Yamaha Motor Co., Ltd. plans to introduce a global consolidated spare parts inventory management system once the information system infrastructure is in place. By reforming the distribution process, the Company seeks to achieve a 50% reduction in spare parts inventories in European and U.S. markets by the end of 2004 compared with 2000, as well as a 30% increase in productivity in June 2003 compared with 2000.
With development of the global parts information system infrastructure -- G-FAST 21 -- completed in December 2002, the Company is poised to shift from the current subsidiary-based system for parts inventory management to a consolidated system. In the new system, the Company will centralize worldwide spare parts inventory management in its headquarters in Japan.
Specifically, a newly established consolidated inventory control center at headquarters will forecast total demand for spare parts based on analysis of data collected from regional control centers throughout the world by G-FAST21. The center will then optimize the spare parts stock volume for each region and for headquarters, based on the forecast supply of spare parts required in initial-stage marketing of new product models. Furthermore, the Company will set a new ideal stock level for each spare part, factoring in differences in life span based on the marketing life of the product in which each part is incorporated. This will enable the Company to optimize parts inventories, both for headquarters and the markets. The new inventory system has already been deployed in European and U.S. markets, where the Company has targeted a 50% reduction in spare parts inventories by 2004, compared with 2000. Likewise, the Company will launch this new spare parts inventory system beginning in late 2003 in Canada, Australia, Asia, and the Middle East, in that order. The Company forecasts that the new consolidated spare parts inventory management system and related measures will reduce annual operating costs by approximately five billion yen by the end of 2005, compared with 2000.
With parts distribution reform, the Company also aims to generate a 30% increase in productivity in June 2003 compared with 2000.
The productivity drive began by streamlining the nine business processes performed at the parts center -- packing factory-delivered parts; storage; retrieving operations; order pickup, inspection, primary packing; secondary packing; shipping and vanning. The Company succeeded in eliminating the order pickup, inspection, primary and secondary packing processes, and now handles 70% of total spare parts volume in just four processes. Furthermore, with the scheduled introduction of a cross-docking distribution system in April 2003, the Company will start shipping 10% of parts immediately upon initial arrival from the factory, meaning that the parts centers will eventually be involved in only two processes -- receiving and vanning. In order to successfully streamline distribution processes according to plan, the Company has optimized the parts center storage rack layout, and has introduced newly developed wireless portable terminals and self-propelled carts, as well as the network-based parts center management system to support them.
Also as a part of the distribution process reform plan, the Company will ship slow-moving spare parts directly from headquarters to overseas dealerships, starting in April 2003. This is a new international direct delivery service jointly developed with an international courier company. It will shorten the current delivery lead time of seven to ten days for orders from U.S. dealerships to three days. Beyond reducing lead time, the new delivery service will help clear all stocks of slow-moving spare parts in the U.S. market and enable the Company to store them exclusively at headquarters. Thus, the Company will be able to cut total excess inventory. By fully implementing the global consolidated spare parts inventory system and streamlining the distribution process, the Company seeks to increase both customer satisfaction and profitability.