Overcoming the 2025 Cliff: Tsuginohi's Sustainable Digital Transformation Journey

Overcoming the 2025 Cliff: Tsuginohi's Journey Towards Sustainable Digital Transformation

Tsuginohi Co., Ltd., an innovative venture based in Okayama, is actively addressing the national concern known as the "2025 Cliff," which refers to the economic losses caused by legacy systems. Led by in-house engineers, Tsuginohi has embarked on a project to revamp its core inventory management system, marking a significant step toward a sustainable model for digital transformation in regional businesses.

Tackling Complexities in Local Economies

The complexities of core systems and the fragmentation of data pose significant challenges for many companies in Japan. With years of operational history, these systems often become convoluted, leading to difficulties in accessing crucial data for decision-making. This issue has become increasingly recognized as a potential crisis, dubbed the "2025 Cliff."

Particularly in inventory management, the interplay between multiple systems—such as production management, CRM, and e-commerce platforms—has often led to fragmented data connectivity. Many frontline workers resort to manually updating spreadsheets, resulting in human errors and missed opportunities. This situation represents a hidden liability, obstructing the advancement of digital transformation and lowering overall productivity within local economies.

Strengthening In-house Development for Agile Solutions

In response to these challenges, Tsuginohi has shifted its strategy to enhance a self-controlled development system, allowing the company to steer its core operational systems. The collaboration among in-house engineers has helped to strengthen the development process, fostering a more efficient and effective system aligned with actual business workflows.

Improved Integration and Real-time Data Visibility

One of the significant advancements has been the elimination of data inconsistency between its production management system, ITOS, and Salesforce CRM. By reducing time lag from production completion to inventory visibility, Tsuginohi has achieved real-time reflection of available stock, enhancing the overall visibility of inventory data.

This transformation is a practical approach to boost organizational capabilities, allowing regional businesses to evolve their digital infrastructures swiftly in an ever-changing market environment. It's not merely about improving operational efficiencies; it's a pivotal shift that aims for a breakthrough from reliance on IT vendors into an era where local companies autonomously build and manage their digital assets.

Contributing to Greater Sustainability and Economic Value

The implementation of this new system has yielded several social and economic benefits, particularly addressing issues related to resource optimization and contributing to green transformation (GX).

Reducing Inventory Loss and Enhancing Resource Allocation

With accurate inventory tracking, Tsuginohi has eradicated discrepancies such as unseen stock leading to missed sales opportunities and excess orders from stockouts. This advancement not only cuts unnecessary logistics costs but also ensures the optimal allocation of managerial resources.

Shift Towards Data-Driven Management

Using the meticulously accumulated data, the company has shifted towards data-driven management, allowing for scientific pricing strategies and comprehensive business planning free from mere gut feelings and experience.

A Model for Regional DX Talent Utilization

By directly employing highly skilled engineers and achieving tangible results, Tsuginohi provides a potential solution to the concentration of IT talent in urban areas. This model demonstrates that regional companies can become attractive platforms for engineers seeking challenging environments.

Expanding In-house Development and Building Strong Business Foundations

Looking forward, Tsuginohi aims to leverage its development framework to gradually expand into other areas currently relying on external services, such as e-commerce functionalities. The objective is to create a more seamless and flexible business foundation, from inventory management to sales channels.

The company is committed to fostering both co-creation with external partners and enhancing its internal technological capabilities, paving the way for "strong organizational growth" and true digital transformation, all originating from Okayama.

Company Overview

- Company Name: Tsuginohi Co., Ltd.
- Headquarters: 1448-1 Makabe, Soja City, Okayama Prefecture, Japan
- Tokyo Office: 5th floor, 1-1-11 Kitashinagawa, Shinagawa-ku, Tokyo, Japan
- CEO: Seima Kurokawa
- Established: July 2, 2018
- Business Focus: Recycling of automotive parts and development of environmental technologies
- Brand Statement: “Connecting and benefiting the Earth.”
- Website: https://tsuginohi.com/