Tokyo-based Hitachi Ltd. (www.hitachi.com) is a leading global electronics company with approximately 384,000 employees worldwide and consolidated revenues totaling $86.8 billion for fiscal year 2006. The company offers a wide range of systems, products, and services in various market sectors, including information systems, electronic devices, power and industrial systems, consumer products, materials, and financial services.

As a leading electronics company, Hitachi is leveraging the power of global logistics solutions to provide the connectivity necessary to gain line-item visibility, establish partner connectivity, and improve their overall supply chain effectiveness.

Hidehiro Akashi, Chief IT Architect, Solution Development Department, Global Business Planning & Operations Division, is keenly aware of the supply chain’s role in managing Hitachi’s products and manufacturing operations around the world, with visibility being a key component of the supply chain.

“Supply chain visibility allows global organizations that have distributed production sites around the world to leverage the value of a Total Supply Chain Management (TSCM) system. Visibility does play a significant role in Hitachi’s supply chain,” says Akashi, adding that everyone throughout the organization agrees that it is a “top priority.”

However, achieving supply chain visibility meant that Hitachi has had to re-engineering internal processes and attitudes. “As in many large-scale organizations, Hitachi had to re-engineer our own processes, and mind-set, across multiple internal organizations and group companies on a global scale. In order to break the division while at the same time leveraging Hitachi’s overall performance and competitive strength, the organization focused intensely on implementing information sharing measures that included demand forecasts, final goods, WIP, raw materials inventories, supply plan, production plan, and procurement plans, all the way from an operational level through to planning and strategic levels in the company. In addition, Hitachi is attempting to utilize its collective strengths, called uVALUE, which can lead Hitachi to break the silos among industry sectors and carry out the values of being a large, diversified organization.” According to the company’s Web site, uVALUE comprises the letter “u,” which stands for ubiquitous, and the word “value.” uVALUE is value created for customers in a ubiquitous information society by interconnecting business, lifestyles, and communities.

While Hitachi utilizes typical metrics such as inventory turnover, yields, and productivity to measure supply chain performance, Akashi says the company is looking into other ways to gauge progress. For instance, “taking in-transit inventory turnover into account is a relatively new attempt to extend the TSCM execution/control to cover the logistic layer. We believe this is essential to enhance and support criteria, such as increasing customer satisfaction and reducing opportunity loss.”

Akashi points out an impressive example of success in the effort to improve supply chain visibility that occurred within the company’s machinery sector. “Before the deployment of visibility, there was no way to perform exception handling for supply scheduled three months away. Now, with visibility features in place, we perform daily exception handling that addresses forecast-deviations, demand-supply matching adjustments, and reduces unnecessary safety stock on regional sites. As a result, response lead-time (time lag) was improved from three months down to a single day.”

Hitachi’s vendors and partners participate on the same supply chain IT platform, too, which facilitates the larger goal of supply chain visibility, says Akashi. Like a typical Japanese organization, “Hitachi grows together with our partners and vendors, which results in a stronger business relationship, higher credibility and closer dependency,” he notes. “Most of our vendors and partners share the same business objectives, concepts of value, and, in some situations, standard work flows. The coordination and organization of vendors and partners for the rollout of our visibility solution was as simple as a basic EDI, e-commerce implementation. Sharing project information, providing a sufficient time-line and working in partnership with our vendors were the basic critical factors to success. The only identified difficulty for integrating all players into the same platform was from a technical perspective. Each vendor and partner had their own internal/kernel systems. Most of the difficulties arose from helping them to format data definitions, data cleansing, and interfacing, which required a highly skilled and efficient team to accomplish.”

Looking ahead, one of the goals for Hitachi is the closer integration of the financial and physical supply chains—and, it’s a high priority, remarks Akashi. “The level of integration of the financial with the physical supply chain is a challenge for Hitachi. Currently, we do not have a satisfactory integration. We recognize from a business strategy point of view, liking the two together is a critical success factor.”  wt