2016 Volume 62 Issue 3 Pages 229-239
The southern part of Tokyo district includes Ota city is famous for its dens agglomeration of industrial SMEs. The district has an edge over other districts in the availability of highly skilled labor with specialized skills and many skilled engineers.
Prior studies focused on the linkage between SMEs and their suppliers in Ota to unveil agglomeration externalities. However, these studies did not use numeric data in their analyses due to difficulty in obtaining such data.
This study focuses on a certain basic manufacturing firm in Ota to unveil importance of rapport for tool and metal suppliers and subcontractors.
Data from the firm，“Y” Precision Co., Ltd, were analyzed. This company was closed down in May 2014 due to aging of its skilled engineers. The data were analyzed to quantitatively determine a linkage quantitative to plot a transaction amount and frequency of transaction for suppliers and subcontractors.
Analysis results indicate that, first, vicinity to subcontractors was important for the firm because it reduces lack of clarity in quantity ordered and due for delivery to buyers company. “Y” Precision Co., Ltd, subcontracted frequently for nearby companies because it produced prototypes, and hence, the precise quantity ordered by buyers often indeterminable.
Second, vicinity to a machine tools supplier was important because the firm required frequent shipments of machine tools especially cutting tools, particularly cutting tools. These tools are necessary for machining but are a consumable item. Most of SME find it impossible to stock machining tools because they lack sufficient fund.
The study thus concludes, vicinity to subcontractors and machine tool suppliers was necessary for this company to reduce risk of late delivery and also mitigate its lack of funds. This discussion can be expand to other SMEs in Ota city.
