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Global Parts Supply Chain to Be Completed by 2005 Aiming to Improve Customer Satisfaction and Profitability

February 27, 2003

Yamaha Motor Co., Ltd. will complete its global parts supply chain by 2005, with the aim of improving customer satisfaction and profitability. Developing the new supply chain entailed creating a global parts information system infrastructure and control centers to manage parts distribution in each region using the information system. The Company had already finished developing the information system infrastructure in December 2002. When it makes the information system available at six control centers worldwide by 2005, the Company will have completed the parts supply chain. It then expects to enjoy cost reductions of about four billion yen annually compared to the system in place prior to initiating this structural reform.

The parts business involves a vast range of products -- from spare parts for motorcycles, marine and power products, to oil and accessories -- totaling 300,000 parts managed at Yamaha Motor headquarters in Japan alone, and 500,000 on a consolidated basis. In addition, parts are currently produced in more than 30 countries around the world, and their supply to markets is becoming increasingly complex due to the development of cross trading and other factors. Amid this business environment, the traditional system of independent spare parts inventory management by headquarters and overseas subsidiaries was causing uneven inventory, among other problems. Meanwhile, finding ways to shorten supply lead times, improve global parts distribution, and optimize inventory volume have become pressing issues for the Company.
Yamaha Motor is striving to solve these problems by developing the infrastructure for a global parts information system, including G-FAST21, and establishing regional control centers to operate the information system, thus completing its global supply chain system. With the streamlined supply chain, the Company aims to improve both customer satisfaction and profitability.

G-FAST21 is a next-generation parts information system that enables parts distribution centers worldwide to link markets, parts factories and regional parts control centers on a common platform, making the Yamaha Motor global parts supply chain a reality. In addition to managing incoming and outgoing parts orders, G-FAST21 can control consolidated inventories on a global scale -- a feature that was not available in the former system. Furthermore, G-FAST21 integrates various operations, including demand forecasting, inventory planning, and calculation of parts manufacturer order volume. It is a common global system, capable of determining optimum inventory volume for each regional parts control center and the headquarters parts control center, while quickly placing orders to each parts manufacturer according to its real-time measurement of current demand conditions in individual markets. The new information system instantly calculates the entire required inventory volume on a global scale.

In addition to creating the global information system infrastructure, Yamaha Motor aims to establish control centers to efficiently manage parts distribution in each of the major regions of the world. The Company has already established such control centers in Europe and North America, and is scheduled to open similar centers in Asia and the Middle East in 2003, and in China and Latin America by 2005. By setting up these regional control centers, the Company will be able to concentrate its commercial and distribution operations, thus streamlining to a simpler business model and realizing more sophisticated management. The Company's ultimate goal is to improve customer service through these reforms. At the same time, the Company aims to expand its parts business on a consolidated basis by encouraging the development, planning, and procurement of new local products, while shortening the lead time in supplying parts, minimizing excess inventory, and reducing cost by concentrating distribution operations.

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