kei·​ret·​su | \ kā-ˈret-(ˌ)sü How to pronounce keiretsu (audio) , ke-\
plural keiretsu also keiretsus

Definition of keiretsu

: a powerful alliance of Japanese businesses often linked by cross-shareholding

Examples of keiretsu in a Sentence

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And when the Japanese were eclipsing the U.S. economy through the keiretsu, large affiliated industrial companies working hand in hand with government—until Japan’s Lost Decade became two. Stanley F. Druckenmiller, WSJ, "Where’s the Invisible Hand When You Need It?," 2 May 2018 The firm was taken by the Japanese idea of keiretsu, a network of like-minded companies that support one another through partnerships and equity stakes., "Amazon Turbocharged Audible’s Domination of Audiobooks," 13 Mar. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'keiretsu.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of keiretsu

1975, in the meaning defined above

History and Etymology for keiretsu

Japanese, literally, system, series, from kei system + retsu row, line

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The first known use of keiretsu was in 1975

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Financial Definition of keiretsu

What It Is

Keiretsu is a Japanese term that refers to a small, integrated supplier group.

How It Works

Just in time (JIT) is an inventory management method whereby materials, goods and even labor are scheduled to arrive or be replenished only exactly when needed in the production process. Toyota Motor Company  developed JIT in the 1950s. JIT is often referred to as a "pull" system, whereas traditional inventory methods are often referred to as "push" systems or "just-in-case" management.

The dominant characteristic of JIT is that it essentially requires the supplier to assume the manufacturer's inventory management function. JIT companies tend to have fewer suppliers than traditionally managed companies. Supplier consolidation -- keiretsu -- means suppliers receive larger portions of the company's business and are hence more committed to meeting quality and delivery requirements. Quantity discounts available to the JIT company may also be larger.

Why It Matters

The goal of keiretsu is to improve product quality by keeping only enough inventory on hand to meet immediate production needs. Thus, in order to effectively employ JIT, a company must accurately forecast demand. JIT's encouragement of planning, simplification and standardization is aimed at reducing production errors and, by extension, encourages the limitation of the number options a product has. These methods eliminate the expense of housing idle materials and lower the costs of defective products, wasted space, extra equipment, overtime, warranty repair and scrap.

A smaller supplier group also means, however, that JIT companies are more exposed to work stoppages or product shortages if the supplier cannot deliver, and exclusive or long-term contracts may disincent some suppliers to continue improving quality.

Source: Investing Answers

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to move or obtain by small maneuvers

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