Stable Supply and Optimization of Inventory, Production and Logistics Costs

「In light of the policy of consolidating existing sales bases and others to realize a flexible and agile supply chain system, the shift in the policy on long-term contracts for sales bases and others in response to the diversification of customer needs, and plans to commence operations at new integrated-function logistics centers (IDCs) from the fiscal year ending December 2025 onward to further strengthen the logistics network, we have changed the useful lives (lease terms) beginning in the current consolidated fiscal year.」

「In manufacturing and logistics, we will further advance the supply chain network by utilizing technology and building more sophisticated, data-driven processes through digital transformation (DX). By promoting a "local production for local consumption model" based on manufacturing products at plants close to consumption areas, we will seek to improve transportation efficiency, including by reducing transportation distances.」

「In particular, in logistics, we worked with customers and others to improve efficiency and address social issues. We also sought to improve the accuracy of the S&OP (Sales and Operations Planning) process and worked to respond efficiently to the increase in shipping volumes expected during the summer.」

「In manufacturing and logistics, we worked to promote a "local production for local consumption model," based on the concept of manufacturing products at plants close to consumption areas. Along with expanding manufacturing capacity and establishing a flexible manufacturing system, we worked to improve the logistics network, including through the utilization of Mega DCs (Distribution Centers), and sought to reduce costs and strengthen the supply chain foundation.」

「We sought to expand manufacturing capacity through measures including commencing operations at a new production line at the Ebina Plant and improving manufacturing processes. We also worked to reduce transportation distances per case by establishing supply systems for each area and utilizing Mega DCs (Distribution Centers).」

「We worked to ensure the stable operation of the S&OP (Sales and Operations Planning) process revamped the previous year and to improve the supply network, thereby seeking to maintain a stable supply of products and reduce total manufacturing and logistics costs.」

「In manufacturing and logistics, amid the impact of soaring raw material, supply and energy prices and the weaker yen, we commenced operations at a new production line at the Ebina Plant in April 2023 and worked to improve the entire supply network, including by utilizing the automated logistics centers Saitama Mega DC (Distribution Center) and Akashi Mega DC, which have some of the largest storage and shipping capacities in Japan. We prepared for stable operations during the summer peak season while seeking to reduce manufacturing and logistics costs.」

「In manufacturing and logistics, amid the impact of soaring raw material, supply and energy prices and the weaker yen, we worked to improve the supply network, including by further enhancing the S&OP (Sales and Operations Planning) process and utilizing the automated logistics centers Saitama Mega DC (Distribution Center) and Akashi Mega DC, which have some of the largest storage and shipping capacities in Japan. We also sought to reduce manufacturing and logistics costs and prepared for stable operations during the summer peak season.」

「Although demand surged during the summer peak season as the resumption of people going out coincided with extremely hot weather, these initiatives enabled us to maintain a stable supply of products.」

「In manufacturing and logistics, amid the impact of soaring raw material, supply and energy prices, we worked to establish a supply system capable of responding flexibly to sharp fluctuations in demand, including by revamping the S&OP (Sales and Operations Planning) process and utilizing the automated logistics centers Saitama Mega DC (Distribution Center) and Akashi Mega DC, which have some of the largest storage and shipping capacities in Japan. Although demand surged as people resumed going out and amid extremely hot weather, these initiatives enabled us to maintain a stable supply of products.」

「In manufacturing and logistics, amid the impact of soaring prices for raw materials, supplies and crude oil, we have worked to build a supply network that will serve as the foundation for sustainable growth. In July, Akashi Mega DC, an automated logistics center with one of the largest storage and shipping capacities in Japan, commenced full-scale operations. We have also strengthened coordination between sales and supply chain operations, including by revamping the S&OP (Sales and Operations Planning) process, and worked to establish a supply system capable of responding flexibly to sharp fluctuations in demand.」

「The company proceeded with preparations for the stable operation of the Saitama Mega DC, which began operating in 2021, and the smooth launch of the Akashi Mega DC, scheduled to begin operating in July 2022. In conjunction with the operation of the Mega DCs, it also consolidated sales and logistics centers and reduced and optimized the allocation of product inventories.」

「Under the concept in the medium-term plan announced in August 2019 that “the way we have done things is not an option,” the Company has steadily pursued key transformation initiatives, including further evolution of the operating model in the vending channel, redistribution of product inventories centred on the “Saitama Mega DC” and consolidation and integration of logistics bases to optimise the logistics network in the Kanto area, streamlining the supply chain structure to achieve low-cost operations, and promoting new ways of working.」

「Under the concept in the medium-term plan announced in August 2019 that “the way we have done things is not an option,” the Company has steadily pursued key transformation initiatives, including further evolution of the operating model for the vending channel, redistribution of product inventories centred on the “Saitama Mega DC” and consolidation and integration of logistics bases to optimise the logistics network in the Kanto area, streamlining the supply chain structure to achieve low-cost operations, and promoting new ways of working.」

「The Saitama Mega DC, a core logistics center serving the Tokyo metropolitan area, was completed and began operating in February 2021. This marked progress toward establishing a resilient and flexible supply system.」

「The state-of-the-art Hiroshima Plant was completed. All 7 new production lines pursued since the previous year, including the 4 lines brought into operation this year, are now operating, completing the initiative to strengthen the supply system as planned.」

「New production equipment began operating at the Hakushu Plant. Progress toward restoring production capacity and normalizing the supply system is proceeding smoothly. In light of the COVID-19 infection situation, the timing of capital investment and commencement of operations for the current fiscal year is being reviewed.」

「Approximately ¥90 billion was invested to rebuild the supply system, expand production capacity, and strengthen the business base. During the current period, 3 production lines at the Kyoto and Kumamoto plants and 2 automated warehouses at the Hakushu and Kumamoto plants began operating. Full-area implementation of the CokeOne ERP system was completed.」

「In addition to the 2 lines that began operating in the first quarter, a new aseptic PET bottle production line began operating at the Kyoto Plant in October. Preparations are progressing smoothly toward bringing 4 additional lines, including the new Hiroshima Plant replacing the damaged Hongo Plant, into operation by the second quarter of 2020.」

「This was due to an increase in non-current assets, including an increase in inventories as the company built up product inventories in preparation for the peak season, an increase in property, plant and equipment following the completion of two new production lines at the Kyoto and Kumamoto plants during the first quarter, and the recognition of right-of-use assets following the application of IFRS 16 Leases from the current consolidated fiscal year, despite a decrease in goodwill mainly due to an impairment loss on goodwill.」

「Two new production lines began operating at the Kyoto and Kumamoto plants. Investment to rebuild the supply system and expand production capacity is continuing toward operating a total of 7 lines by spring 2020.」

「The Company is expanding production capacity through around spring 2020, including a plan to relocate the damaged Hongo Plant nearby and resume operations. Until these projects are completed, manufacturing costs, logistics expenses and other costs associated with changes to the supply system are expected to remain elevated.」

「In the beverage business, operating profit was ¥29,448 million, down ¥6,892 million, or 19%, year on year, due to the review of the supply system following damage from the July 2018 heavy rains and other events, product supply constraints caused by a sharp increase in demand for new aseptic products, the continued deterioration of the channel and package mix, and higher amortization of goodwill and other costs resulting from the management integration.」

「Meanwhile, operating profit increased by ¥1,704 million from the previous consolidated fiscal year to ¥42,104 million, up 4.2% year on year, due mainly to reductions in manufacturing costs in the soft drinks business and the creation of integration synergies.」

「Meanwhile, operating profit increased by ¥2,620 million from the cumulative third quarter of the previous consolidated fiscal year to ¥40,131 million, up 7.0% year on year, due mainly to reductions in manufacturing costs in the soft drinks business and the creation of integration synergies.」

「A flexible supply system aligned with sales conditions enabled the company to ensure a stable supply of products and reduce product inventories. It also proceeded with introducing production equipment for canned coffee and bringing production of PET bottle containers in-house to reduce costs by improving productivity.」