The analysis of supplier companies

In between, more sample PCB supplies than assembly subcontractors complained that their customers were unwilling to make long-term commitments. Short-termism was due to a combination of switching suppliers for a small price advantage and uncertainty about future oder levels due to non-disclosure of future production plans by customers. With respect to B120(PCB)'s managing director, for instance, lamented its customers' proneness to flit from it to another supplier offering a 'silly price', only to come back to the company having been let down in either quality or delivery(see NEDO for a similar point).

With respect to, customers' non-disclosure of future business plans created a sense of uncertainty in the British PCB suppliers. To the pair of statements:
1, Our customers always let us know in advance their future production plans
2, Our customer tend not to let us know their future production plans.
All the British PCB suppliers chose the latter while all the British electronic assembly sub-contractors chose the former. Such uncertainty was said to be either created deliberately by customers who wished to appear to call off greater quantities than actually planned so as to extract lower prices, or due to their inability to forecast future demand themselves. Neither opportunism nor incompetence is conductive to creating an atmosphere of trust.

B410(PCB)'s sales manager also talked in terms of customers having a 'narrow window approach', and how orders die a sudden death. At this supplier, there are two ways in which customers' commitment beyond the next twelve months is sought. One is through a letter of intent, which states only the estimated manual level of order. The other is through lengthening the contractual period beyond one year, e.g. up to five years, the managing director of B500(PCB), which has agreements lasting up to three years, prefers long-term contracts because less time is wasted in negotiation of contractual terms(in particular, he noted, over who bears the cost of stock-holding in JIT delivery).

In Japan, as the questionnaire results indicate, long-term continuous trading is both desirable and achievable. Many of the sample suppliers have been trading with their major customers ofr the last twenty years or longer non-stop. In the case of J120(PCB), the trading relationship with its major customer detes back from even before the company started manufacturing PCBs. In fact, it was the customer who suggested that J120(PCB)'s in-house skill in painting and sheet-metal processing might be a good foundation for diversifying into PCB production.

One would expect relatively heave transactional dependence and long-term commitments in customer-supplier relationships to go hand in hand. At the extreme, companies such as J30(EA), J160(EA), J360(EA), and J650(PCB), which are 100 per cent or nearly totally dependent on a single customer, are in effect trading on the assumption that the relationships will continue, if not for ever, for a long time. They also had very good access to their customers' future production plans.

But it is not just for the heavily dependent suppliers that this working assumption applies. Even J65(PCB), which prides itself on being exceptionally independent in the Japanese industry, has not been able to refuse an order from NTT(and its pre-privatised Denden Kosha) of anidentical part number which has been continuously placed for the last twenty years. Thus, just as some British customers' fickle behaviour of light-heartedly breaking off relationships as prices dictate can be a constraint on British PCB suppliers, the Japanese trading norm of long-term relationships may act as a constraint on both customers(as we saw in the case of JJ Electric) and suppliers.

In sum, long-term continuous(with an emphasis on continuous) trading is more of a norm in Japan than in Britain. There is evidence that Japanese suppliers are given more access to customers' future production plans than British suppliers. Some British suppliers complained about the short-termism of their customers (no such complaints were encountered in Japan), which they tried to rectify by both contractual and more informal methods. A minority of British PCB suppliers, however, regarded short-termism as a small price to pay for obtaining orders with high profit margins.