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Introduction of Group Companies
Value One Summer 2008 No. 21
Koho presents its own unique business model, one that is geared to meeting the regional need for small lots and quick deliveries-a kind of "convenience store" that sells cold finished steel bars-in the Tokai region.
Significant Presence in the Tokai Region's Retail Market

Koho was established in 1971 through a joint capital investment by major secondary processor Miyazaki Seiko Co., Ltd. (headquartered in Nagoya; president: Kaoru Miyazaki) and Mitsubishi Corporation for the dedicated sale of cold finished steel bars. Cold finished steel bars, made by drawing steel bars or wire rods through a die and polishing the surface by acid washing or shot blasting, are extensively used in making automotive and industrial machine parts.

In its early phase, Koho intended to be a kind of "department store" that sells an extensive array of cold finished steel bars supplied by Miyazaki Seiko. More recently, however, it has steadily increased the breadth and depth of its business activities, becoming more like a "convenience store" that sells cold finished steel bars, to meet the need for small lots and quick deliveries.

President Tadashi Kawane, originally from Miyazaki Seiko, has held his present position since 1995 and is proud of Koho's unique business model, saying, "The demand for cold finished steel bars will not grow significantly, but we have built up a presence in the retail market in the Tokai region by providing high-value-added services that feature elaborate machining and adaptability and answer the need for small lot supply and quick delivery, something that major steelmakers are unable to offer."

Koho's greatest strength lies in its organizational ability to accept an order for as little as a single machined piece weighing only a few grams and deliver it. The company's sales force and production shop are connected by computer to each other at all times to ensure adequate response to urgent delivery needs. To meet such a need for small lot supply and quick delivery, the company has successively launched sales offices since the 1990s in key locations throughout the Tokai region, including Numazu, Yokkaichi, Komaki, and Okazaki, in pursuit of developing a regionally established clientele.

Under the leadership of President Kawane, plant personnel strictly observe the company's 5S principles (five Japanese words that begin with the letter s and translated into English as tidiness, putting in order, cleaning, cleanliness, and discipline), and the resultant high efficiency of shop work is one of the main reasons behind Koho's competitive strength. Shop workers come up with small innovations and improvements spontaneously as if it were a part of their routine, and said Mr. Kawane, "Even visitors who came here half a year ago are often surprised by the changes that have taken place over the past sixth months."

The company's sales volume in 2007 was approximately 12,000 tonnes, which was secured by entering into many small retail transactions and included almost no tied sales with big customers. This sales level was supported by customers who required small lots who would sometimes buy only a single rod or a single machined item. Today, Koho has some 1,100 customers and, according to Mr. Kawane, is increasing its clientele by about 80 companies every year. "I would like to see as many customers as possible take advantage of the benefits we provide," added Mr. Kawane, who is eager to take more steps forward.

Regarding Koho's collaboration with Metal One Corporation, President Kawane plans to manage his company in such a way so as to create a closely knit relationship with the Group, saying, "Especially these days, when the steel industry itself is in a phase of major change, we would like to actively exchange information with Metal One, who is the industry leader, and continue growing while overcoming the hardships awaiting us."

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