Company Background
Yakult Honsha Co., Ltd. was developed by Dr. Minoru Shirota (代田稔博士) in 1935. During his study period, many people around him died from intestine diseases. He wanted the Japanese to be more healthier, he then figured out the way of isolating the healthy Lactobacilli to be put into the drink and became Lactobacillus casei strain Shirota after bacterial culturing, which is the product of Yakult. Lactobacillus casei strain Shirota can help enhance intestines’ activities to improve digestive health, prevent harmful bacteria from multiplication in intestines.
From the operating year of 1969, the Hong Kong Yakult company has been upholding Shirota’s ideas for studying, producing and selling - preventing diseases, being intestinal healthy and longevity, and selling Yakult in low price for people to gain healthy - so as to bring health and happiness to people.
Company Development
Product available in Hong Kong
Now, there are 2 products available in the Hong Kong market, namely Yakult and Yakult LT. The following is their composition and features:
Yakult (100mL):
Lactobacillus (over 10 billion)
Water
Sugar
Skimmed milk powder
Glucose
Flavoring agents (citrus fruit)
Lactobacillus can help enhance intestines’ activities to improve digestive health, prevent harmful bacteria from multiplication in intestines.
Yakult LT (100mL):
Lactobacillus (over 10 billion)
Water
Sugar
Skimmed milk powder
Glucose
Flavoring agents (citrus fruit)
Polydextrose - dietary fiber
Sweetener (Maltitol)
Sweetener (Sucralose)
Hong Kong people are always living and working a fast pace, such as having fast food all the days, which make them have little intake of dietary fiber. Hence, most of them are having gastrointestinal discomfort for long time and even suffering in the disease of high cholesterol. Therefore, to deal with this, dietary fiber has been added into Yakult LT so as to prevent intestinal diseases and constipation.
Our visit
Different packages of Yakult in different countries displayed in the production plant.
Components of a pack of Yakult displayed, including from skimmed milk powder, glucose to the external bottles and plastic wrappers.
The area that isolates the healthy Lactobacilli to be put into the drink and became Lactobacillus casei strain Shirota after bacterial culturing.
Q & A
1. How do you forecast the market demand in different distribution channels?
For traditional sales distribution (e.g. supermarket, convenience store etc.), Yakult forecasted the sales by past record, such as same period of the date of last few periods. They will do the comparison of sales record through past few years. For the private store, Yakult would make the demand forecast based on the weather. That means if it was raining, the sales of Yakult will be decreased.
2. What is the most significant supply chain crisis in your company history and how do you tackle the problems?
The most significant crisis of Yakult is 2009 “Trade Guideline for Reducing Sugars and Fats in Foods”. The sugar content of Yakult is higher than the standard level, it indicated the drink contains too much sugar that will lead to various diseases such as diabetes. This crisis led to a sudden fall in the sales of Yakult. The market demand kept low and Yakult chose to produce fewer products. However, the demand has increased gradually after the crisis.
3. How does quality control help Yakult to ensure the product quality? Once a quality problem occurred, what Yakult can do?
Not only will the quality of products ready for sale in the plant be gauged before transporting to retail stores, spot checking will also be adopted even products have already been sent to the retailers. If there are complaints about the products’ quality or quality issues really occur unfortunately, Yakult operating team will immediately take back all products which belong to the same batch or production period. Few years ago, Yakult received a complaint of a weird taste in Yakult products. While the reporting time was almost out of the operating time, the team still went out to retrieve those suspect of substandard products and handled the issue instantly so as to prevent other customers from consuming the potentially unqualified products.
4. How does the company maintain its product quality under different temperature change during transportation?
In Hong Kong, there is no particular regulation specifying the required temperature of drinks. However, Yakult HK complies with the regulation of Japan that Yakult drinks are reserved and retained at the temperature of under 10℃ so that the safety of food is ensured. To maintain the certain temperature of the drinks, all the delivery trucks of Yakult HK have refrigerators installed. Besides, Yakult HK also regularly inspects the drinks in different stores and furthermore refrigerators will be provided to stores without refrigerator.
5. Why does Yakult HK have less favor than the other neighbor countries such as Singapore?
Yakult HK has decided not to add new favors due to three main reasons. The first reason is the area of Hong Kong factory is limited, and so it is difficult to add a new production line. For instance, the production of Yakult LT added in 2011 has already brought certain burden to the factory. Secondly, previous research done by Yakult HK suggested that the demand of new favors in Hong Kong market is negligibly small, and therefore it is not worth adding new favors at this moment. The last reason is Hong Kong government suspended the provision of industrial land, making Yakult HK not able to expand the factory easily and so is the introduction of new production line.
On the other hand, the Yakult companies in neighboring countries, such as Singapore, is required to launch another new favors. This is because as those branches enter their markets later than Yakult HK did, it is crucial for those branches to differentiate the products from others in order to attract customers and compete with the exist competitors in the local market.
6. As the expiration date of the product is 30 days, the estimation of market demand become critical to the profit. How do you make an estimation of the market demand in an effective way?
As well as analyzing historical sales records, the way in which Yakult HK estimates demand of different points of sale literally relies on communication with staff in different stores or large scale chain stores and observation of demand of different sale points. These two tasks are accomplished by delivery workers who are responsible for forging a close relationship with staff in different store and frequently asking them the estimated volume of Yakult products they need in the following months or seasons. Information and feedback from our frontline delivery men is then transmitted to Yakult HK’s production and delivery teams, accurately meeting market demand while transporting newly produced Yakult to every point of sale in a swift manner, and minimizing the volume of Yakult products getting rotten.
7. In order to protect the brand reputation and maintain the quality standard, what are your criteria in choosing the suppliers?
Suppliers or raw materials necessary in producing Yakult, in particular the essence of Yakult, the bacterium Lactobacillus casei Shirota, are stipulated, procured and delivered by headquarter in Japan. Yet, the only thing varies from countries to countries is the source of water. Normally water monitored by the respective governments is of high quality and contains no contaminate. As a result, Yakult HK has long been maintaining a positive image and an image that few or even no unpleasant accidents have happened so far.
8. What technologies do you adopt for quality control?
Yakult strictly follows the International Organization for Standardization (ISO 9001:2000). To ensure product quality, more than 120 samples are taken during various production stages for thorough analysis in the laboratory. This is to check the number of lactobacillus case numbers, contaminants, acidity etc. Yakult’s quality assurance follows the HACCP principles to maintain the factory cleanliness and hygienic condition.
9. The population of Yakult drinks is increasing in the Mainland nowadays. How does Yakult adjust the production plan to respond to the rapid increase in demand?
To deal with the increasing demand in Mainland, Yakult is owning four plants in China, which is enough to meet the demand in China nowadays. Yakult is not considering to operate the fifth plant now, but there may be the fifth plant if the production capability can not meet the increasing demand one day.
10. There are many growing competitors from China these years. How does Yakult stand out from the market to gain back the market share?
Yakult is a reputable brand so consumers will still buy it despite the emergence of a bunch of competitors. To increase competitiveness, Yakult introduces different tastes and packages such as the green one. Moreover, its unique selling point is that Yakult has 10 billion of bacteria in each drinks in which other brands can’t copy because of the patent.
Reflection
After the visit, we are more familiar with the production process of beverages especially the perishable drinks like Yakult. To ensure product quality, the drinks are taken special care and is put under a certain temperature. Yakult have 3 production lines, each of which can process from filling the drink into the bottle to packaging. Each production line is well designed that can produce 38,000 bottles per hour, with 3 production lines, they can produce 114,000 bottles per hour. Before visiting the production plant of Yakult, we cannot imagine how they can produce so many bottles of drinks in not a large space in Tai Po. After the visit, we realized a well-designed production not only can increase the productivity, but also reduce the space required, and in the long run, reduce the cost of production.
Reference:
Hong Kong Yakult Co., Ltd. (2015). Company History. Retrieved on 1 March, 2016, from http://www.yakult.com.hk/co_history.htm
Kukreja. K. (2015). Om yakult operation management. SlideShare. Retrieved on 1 March, 2016, from http://www.slideshare.net/karankukreja26/om-yakult-operation-management