Raw Materials Procurement Strategy: The Differential Advantage in the Success of Japanese Steel

One of the best kept secrets of the Japanese economic miracle after World War II, and particularly its rise to becoming the world's leader in steel sales, has been the intracacies of its aggressive international procurement and logistics strategy. That any nation essentially devoid of raw materials could organize the logistics of acquiring bulky, heavy inputs from locations 5,000–15,000 miles from its domestic factories, and then be able to sell finished products to distant resource‐rich industrialized nations at prices significantly below those of local manufacture, stretches the imagination. This accomplishment also refutes the traditional economic laws of comparative advantage. This article makes clear the elements of the long‐term Japanese materials management strategy that were an essential precondition for efficiently manufacturing steel and have been the vehicle for repeated successes in many other industries.