday
• Serving global clients Adidas example -
  identical zippers in more than 40 countries -
  modernization of all 88 plants overseas and a few
  in Japan - standardization of dies and metal
  alloys
• 1997 shop-floor control system in UK. Now we
  can respond to important orders within the hour
  if necessary. Needless to say, our customers are
  delighted Alan Waterworth, YKKs project
  leader
• 2000 commenced implementation of internet based
  supply chaing and customer management solution-
  USA, implementation of a real-time collaborative
  planning and forecasting system- 2001 Japan,
  EDI file or web format transfer system. Deliver
  dates are met with a success rate of 97
• Customers and suppliers can log on to special YKK
  business portals to make orders, track orders,
  receive updates on products, while YKK integrates
  this information in real-time into order
  processing, manufacturing and delivery

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Service leadership and IT 2/2
Overview
Analysis
Success factors
Future
Key issues
"Our ultimate goal is to create a 'Virtual
Company' that brings us together with our partner
companies. By using EDI as one of the media in
achieving this, we hope to create a system that
will offer advantages for both sides." Yasuhiro
Nishida, General Manager of the Information and
Data Processing Service Center Corporate
Administration
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Porter and 42 models
Overview
Analysis
Success factors
Future
Key issues
4 2 Analysis Focused strategy, performance
oriented culture, fast flexible flat company
structure, flawless operational execution
developing innovations that transform the
industry keeping leadership committed to the
business
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Contemporary issues
Overview
Analysis
Success factors
Future
Key issues

• Increasing global competition
• Decline of older markets
• Dramatic global geographical shift in apparel
  manufacturing
• Growing size and power of the players n Asia
• Substantial counterfeiting (e.g. 10 of zippers
  imported into the US are counterfeit, majority of
  them as YKK)
• Increasing price competition

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YKK responds
Overview
Analysis
Success factors
Future
Key issues

• Strategically
• Shifting production to new manufacturing
  countries (Bangladesh, China, Russia, Romania,
  Poland, Czech Republic)
• Factories in China will account for 17 of global
  capacity vs. 10
• US production capacity with fall by 22. US
  will account for 10 of global capacity vs. 14
• Output capacity in Japan will fall 13 and
  reduction will be made in the UK and Germany
• Offsetting pressures on fastening products by
  growth in aluminum construction sector
• Consolidation of aluminum business and
  standardization in fastening business
• Tactically
• Fighting counterfeiters
• Created new brand aimed at Chinese domestic
  market

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Looking ahead
Overview
Analysis
Success factors
Future
Key issues

• YKK Corp. expects a group net profit to increase
  two-fold from the previous year
• For the next fiscal year beginning April, the
  company expects a healthy group profit of 21
  billion yen on sales of 582 billion yen
• To ensure mid- and long-term growth for the YKK
  Group in an increasing difficult business
  environment, we must focus on specific goals that
  reflect the overall mission of our group
  activities
• Tadahiro Yoshida, President

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Questions ?