Inventory & Quality Management

Done By: Muhammad Faisal, S8912976AMatthaeus Teo, S9001992IHairul Bin Rahim, S8929908Z

Lecturer:Mr Toh Yew Soon

Content Page

Page 3. Introduction

Page 4. Yakult

Page 5. Yakult Production Cycle

Inventory Management

Page 6. Types of Inventory

Page 8. Reorder Level

Page 9. Types of Inventory Costs

Quality Management

Page 10. Quality Management

Page 11. Product Checking System

Page 12. Machines Over Human

Page 13. Quality Control Room

Page 14. Cold Chain Management

Page 15. Glossary

Page 16.

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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 Shi-

rota 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

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Yakult

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

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Yakult Production Cycle

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Mixing of Raw Ingredients

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

SterilizationThe sweet, milky solution is

sterilized at a high temperature to destroying

bacteria.

Fermentation TankLive 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 TankCitrus flavour is added to the concentrate. Different flavor

everyday.

Storage TankThe flavoured, concentrate is transferred to a huge storage

tank, containing syrup solution.

Water SteriliserYakult uses water that is

minerals free that has been processed.

Mixing TankThe 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 TankBottles are made and stored

in a large, sterile bottle storage, enough for one week of production and bottling of

Yakult.

SelectorBottles drop down a large

funnel from the bottle storage tank into a large circular selector, which places the

bottles in an upright position.

Printing StationBottles 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 RoomThe slabs are transferred to a pallet, wrapped and stored at a temperature of 2-3°C whilst

awaiting delivery to the stores.

DeliveryThe 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.

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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 pow-

der 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 tem-

perature 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 concentra-

tion. 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

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4 A Seed Tank

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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 materi -

als 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.

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

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Types of Inventory Costs

Due to the face that Yakult stores almost all of its inventories from the raw ingredients to the fin-

ished 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 compo-

nents 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 ware-

house 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 facil-

ity 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.

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

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Quality Management

Quality has become a major factor in a customer’s choice of products and services. If the cus-

tomer 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 contam-

ination that may occur during the manufacturing process and many consumers also rely on man-

ufacturing and processing standards. Besides ingredient quality, there are also sanitation re-

quirements. 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 er-

ror and increase efficiency but the human element is still present in the current system. The rea-

son 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 ran-

dom checks every 15 minutes or every 10000 bottles that is made. When a defect or a con-

taminated 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 ma-

chines from Japan based in Singapore. The machines used for the production of the Yakult bot-

tles 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. How-

ever, 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 qual-

ity. 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 con-

sumer makes a complaint about their product, they can use the batch that has been kept refriger-

ated in their facility to troubleshoot the problem or find a solution. Most of the time, it is the con-

sumers 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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