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1.0 in Singapore and Brunei as the

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1.0 Introduction

            Supply
Chain Management has become a strategic means for Businesses with the evolution
of technology to improve and manage quality, satisfy customers and increase
competitiveness among others. It combines all the activities associated with
the goods or services i.e. from acquiring raw materials to distribution of
goods or services (Russell & Taylor, 2014). One such Businesses
that practice supply chain management is the food industry.  Yakult, a probiotic milk drink is one such
businesses is the focus of this report. It is the global leader of probiotic
drink market with a wide range of probiotic products which uses harmless
bacteria strains as its main ingredients (Goyaland & Gupta, 2015). The supply chain
management of Yakult helps to understand the various business challenges and
strategies that can improve the efficiency of business and its products.

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2.0 Overview

            Yakult is a probiotic cultured milk
drink which contains harmless bacteria known as Lactobacillus Casei strain Shirota
(L. Casei strain Shirota). It is specially cultivated harmless bacteria added
to the Yakult drink where about 10 million L. Casei strain Shirota is included
in the drink to help replenish the good bacteria in the digestive system (Yakult, 2018) which helps to
resist the gastric juice and synthetic bile juice in different stages. Hence
Yakult has benefitted about 30 million people in terms of health maintenance in
more than 30 countries worldwide (Goyaland & Gupta, 2015). Along with the
normal Yakult flavour, there are three different flavours such as grape, apple
and orange which is available only in Singapore and Brunei as the demand for
the different flavours is high in this region (Ti, 2018).

Yakult,
derived from the word ‘Jahurto’ which means yogurt (Ti, 2018)
was first established in Japan in 1935 by a scientist and founding father of
Yakult Dr. Minoru Shirota who invented and cultivated the Lactobacillus Casei
Shirota bacteria. Though he cultivated L. Casei Shirota bacteria in 1930’s it
took him 5 years to analyse the right food medium for it. Hence Yakult was
first bottled in 1935 and was distributed to the customers in glass bottles by
the nurses worked for Dr. Shirota, who were later referred as Yakult Ladies.
The cultured fermented milk was a huge success, and the demand for the drink had
a steady increase which led to the establishment of Yakult Honsha Ltd in 1955 (Yakult, 2018). Today the average sales
in the volume of dairy products of Yakult exceeds up to 30 million bottles per
day (Yakult Honsha, 2015).

3.0 Supply
Chain Management of Yakult

            The Supply Chain diagram as shown in
Figure 1, explains about the various activities associated with the product i.e.
from its raw materials to its customers.

Figure
1: The Supply Chain for Yakult

Source:
(yakult supply chain, 2017)

The
process of manufacturing Yakult drink requires various raw materials from the
suppliers. The basic supplies required to make the probiotic cultured milk
drink are the ingredients such as Skimmed Milk, Sugar, Water and L. Casei
strain Shirota Bacteria. These raw materials are exported from various
suppliers across the world. The bottling and packaging requires plastic
polystyrene and aluminium foil (yakult supply chain, 2017) which is imported
from Japan (Ti, 2018).

3.1 Manufacturing
process

            The
next step after obtaining the raw materials from the suppliers is the manufacturing
process of Yakult which undergoes various processes as shown in Figure 2. The
skimmed milk powder exported from the suppliers are added to the dissolved tank
where the milk powder is dissolved in sterilised water of temperature 50-55
degree Celsius to turn the milk powder to a milky solution (Yakult, 2018). The Milky solution
is then sterilised at a high temperature to eliminate the bacteria if
present.  The Sterilized milky solution is
then passed to culture tank from the dissolving tank where the solution is
cooled to 37 degrees Celsius (Yakult, 2018).

Figure
2: Manufacturing process of Yakult

Source:
(Yakult, 2018)

            The L. Casei strain Shirota bacteria
imported from Japan is stored in the seed tank. This bacterium will be added to
the culture tank from the seed tank to ferment the solution and is continued to
be added until the quantity of L. Casei Shirota reaches to an ideal
concentration. Once the required concentration of the bacteria is added to the
solution, it changes to curd form which is termed as the culture base (Yakult, 2018).

The
culture base is then passed through the high-pressured machine known as
homogeniser to make the solution to a fine quality before transferring it to
the storage tank. The storage tank is chilled at the temperature of about 5 degrees
Celsius in which the sterilised sugar syrup is added to the culture base
solution to form the concentrated Yakult (Yakult, 2018).  The concentrated Yakult is now passed to the
mixing tanks which are four in number. Each mixing tank adds different flavours
such as Natural, Grape, Apple and Orange along with the permitted colouring for
the Yakult to have different flavours (Ti, 2018). The Yakult is diluted
with sterilised water and this diluted mixture is then sent to the filling tank
prior to bottling (Yakult, 2018).

3.2 Bottling and
Packaging Process

            To
transfer the Yakult drink to the containers, plastic bottles are produced on
site at a speed of about 7000 bottles per hour by the bottle moulding machine using
plastic polystyrene as the raw material imported from Japan. The produced
bottles are then stored in the bottle storage tank which is transported through
a duct by a clean air blower. These empty bottles are sent to the selector
machines from the bottle storage tank. Selector machines arrange the bottles in
proper position before it is sent to printing (Yakult, 2018).

            The bottles are wrapped, and each
bottle is printed with the Yakult logo and ingredients used for preparing Yakult.
Once the printing is done they are filled with Yakult by the filling machine (Yakult, 2018) which has the capacity
to fill 30,000 bottles per hour per production line as seen in Singapore (Ti, 2018). The bottles are
then capped with the aluminium foil lid and sealed. The “Use by Date” is
printed with the date on the foil lid after sealing the bottle (Yakult, 2018).

            The finished product of Yakult is
then transferred for packaging. In this section the bottles are sorted either
as single bottles or packed in a pack of five which is shrunk and wrapped
together in polypropylene. The five-bottle pack will be wrapped into either
same flavoured combination or mixed flavour and the single bottles are packed
into a case of 100 bottles of same flavour. Once the packaging is done, all
cases that contains Yakult is transported to the cold room through the conveyor
belt (Yakult, 2018).

3.3 Warehouse
Process

            The
finished products of Yakult are quality checked in the laboratory and kept in
the cold room while being refrigerated to the temperature of about 5 degrees
Celsius to maintain the condition of the Yakult drink and L. Casei Shirota present
in it at a stable condition before distribution (Yakult, 2018).

3.4 Distribution
Process

The
Yakult stored in the cold room is distributed by using refrigerated trucks. The
distribution process takes place via 2 sources i.e. either through direct sales
by various distribution channels such as supermarkets, retail stores, schools
etc, or through home delivery from door to door by Yakult lady agents (Yakult, 2018).

4.0 Yakult’s
supply chain and supply chain management concepts and practices

4.1 Supply Chain
Processes

            Supply
chain combines all activities related with the transformation of goods and
services from the initial stage such as collecting the raw materials to final
stage of reaching the customer. The delivery of a product or a service is a
tedious process which comprises of various interrelated processes and
activities (Russell & Taylor, 2014). The supply chain of
Yakult comprises of various interrelated processes from importing raw materials
from the suppliers till the distribution of the product.

4.1.1 Procurement Process

 Procurement of services, components and
materials from the suppliers is the first step of the supply chain process
which acts as a source to the production (Russell & Taylor, 2014). Yakult imports
various raw materials from its suppliers across the globe for producing the
probiotic milk drink (Ti, 2018). Because Yakult
contains live L. Casei Shirota it is difficult to import and preserve for a
long time, therefore it is important to produce it locally (Yakult
Honsha, 2015).
The sudden increase in the prices of raw materials affects the manufacturing
costs and other costs such as costs of containers and packaging (Yakult
Honsha, 2015).

4.1.2 Production Process

 Production of products and services is the
next step which helps to make the products based on available source (Russell &
Taylor, 2014).
In production of Yakult, the manufacturing, bottling and packaging process of
Yakult drink is a continuous replenishment and hence follows a product layout. The
production lines are of 6 in number where 30,000 bottles of Yakult are prepared
per production line with mixed model manufacturing where Yakult is produced
with mixing of different flavours (Ti, 2018)

4.1.3 Distribution Process

 Distribution of products refers to the
delivery of products to the customers including accepting and receiving orders (Russell &
Taylor, 2014).
The distribution of Yakult drink in refrigerated trucks to customers uses
various sources as mentioned in the supply chain of Yakult. The Yakult Lady
System are the essential part of home delivery services and sales. The strength
of this system is the ability to communicate directly to customers and convey
proper message to them by promoting the value of L. Casei Shirota by recommending
the consumption of Yakult per bottle per day (Yakult Honsha, 2015).

4.2 Supply Chain
Management

            The
Management of supply chain mainly focus on managing the flow of goods and its
information through supply chain to understand customers’ needs and the
responsiveness of the effect of lowering total costs. Communication,
Cooperation, trust and information among members are the key factors for Supply
chain management to be effective. Hence there must be a rapid flow of
information among suppliers and customers as it is important for them to
understand each other (Russell & Taylor, 2014).

If
the deliveries are late or incomplete, it affects the supplier as customers
will lose trust resulting in poor quality customer services. This phenomenon is
known as Bullwhip effect where a smaller change in downstream of supply chain
will result in a huge change in the upstream  (Russell & Taylor, 2014). Yakult can distribute
its products in a consignment base process to its larger customers which helps
Yakult sell more products to its customers and helps in understanding the
requirement of the customers based on the goods sold (Ti, 2018).  This helps in building a strong customer
relationship and helps in improving the services to the strong customers.

4.3 Risk Management

If
a product follows make to stock production strategy, the demand for the product
cannot be analysed based on the previous demand because the demand varies on
timely basis (Russell & Taylor, 2014). The factory of
Yakult follows make to stock strategy, but the uncertainty is managed by Yakult
as they have safety stock stored in their cold room (Ti, 2018) by eliminating the
lead time for production. Increase in the visibility, velocity and decrease in
the variability of production helps in reducing the uncertainty (Russell &
Taylor, 2014). 

4.4 Inventory
Management 

            Businesses
overcome uncertainties by avoiding delays with their own form of insurance
known as the inventory. They carry buffer inventory at every process of supply
chain which helps in minimizing the negative effects of uncertainty and helps
in smooth flow of goods and services from suppliers to customers (Russell &
Taylor, 2014).
In Singapore, the Yakult distribution is directly from the factory to the
customers. The sales person who carries the finished product of Yakult visits
every selling point such as supermarkets, schools etc to restore the inventory
in every two times a week especially if the customer is a large supermarket.
Excessive inventory is sent back to the factory at the end of the day and these
inventories are stored back in the cold room to retain the good bacteria (Ti, 2018).

5.0
Yakult’s supply chain sustainability

            The
Factory of Yakult in Singapore has about 50 workers and contains six production
lines. The production line runs from 8 am to 5:30 pm where 7000 bottles are
produced each hour (Ti, 2018). Sustainability is
also referred to as “going green” and has major involvement of Environment, Recycling
and Quality Assurance (Russell & Taylor, 2014). Yakult has analysed
various environmental hazards in its production lifecycle and is working on
reducing it. The production of Yakult at the Yakult plants and its bottling
companies does the effective utilization of raw materials, electric power,
packaging materials and water resources based on ISO 14001 objectives and
targets (Yakult, 2016).

            The containers used for Yakult and
other products that are delivered to customers are associated with Japan’s
containers and packaging recycling act are recycled on timely basis by the
national government recycling organization. Yakult takes this initiative to
reduce the amount of usage of plastics and pays the organization a valid
commission for this service. Yakult has also taken necessary action to reduce
the emission of greenhouse gas by annually reducing the energy consumption and
by promoting more of the eco-driving methods. They also promote in recycling
water resources which helps conserve water resources and reuse them effectively (Yakult, 2016).

            Yakult has also started various environmental
friendly initiatives such as ‘Yakult Sustainable Ecology 2020’ to focus more on
the realization of environmental goals and objectives and focusing more on the
sustainability of the global environment (Yakult, 2016).

5.1 Quality
Assurance

            Yakult
has unique quality control standards certifications that integrate both HACCP
and ISO 9001. HACCP standards represent ‘food hygiene management systems’ and
ISO 9001 represent ‘International Standards for quality control and quality
assurance’ (Yakult Honsha, 2015). The Government of
Singapore has also certified Yakult with Grade A for maintaining quality of
food hygiene sanitation and processing (Ti, 2018).

            The samples of the Yakult drink are
also collected for Quality assurance at Laboratory present in the factory, to
measure the quality and effectiveness of L. Casei Shirota and to confirm that
the probiotic drink is safe to drink (Ti, 2018).   

6.0
Conclusion

            In
Conclusion, Yakult’s supply chain process is a continuous process which follows
mixed model manufacturing producing four different flavours. They may
distribute their product in consignment base process which helps in selling, more
products to their customers and help building strong customer relationship. The
suppliers of Yakult should make sure they carry buffer products to eliminate
uncertainties and manage the inventory efficiently. Yakult has also analysed
various environmental hazards in its production lifecycle and is working on
reducing it. They also have unique quality control standard certifications
showcasing maintenance of food hygiene sanitation and processing. 

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