Supply Chain Disruptions Caused by Natural Disasters, Manufacturing and Transportation Issues, and Labor Shortages

「In manufacturing and logistics, the Group has pursued end-to-end supply chain optimization by promoting a “local production for local consumption” model, based on manufacturing products at plants close to the point of consumption, while improving the accuracy and ensuring the stable operation of the S&OP (Sales and Operations Planning) process.」

「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, supplies and energy prices, the Group has been developing a supply system capable of flexibly responding to sharp fluctuations in demand 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 was surging due to the recovery in foot traffic and the extremely hot summer, these initiatives enabled us to maintain a stable supply of products.」

「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.」

「In addition, under the principle stated in the medium-term plan announced in August 2019 that “the way we have done things up to now is not an option,” we advanced the reallocation of product inventory centered on the Saitama Mega DC and the consolidation and closure of logistics facilities to optimize the logistics network in the Kanto region, as well as the streamlining of the supply chain to achieve low-cost operations.」

「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 manufacturing equipment began operating at the Hakushu Plant in Yamanashi Prefecture. Recovery of manufacturing capacity and normalisation of the supply structure are progressing smoothly.」

「2019 was a year of transition, focused on recovering from the previous year's disaster and product supply problems and rebuilding the foundation for future growth. Under the new management structure, the Group is updating its medium-term plan and investing in the restoration of the supply system and the phased expansion of manufacturing capacity by the second quarter of 2020.」

「Higher logistics costs while restoring the product supply system following damage caused by the previous year's disaster」

「To deliver products to customers, the Group obtains information necessary for the production process and establishes effective supply and distribution systems. However, circumstances such as natural disasters, manufacturing or transportation problems, labor shortages, or the inability of major suppliers and logistics providers with which the Group does business to provide stable services could disrupt the Group's manufacturing or sales activities and affect its financial condition and operating results.」