Back in May, Teiichi Goto, Fujifilm President and CEO, in response to a question about their inventory situation and plan, stated, “The most important point is how much brand strength to create and how to maintain it. Therefore, it would be quite unfortunate to manufacture too much and lower the price. What Fujifilm has been trying to do for a long time is finally coming true now. We intend to drive the entire imaging business, including Instax, while concentrating on building brand strength and not reducing the value of the properties purchased by our customers.” When asked if the current inventory situation is normal, Mr. Goto replied, “Yes.”

A lot of people interpreted that to mean that Fujifilm is purposefully causing market shortages. But they’re wrong, and I’m growing a bit tired of seeing this myth perpetuated over and over. I addressed it once, back in July, making a strong case that Fujifilm is not purposefully creating market shortages, but is simply getting better at “Lean” production. Unfortunately, based on what I keep seeing online, I think it needs to be said again, so here we go.

First, you have to understand that Mr. Goto spoke those words in Japanese, and they were later translated into English. Translating isn’t as easy as Google makes it seem. These two languages are very different. Fujifilm, for a number of years, translated “Daylight” White Balance as “Fine” in English. It’s as much an art as it is a science, and it is quite easy to get wrong, even subtly—small misinterpretations can cause big misunderstandings. This article that I’m typing right now might not fully translate well into Japanese, and could perhaps be misunderstood in that language. With that perspective, I think it’s important to read Mr. Goto’s words with a bit of grace and with a grain of salt.

In order for someone to come to the conclusion that Mr. Goto’s intended communication was “purposefully create market shortages” one must have zero grace for translation errors, plus make a mental pretzel, because nowhere is that sentiment overtly stated, only vaguely implied. If you squint your eyes just right, it’s right there in-between the lines. Yet people go around stating it as fact. It’s not fact, it’s simply a misunderstanding.

Which brings me to the second point. You cannot understand what Fujifilm said without a basic understanding of the Lean Business Philosophy. If you don’t have that understanding, your local library or book store has an excellent selection on this topic, I’m sure. Just as a teaser, you can read this Harvard Business Review article, which gives a very brief synopsis of what the Lean strategy is. Like a lot of Japanese companies, Fujifilm operates under this philosophy, so understanding it will provide you with the context in which to best understand Mr. Goto’s words.

I have read a book or two on the topic. My interpretation of Teiichi Goto’s statement is this:
– “Brand strength” = not overproducing, which devalues the products.
– “Maintaining brand strength” = better forecasting future market trends, so as to not overproduce.
– Overproducing is bad for both Fujifilm and Fujifilm’s customers.
– Fujifilm has always strived to not overproduce products, but not very successfully; however, they’re getting better at it.
– Getting better at not overproducing is a driving force for Fujifilm.

Now you might think, what’s so bad about overproducing? In the Lean Business Philosophy, overproducing—and overbuying, which is related—is a sin. It’s bad. It’s better to buy one too few parts than one too many. It’s better to produce one too few products than one too many. Overproducing and overbuying means you now have warehousing issues, which cause all sorts of headaches across multiple departments. In order to deal with that, the company will often sell the products at a nice discount in order to get it out of the warehouse. This is bad for the company, because they are likely taking a loss, and it’s bad for the consumer because it reduces the resell value of the product they spent a bunch of money on. Those looking for a bargain might desire overproduction, but the discounts come at a price.

In a perfect world, every company would manufacture just the right amount of every product, so that the demand would be perfectly met, and there would never be any over or under production. But, we don’t live in a perfect world. Demand is difficult to predict, and it is being predicted months and months in advance. It takes quite some time to secure all of the parts from various suppliers, assemble those parts into cameras, and get them onto store shelves. The camera that just came in stock at your local camera store likely began six months ago or more, as Fujifilm approached the various vendors to get the necessary parts to build it, and schedule the manufacturing to get it assembled. They predicted back in the summer that you would be buying the camera in December, and built it based on that prediction. If it was possible to make the exact number of a copies of all of their products to perfectly meet the demand, I’m 100% convinced that Fujifilm would do it. But, like The Price is Right, they don’t want to do that at the expense of going over (especially way over), which is the same as losing.

Fujifilm has guessed wrong many times in the past. Some cameras that were overproduced are the X-E3, X-H1, and X-T4. Those aren’t the only ones, but those are some recent examples. Fujifilm had to sell them at a discount, which reduced their resell value for those who purchased them new. It’s a lose-lose. So they’re working hard to not repeat that. It might mean the camera you want hasn’t been sitting on the shelf at your local camera store collecting dust as it is waiting to be sold, but that’s not a bad thing when you think about it.

But what about the never-available Fujifilm X100VI? That’s an extreme case. It’s not everyday that a camera goes viral, and no camera has ever gone as viral as the X100VI. It holds the record as the most preordered camera in the history of cameras, and the most in-demand camera of 2024, and probably ever. Nobody could have anticipated that, but people think they should have, and, despite manufacturing the X100VI at four-times the rate of the X100V, people accuse Fujifilm of purposefully producing too few in order to artificially inflate demand.

Let’s say that Fujifilm decided to increase production of the X100VI to 60,000 units per month (basically, doubling current numbers). It would take them months to acquire all the parts and get assembly scheduled, meaning that Fujifilm would be predicting that the global demand for the X100VI would be at least 60,000 units per month next summer. But let’s say the market flips between now and then, and demand for the X100VI plummets to only 10,000 units per month (which, incidentally, is closer to what the demand was for the X100V). Because Fujifilm has set into motion six months of 60,000 units, they will have over-manufactured 250,000 copies before the end of next year, a shocking number! Fujifilm has the tough position of trying to keep up with shifting demands while being careful not to overproduce, and predicting all of it months in advance.

Let’s cut Fujifilm a little slack, and have a bit of grace, as they navigate changing market conditions. I don’t envy them, as I’m sure it’s not easy. If Fujifilm is getting better at the Lean strategy, I think that’s good, and not something they should be criticized for. I’m all for maintaining brand strength, because it’s good for all of us.