Helping the little guys to survive: BB net B2B portal ambitions showing results - Sponsored Section

Japan, Inc., Nov, 2003 by John Dodd

JAPAN IS A NATION of small to medium-sized enterprises (SMEs), which in the retail sector are typically family-owned businesses and shops. Over time the evolution of "category killer" supermarkets and mega-stores has meant that small businesses are having more and more difficulty competing. Small stores are at a disadvantage not only in terms of marketing, but also in their ability to source quality produce at bulk rates, gain priority on manufacturer delivery schedules and generally bring their operations up to modern standards.

The trend of small owners being displaced from the market really started speeding up with the change in the large stores establishment law. As a business consultant in the confectionary and bakery industries, Eiji Tanaka realized that the writing was on the wall and small store holders were destined for extinction if they didn't get help fast. He correctly identified that unified buying of ingredients would be a key competitive element in helping the small store holders to fight back. So in 2000 he founded the Brisk Business Network.

Describe your business

Our business is to assist industries servicing small companies needing to buy products and services. At the moment we are particularly focused on servicing the multitude of small confectionary and bakery stores in Japan, which represent an industry turnover of around [yen] 1.5 trillion every year. Restaurants are another major source of business, and that industry represents an even bigger opportunity of about [yen] 25 trillion every year. Ramen and Chinese restaurants are an important target for us. The purpose of our business is to use our IT expertise to help these businesses work efficiently by aggregating their buying and using the Internet as a tool to get the work done.

We started managing the wholesaling of ingredients over the Internet because this sector is so inefficient. You see, the way that Japanese food distribution works, every single ingredient involves a large number of middlemen. The bigger the brand name, the bigger the food chain of middlemen is. For example, if you take a well-known company such as Nissin, you will find that as a major brand, their operations involve all inordinate number of wholesalers and middlemen. Their procurement plans are based around relationships with these suppliers, but they have to establish a different set of procedures and relationships for each and every ingredient.

How about yourself?

Well, personally and perhaps somewhat surprisingly, I studied mechanical engineering in college. I went on to get a job as an engineer at Daihatsu. Soon after I changed jobs and went to the Funai Research Institute. There I gained expertise in the confectionary and bakery industries as a consultant, and eventually I elected to become an independent consultant. That was when I realized how much the Internet could do for the industry, so I set up BBNet to provide all the services, which, as a consultant, I was having to advise on.

How did you get started?

It is always difficult to form a strategy to develop business partnerships, especially in Japan, and we soon learned that the only way to do it was to approach each one on a company-by-company basis. It really is the only viable means of achieving the kind of partnerships we needed.

I started at Funai Research institute--a consultancy company listed on the second section of the Osaka Stock Exchange. I was a consultant at this company and was a specialist in the confectionary and bakery industries. That is where I gained my expertise and where the idea for BB Net sprang from.

Why the Internet?

The Internet is a tool that allows one to put all the parts of an industry together in the same place. Take the confectionary and bakery industries as a prime example: There are so many parts to it and so many services that surround it. There are ingredients, delivery services, all the aspects of running a store, wholesalers, insurance and a massive range of other services that form this one industry. Our company goal is to develop services that aggregate all these stores together so that they can act as a single massively large customer. With this kind of buying power and centralized information resource, the industry can run more efficiently. Now that we've gained this primary expertise, we are starting to create alliances with other service providers. We'll keep the confectionary and bakery business in-house, and eventually form an IT-based infrastructure for each separate industry.

When I look at IT usage, I look at the fact that there is no confectionary store or bakery that doesn't have a phone. I have no doubt at all that the Internet will become an equally indispensable tool and penetrate these businesses in exactly the same way. This usage of the Internet is not an issue of our having more high-tech expertise than someone else. Rather, the real key here is about working out how the Internet can be used simply and effectively so that the average store owner can make their business work better.