How do you break the news to a warehouse manager or a trucking company boss that they are about to lose their biggest client?
The 13 years he has helped customers reduce distribution costs in Japan have not taught Scott Smalley any easy, ready-to-use phrases when dealing with subcontractors facing the ax.
Sometimes, “the words you use just don’t matter. Because . . . there is nothing you can say,” he said. “It’s not material you cover in language class.”
In times like that, what counts is trust. Managers won’t go through with reforms that will cause so many workers pain unless they trust you, he said.
Smalley, a contract logistics manager for the major German shipping company Kuehne and Nagel Ltd.’s Tokyo office, is one of the few foreign specialists in Japan’s complex logistics apparatus. The last decade saw the American handling distribution strategies for multinationals like the GAP casual clothing chain.
“Frankly, age helps,” the 37-year-old said. “Now that I’m older, it’s been a lot easier” to win trust in Japan. Five years ago, he said, there would have been no way he could have gained some of his present clients.
But where do you start?
For Smalley, when beginning business negotiations with Japanese, the opener may be: “I can’t eat ‘shiokara’ (fermented squid).” The simple statement eliminates a sea of trite questions about whether he can use chopsticks and eat “natto” (fermented soybeans), and immediately positions him as a seasoned veteran of things Japanese. “Then we can start talking business.”
His second secret is basic: Know your stuff.
“I need to show my clients I know what things cost in Japan,” Smalley said. “If I’m asked a question, I can answer, without having to say ‘e-to, e-to’ (um in Japanese).”
Plus, numbers don’t lie, and clients appreciate it when you can demonstrate on paper how switching fixed costs into variable costs would help cut costs, he said.
Logistics refers to how a company stores, allocates and distributes its products and supplies. Typically making up a third of a firm’s cost structure, logistics in the last 10 years have been major targets of cost cuts.
Smalley remembers pushing through one restructuring program at a midsize manufacturer. The decision called for pulling inventory out of a Tokyo warehouse in three months.
The most vocal opposition came from the manufacturer’s head of human resources, who said there was too much risk in cutting off a warehouse operator with whom they had been doing business for five years.
When feelings run strong, Smalley’s usual methods of rephrasing requests into questions don’t work.
That’s when he resorts to “nemawashi” (consensus-building) tactics. Literally, “digging around the root of a tree before transplanting it,” Smalley seeks the support of a board member to ram through change.
“Getting things done means knowing who to talk to.”
A common piece of advice Smalley gives to clients these days is: Don’t assume the U.S. “global standard” is always right.
Multinational corporations can become fixated on facilities like built-in sprinklers in warehouses, which can cost five times as much as in the U.S.
“Lately, I get more frustrated at multinational companies,” he said. “Sometimes, (they) can’t seem to understand that some things can be done differently.”