Executive Officer, Chief Supply Chain OfficerBruce HerbertThe Supply Chain Management Division is responsible for formulating and executing strategies for the entire Groupʼs supply chain. We mainly manufacture, distribute, and sell within our own Group, and the supply chain represents an important management base. The Supply Chain Management Division aims to build an efficient and lean supply chain system in order to manufacture safe, secure, and high-quality products and deliver them to customers at low cost. To that end, we are promoting initiatives to improve productivity in each field, including planning, manufacturing, distribution, and the systems that connect these, as well as digitalization and automation.In 2021, demand forecasting was very difficult due to the ongoing COVID-19 pandemic. This only reaffirmed the importance of creating a process and system that can further strengthen cooperation with commercial and respond to demand fluctuations with agility. However we believe that our continuous improvement and investment throughout the supply chain has been successful. We are now able to flexibly adjust product supply according to customer needs and minimize the extra cost burden.In 2022, we will continue working to establish a robust hedging strategies in response to changes in market conditions, reduce the weight and volume of containers, support sustainable materials, etc., while reducing costs and pursuing sustainable procurement. We are implementing procurement strategies in collaboration with CEPG (Cross Enterprise Procurement Group), a global procurement organization of Coca-Cola system that utilizes global scale and know-how, as well as share successful case-studies.supply network to achieve sustainable growth and low-cost operations. In manufacturing, we are improving both the stable supply of products and production efficiencies. We are achieving this through establishing a flexible system with enhanced capacity. We are working to supply products in a timely and low-cost manner by enhancing the linkage between commercial and supply chain which still have room for improvement. To achieve this we are utilizing digital technology and acting with agility towards changes in the environment. In terms of distribution, the Saitama Mega DC, an automated distribution center with one of the largest storage and shipping capacities in Japan for the Coca-Cola System, is operating in a stable manner. This coupled with the smooth launch of Akashi Mega DC, which is planned to commence operation ahead of schedule in July 2022, along with the consolidation of sales and logistics centers synchronized with these mega DC, we allow us to reduce product inventory and achieve optimal allocation. Going forward, we will continue to further promote cost reduction and efficiency initiatives throughout the supply chain, and strive to build an efficient and lean supply chain system so that we can deliver safe, secure, and high-quality products to our customers.21Message fromHead of Supply ChainHigh quality procurement by leveraging scaleToward the exProcurement Our main procured items include concentrate that are the basis of products, raw materials and materials related to product manufacturing, and indirect materials such as sales equipment. The concentrate is procured from Coca-Cola Japan Co., Ltd. and uses an incidence-based pricing model. We procure sugars, PET bottles, aluminum cans, cardboard, vending machines, and other items from suppliers who comply with our basic supplier and procurement policies set globally by the Coca-Cola system. We will promote joint procurement, review the contract system, execute ManufacturingWe have 17 plants within our coverage area, and we are working to build a completely optimized supply chain network while engaging in flexible manufacturing at each plant. From 2019 to 2020, we completed seven new aseptic lines in order to address the recent increase in demand for aseptic products, mainly non-carbonated beverages. We actively introduce new technologies with a view to product innovation. We have also continued to invest in production lines for alcohol products, which have seen an increase in sales since our entry into the market, and have built a manufacturing Supply Chain Initiatives
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