Inventory & Quality Management

Done By: Muhammad Faisal, S8912976A Matthaeus Teo, S9001992I Hairul Bin Rahim, S8929908Z Lecturer: Mr Toh Yew Soon

Content Page
Page 3. Page 4. Page 5. Introduction Yakult Yakult Production Cycle

Inventory Management
Page 6. Page 8. Page 9. Types of Inventory Reorder Level Types of Inventory Costs

Quality Management
Page 10. Page 11. Page 12. Page 13. Page 14. Page 15. Quality Management Product Checking System Machines Over Human Quality Control Room Cold Chain Management Glossary

Introduction
Yakult is a Japanese probiotic milk-like product made by fermenting a mixture of skimmed milk with a special strain of the bacterium Lactobacillus Casei Shirota. It was created by Minoru Shirota who started manufacturing and selling Yakult in 1935. Yakult was first introduced to Singaporeans in 1979 with the incorporation of Yakult Singapore in 1978. Although Yakult Singapore started humbly in three containers at Hillview Avenue, it operates today from a multi-million dollar ultra-modern plant at Senoko Avenue. As Yakult is produced locally, customers can be assured of the highest quality and freshness of Yakult sold in Singapore.

Figure 1, Yakult Singapore Pte Ltd at 7 Senoko Avenue

Yakult
Yakult is famously known for its bacteria, known as Lactobacillus Casei Shirota. To obtain the bacteria; it has to go through 3 stages as based in the diagram below.

Yakult Production Cycle

Mixing of Raw Ingredients

Skim milk powder, sugar and dextrose are mixed with filtered, sterilized water.

Fermentation Tank Sterilization

The sweet, milky solution is sterilized at a high temperature to destroying bacteria. Live L.casei strain Shirota strain, cultured and tested in laboratory, is added to the tank. The temperature of the tank is then reduced. The solution is will be remained in the tank for 6-9 days for concentration.

Flavour Tank
Citrus flavour is added to the concentrate. Different flavor everyday.

Storage Tank
The flavoured, concentrate is transferred to a huge storage tank, containing syrup solution.

Water Steriliser
Yakult uses water that is minerals free that has been processed.

Mixing Tank
The concentrate is diluted with water at a ratio of 1:1.

Injection Blow Moulding Machine

The plastic bottles are produced, on site, from polystyrene. The injection moulding machine has the capability to produce 10,000 bottles per hour.

Bottle Storage Tank

Bottles are made and stored in a large, sterile bottle storage, enough for one week of production and bottling of Yakult.

Selector
Bottles drop down a large funnel from the bottle storage tank into a large circular selector, which places the bottles in an upright position.

Printing Station
Bottles move along the conveyer belt to the printing station where the name "Yakult" are printed on the bottle in an instant-drying ink.

Filling, Capping & Sealing Machine

The filling machine has the capacity to fill 36,000 bottles of Yakult per hour. After the bottles are filled with the drink, they are sealed with a foil lid, sealed and transferred along the conveyor belt to the packaging area.

Shrink-Wrap & Packaging Machine

Here single bottles of Yakult are sorted into groups.

Refrigeration Room
The slabs are transferred to a pallet, wrapped and stored at a temperature of 2-3C whilst awaiting delivery to the stores.

Delivery
The Yakults are then delivered to all over Singapore and also to Brumei.

Inventory Management
Types of Inventory
The type of inventory that Yakult holds in their plant varies from ingredients for the production of their goods to the finished products. The standard Yakult product that is produced in the local factory contains ingredients such as Sugar or Glucose, Skimmed Milk, and also the bacteria Lactobacillus casei Shirota. The skim milk is purchased from a supplier from Australia while the sugar or glucose is bought from Italy, France and Korea. Therefore, Yakult has to purchase and then store them in their holding room or a holding warehouse located at their plant for easy access whenever they need it.

2 Production line of Yakult from raw materials to the delivery.

Yakult also possess inventory that has undergone some changes or are in the midst of changes but is not completed yet. Examples would be tanks to store the materials which are in production such as the Dissolving Tanks which is where the mixing of ingredients like the skim milk powder and the sugar starts, a Seed Tank where the milky solution is sterilized at a high temperature for a short time, destroying any bacteria that may be present and a Culture Tank where the temperature is reduced to 37 degrees and live lactobacillus casei Shirota strain is added. The solution is allowed to ferment for about one week until the number of Shirota reaches an ideal concentration. Culture can contain 6000-litres and 6000-litres can produce 233000 bottles of Yakult. Lastly, Yakult inventories their finished goods in a room called a Cold Room. All of the finished goods that are stored in the room are awaiting shipment or distribution.

3 A Culture Tank

4 A Seed Tank

Reorder Level
There will be a certain point of time when the ingredient or material are running low and they will need to reorder so that they can produce another batch of their product. Yakult uses a simple reorder system. Usually, they will place their order for a new batch of ingredients or raw materials every 3 months. The reason is because demand for their product is usually constant monthly or annually. There have been no instances whereby they need to place an order for materials in advance or ahead of time as production level is usually at a constant production rate. The only time that they would need to increase the unit of order is during festive seasons where demand increases however not by much. We then can conclude that Yakult places their order or reorder for materials at least 4 6 times a year. From this, we can also assume that the expenses incurred by Yakult are the same or constant yearly for the purchase or reorder of materials for production. Note: Demand for Yakult is almost constant annually however demand increases by 3% to 4% yearly.

5 Machine used to make the Yakult Bottle. 14 bottles are made every 2.5 secs.

Types of Inventory Costs

Due to the face that Yakult stores almost all of its inventories from the raw ingredients to the finished goods, they have to incur some form of expenses. One type of inventory costs that Yakult incur is the cost of holding their materials or the components that have been processed. These costs are called Holding Costs which are associated with the stocking of materials or their finished goods. For example, Yakult store their sugar sacks in a warehouse that needs to be looked after. They are then required to hire someone to oversee and to handle the inventory in the warehouse. They also need to spend on the insurance of the warehouse and the sugars sacks stored in the warehouse. Another type of inventory costs that Yakult incur is Order Costs which are overheads such as the costs for the purchase of the materials and also the costs of delivery of materials to their plant. Whenever they place an order for materials, not only do they have to incur costs for the purchase of the materials, but also the process such as the delivery of the materials to their facility or the forms and salaries of their workers. Yakult also incur other types of expenses such as utility bills for the holding of the materials in their warehouse. For example, as Yakult stores their inventories in their Cold Room, they have to incur high utility bills to keep their finished goods at the optimum temperature which needs to run for 24 hours 7 days a week so that the quality of the products does not deteriorate.

6 The packaging line where mostly machines are used therefore expenses for running the machine is high.

Quality Management
Quality has become a major factor in a customers choice of products and services. If the customer feels that they are getting what they paid for, they will tend to be satisfied with the quality of the product or services. Quality is an integral part in the food and beverage industry which is the quality characteristics of food that is acceptable to consumers. Food quality is an important food manufacturing requirement, because food consumers are susceptible to any form of contamination that may occur during the manufacturing process and many consumers also rely on manufacturing and processing standards. Besides ingredient quality, there are also sanitation requirements. It is important to ensure that the food processing environment is as clean as possible in order to produce the safest possible food for the consumer.

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Product Checking System

Like any other food production company, they adopt a production line system where the product goes from raw materials to the finish goods and are made piece by piece. Yakult also adopt this kind of system. Due to the current age of technology and the worlds dependence on machines, Yakult has moved from using human labor to the use of machines that helps to cut out human error and increase efficiency but the human element is still present in the current system. The reason is that although human error is eliminated, there is still a slim chance that something might go wrong or contaminate the product. In order for a safe consumption for consumers, Yakult conducts checks during production for every different batch. How they do this is by doing random checks every 15 minutes or every 10000 bottles that is made. When a defect or a contaminated bottle is found, the whole batch will be scrutinized or if need be, cancelled and thrown out as it is no suitable for consumption. This is how Yakult ensures that only the best or the highest of quality Yakults are being made available for the customers. However up to this day, Yakult has not reported any such incidents of where their product had been contaminated and that only the best have been given out for the consumers.

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Machines over Human

As mentioned before, Yakult depends heavily on machines for their process and production of its product. Thus, human error has never occurred or is limited. Although machine eliminates human error, machines need to be maintained in order for it to work efficiently and effectively or production will be halted thus affecting the company financially. The probability of a production machine breaking down is high if not properly or consistently maintained thus Yakult has a technician who is specialized in the maintenance of Yakults machines from Japan based in Singapore. The machines used for the production of the Yakult bottles are from a Japanese company called Sumitomo and they employ a technician from Japan who knows every bolt in the machine to oversee the maintenance of its machine. Yakult usually conduct daily cleaning and maintenance at the end of the day or usually during the evening when production has stopped. The cleaning and maintaining of the machines daily will ensure that the machines run at its optimum efficiency and also ensure that no contamination occurs. If need be, Yakult will stop all production for a few minutes so that repairs can take place. However, major servicing, if needed, is conducted once a month by the technician. Even the slightest discrepancy found in the machines is replaced to ensure no loose bolts, screws or pieces of the machinery end up in the finished product.

7 One of the bottling machines.

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Quality Control Room

Yakult produces their product by batches. For every batch, there are some features of the Yakult which are different; one example would be the flavor. Yakult places a heavy emphasis on quality. All of their goods are produced to the highest standards. Yakult has a department where all of the testing or sampling of the Yakult batches are done. Their Quality Control Department is equipped with some of the latest inspection, testing equipment and their staffs are trained to pick out discrepancy in the batches of Yakult that is being produced. Before a batch Yakult is given the green light to be mass produced for consumption, a sample of the batch is taken and given to the Quality Control Department where testing and sampling is done. Some of the things that the Quality Control Department looks out for are the taste of the batch. They try and find out whether the batch given to them tastes right; making sure it is not too sour or too sweet. Some of the tools or methods that they use are example a refractometer and titration to test the sweetness and sourness of the sample. The Quality Control Department also keeps a sample of batches that has been given the go ahead for production. In case a consumer makes a complaint about their product, they can use the batch that has been kept refrigerated in their facility to troubleshoot the problem or find a solution. Most of the time, it is the consumers inability to store the Yakult at an optimum temperature that results in the Yakult turning bad.

8 Testing every batch of Yakult ensure only the best makes it out to the consumers.

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Cold Chain Management

Cold Chain Managemnt is a temperature-controlled supply chain. An unbroken cold chain is an uninterrupted series of storage and distribution activities which maintain a given temperature range. It is used to help extend and ensure the shelf life of products such as fresh agricultural produce, seafood, frozen food, photographic film, chemicals and pharmaceutical drugs. As Yakult is best served cold approximately at around 10 Degree Celsius, they have to maintain that temperature from before delivery until it reaches the shelves of stores and into the stomachs of consumers.

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Glossary
http://en.wikipedia.org/wiki/Yakult http://yakult.com.sg/

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