DAIKIN INDUSTRIES

SYNDICATE GROUP 3
OPERATION MANAGEMENT
SLEMBA BPOM

1. Putra Gusrianto
2. Rizka Ayu Kusuma W.
3. Shanty Sarah
4. Taufiqurrohman
5. Terry Yessi Evelin
6. Monik Umi Sakinah
COMPANY OVERVIEW
 Daikin Industries Ltd
was founded in 1924 as the company was
Osaka Kinzoku renamed Daikin Kogyo
Kogyosho LP by Akira Co Ltd and developed it was renamed to the current
Yamada Neoflon Daikin Industries Ltd

1924 1963 1982

THE 2019
HISTORY Four new products,

OF DAIKIN including residential and

commercial air
conditioners and air
purifier, are launched for
the new brand line
1984 1991 2000 "Ururu Sarara series."
 Achieves 1 million Daikin America, Inc. The research
production of and MDA department is split into
packaged air Manufacturing, Inc. are three companies:
conditioners. established in the U.S.A. Daikin Air Conditioning
as fluorocarbon polymer R&D Laboratory, Ltd.,
 Daikin first inverter production and sales Daikin Systems &
type air conditioner companies Solutions Laboratory,
is marketed. Ltd., and the Daikin
Environmental
Laboratory, Ltd.
QUESTION 1
WHAT IS YOUR
ASSESSMENT
OF THE PROBLEM
CONFRONTING
THE SHIGA
FACTORY OF
DAIKIN
INDUSTRIES?
 • UNCERTAIN SALES TREND
BECAUSE IT DEPENDS ON THE
PROBLEMS FLUCTUATIVE SEASON
ON THE
• INACCURATE ORDERS FROM
SIDE OF
THE SCM SALES COMPANIES TO FACTORIES
• THE HIGH COST OF PRODUCTION,
BOTH IN TERMS OF MATERIALS
AND WAGES
 • RECESSION IN JAPAN WHICH RESULTED IN REDUCED
HOUSING STARTS. AS A RESULT, AC INDUSTRY
PLAYERS AIMED MOST OF THEIR EFFORTS AT
INCREASING THEIR SHARE OF REPLACEMENT
STAGNATION SALES, NOT THE NEW INSTALMENT IN NEW HOUSES.
DUE TO MARKET • TIGHT COMPETITION WITH SMALL MARGINS. AC
GROWTH WERE MOSTLY CHOSEN ACCORDING TO INSTALLED
PRICE AND THE AMOUNT OF COOLING REQUIRED,
DELIVERY AND INSTALLATION OF AC UNIT.
• LENGTH OF PRODUCT USAGE PERIOD (10-12 YEARS
IN AVERAGE).
QUESTION 2
WHAT ARE THE
STRENGTHS AND
WEAKNESSES OF
SHIGA FACTORY
RELATIVE TO THE
COMPETITORS ?
 A2: THE STRENGTHS OF SHIGA FACTORY

Shiga Factory's supplier is a

wholly owned subsidiary of
Daikin

Good relation with the others

suppliers
Huge variety for product line

Human Resource and A well-managed and highly trained

research and development department
 A2: THE WEAKNESSES OF SHIGA FACTORY

Does not have Daikin has very limited amount Inventory turnover ratio is very low
considerable of market share amongst
presence in other competitors
countries outside
Japan Company Market Share (%)

Matsushita 18.0
Mitsubishi Electric 15.0

Toshiba 11.0
High-cost production Hitachi 10.5
Sanyo 10.0
Product Cost Breakdown Daikin 9.0
Others 26.5
(%)
Materials 85%
Direct Labor 6%
Overhead 9%
 QUESTION 3
AS MR OKA, WHAT
SHORT TERM AND
LONGTERM
ACTIONS WOULD
YOU
RECOMMEND TO
YOUR BOARD OF
DIRECTORS? HOW
WOULD YOU
JUSTIFIED THEM?
• Build a new system on pre order to
prevent unprecise demand.
• Establish a production planning
priority to the 600 variety of products,
depend on most demanded varieties to
sell.
• Develop a real time digitalized
inventory system that integrate the
inventory stock level at retailers,
regional warehouse and manufacture.
• Invests in customer service to develop
customer loyalty and build strong
relations with its clients. > to gain
replacement service
Short Term Action
• Establish a simple sub warehouse to
cover several regional sales companies
based on geographics.
• Consider to invest an exclusive
retailers owned by the company which
solely sold the Daikin products
• Consider to build an online retailing
that enable Daikin to communicate
and retail directly to the consumers.
• Establish a new factory outside Japan
to expanse the market, while still
maintain the quality assurance of
products.
Long Term Action
QUESTION 4
WHICH STEP IN
THE SUPPLY
CHAIN, IF ANY,
WOULD YOU LIKE
TO TIGHTEN UP
OR ELIMINATED?
IF SO , HOW
WOULD YOU
PROCEED?
SCM of Shiga Factory

the demand is not based on the

level stock from the retail store
or retail warehouse, its from
experienced and discussion
do not have warehouse,
with retailers purchasing.
so they relied on factory
because the sales company warehouse to carry
afraid the retailer out of their sufficient inventory
stock, the forecast do not
provide precisely

sales company give forecast to

Shiga company as "pre-PO".
the Pre-PO can be cancelled
any time up to one month.
Recommendation for SCM of
Shiga Factory
Recommendation:
1. Daikin Shiga company can tight up the delivery time of raw material
from their supplier so it can reduce the delivery time
2. Daikin can maintain Shiga factory sub warehouse to cover several
regional sales companies, so the product stock can be easily controlled
and cut the time to bring the product to retail store.
3. regional Shiga company should tighten up about the stock in retail store or
retail warehouse to give the precise PO to Shiga warehouse so the
fluctuation of product in warehouse can be minimize
QUESTION 5
WOULD A MOVE A
LOW –COST SUCH
AS CHINA BE IN
YOUR PLAN?
 REASONS WHY CHINA IS SUITABLE
FOR NEXT MANUFACTURING
Tech-Savvy Industry
Lower Production
Cost Outstanding China is the region
Production where embracing
Undoubtedly, the technology is not as
Low-Cost Labor
domestic One of the reasons difficult as it is always
manufacturing cost is why China is known talked about. Although
You don’t have to
higher than that of for leading the some businesses have
worry about human
manufacturing in production industry is to wait for the right
resources as well.
China. The fact is real, having the capability time to introduce
China is famous for
and that’s why it is to cater to large innovative solutions,
having cheaper labor
continuously productions. It is time- the Chinese
with versatile skill set
becoming a leading efficient and reliable; manufacturing
demand of today’s that’s why China has industry never fails in
global manufacturers. received global fame embracing technology
for facilitating the
operations
Based on the reason above, we will recommend getting a new factory outside of
Japan to the board director (China).

However, this recommendation has a flaw which is the quality of the product
might not be same as is an Japan. To avoid that, we recommend to:
• If the Shiga factory in China deserve to produce finished goods as similar to
Japan site, then it should implement and strengthen the good quality
management systems, in order to assure the quality of products.
• If the Shiga factory in China is positioned as supporting manufacturing to
Japan site, then it is recommended to produce a non vital part only.

By creating a factory outside of Japan too, Daikin will be able to go grow an

expand to the global market easier. This could lead Daikin to greater success in
the future.
THANK
YOU