Ajinomoto Group’s Company-wide Operational Transformation ...
Transcript of Ajinomoto Group’s Company-wide Operational Transformation ...
0Copyright(C)2020 AJINOMOTO CO., INC. All rights reserved
Confidential
Taro FujieCorporate Vice President Chief Transformation Officer (CXO)
March 23, 2021
Ajinomoto Group’s Company-wide Operational Transformation Initiatives
Contribute to greater wellness for people worldwide, unlocking the power of amino acids to
resolve the food and health issues associated with dietary habits and aging
To promote company-wide operational transformation and continual refinements as a solution-providing group of companies for food
and health issues
Increased ASV engagement
ASV
Group Vision for 2030DX goals for 2030
Business m
odel transformation
Promotion of digitalization
OEG
roup-wide adoption of
managem
ent indicatorsPromote “smart corporate”
Ajinomoto Group Vision
Mission
Overall Image of Company-wide Operational Transformation
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OE* as a Group-wide standard to transform thefoundation of the whole Group (*Operational Excellence)
“Better job satisfaction and purpose of life for everyone”Improved ASV engagement“Improve the organization’s ability to get things done”Visualization of contributions and decision making through Group-wide adoption of management indicatorsEnhanced performance in the back office and cost reductions to contribute to growth by promoting “smart corporate”
Achieve shared companywide expenses equal to 2.5% of sales in FY2022 by promoting company-wide
operational transformation
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The Mechanism of Company-wide Operational Transformation
For growthReduce waste↓Enhance performance↑ +
Build the foundation for creating new value
Foster ASV engagement & a corporate culture of individual initiative
Key Goal Indicator:
ROIC
KPI: Engagement Survey Score
KPI: Percentage of shared expenses vs. sales (target 2.5%)
Adopt Operational Excellence (OE)Adopt management indicators to enhance management capabilities (improve ROIC and ability to forecast)Reduce costs and improve service through promoting the “smart corporate” concept (Procurement Dept., ADP,1 AFS2)
☆ Build ecosystems internally and externally, and continue with the above.
1. ADP: Ajinomoto Digital Business Partners Co., Inc.2. AFS: Ajinomoto Financial Solutions, Inc.
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Target for Reducing Shared Companywide Expenses
Trend in shared
expenses for Ajinomoto Co.
Integrate management through HQ systems after classifying functions and
reviewing work
Corporate systems
Manage eachfunction
individually
Launch a joint venture with partners with well-established work
efficiencies, continually improveefficiency
Promoting continual enhancements and efficiencies by working together withforward-thinking partners not just in our business activities, but in corporate divisions, too, will help reduce costs at a steady pace.
(billion yen)
% of Sales
0
10
20
30
40
28.5
37.3
33.0
Existing expenses (to be streamlined)
36.7
FY13(actual)
FY16(actual)
FY19(actual)
FY20 (forecast)
FY22 (forecast)
(3.1%)(2.9%) (3.3%)(3.4%)(2.5%)expected
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Ajinomoto Group’s Operational Excellence
Continuous improvement and reform based on ideas and methods that refine all operations to create added value and customer-centric solutions growing together as individuals and as a team to produce a competitive advantage.
Definition
1. Define customers and value required by
customers
Make clear who the customer is and what kind of value they
require
2. Set goals and analyze 3. Management based on data
Data(fact)
Logical Teach-able
Rational
3 Main Initiatives
OrganizationalGoal
Goal & Issues
Work
Measures
Optimize by using digital solutions
Digital solutions
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Goal & Issues
Goal & Issues
Work Work Work
Measures Measures
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Adopt Shared Group Management Indicators – to Enhance Execution Capabilities
FY2021Over 70% sales
Over 90% sales
Expand Rollout
FY2022
3 Aims★Standardize parameters for
management accounting★Group-wide collection and analysis
system★Monitoring of priority KPIs
Visualization of Group management
★Promote portfolio management★Extend ROIC tree to all employees
Continually improve corporate value
★Stringently maintain ROE>ROIC>ROA>WACC
★Allocate resources to new and core businesses to achieve new vision
★Reduce/withdraw from non-core businesses
Highly efficient revenue structure
(ROIC-focused management)
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Plan to Reduce Costs through Company-wide Operational Transformation
Initiatives planned in FY2020 are steadily being promoted, giving confidence in generating resultsRefine the ability to carry out plans formulated after FY2021
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Ajinomoto Co.
Ajinomoto AGF
Ajinomoto Frozen Foods
Work A
Work A‘
Work A“
Work A“Work A
Work A
Work AWork A
Improved top line
Reduced SG&A
expenses
Contribution to companiesAjinomoto Digital Business Partners Co., Inc.
RefineEnhance
Integrate and reduce waste
Bring together
Companies
BPO+
Utilize Accenture’s wealth of experience in global, cutting-edge digital technologies
Visualization tool
Necessary workWork progress
What is busy, not busy, not necessary
RPAautomation
Quantitativemanagement
Zero-basedwork reforms
4 ADP: Mechanism to Upgrade and Increase the Efficiency of the Back Office
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Copyright © 2021 Ajinomoto Digital Business Partners All Rights Reserved.
The data management system shows operational results. The system is used to see the state of operations from various angles as quantitative data and monitor continually.
Visualization of change in operating time by work. Can change scale to week, month, or year.
Breakdown of operation time can be seen based on times punched in and out, and for each work. Identifies work with high rate of operation.
Can switch view for each person in the concerned team
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Shows metrics such as total operating time, operating rate, proportion of contract work, etc.
Example of Utilization of Digital in ADP4
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InternationalR
ollout4
Initial area(FY2020-2021)
Priority area(FY2021-2022)
Phase 1(FY20)
Ajinomotocorporate
AGF H
Q
Salesoffices
Kawasaki area(Office, R&D, AFM)
Tokai area(Office, R&D, AFM)
FFA
Expand target functions
Back O
fficeFront
HR
Other
SalesSupport
OtherCorporate Functions
Procurement
PR
GeneralAffairs
Head Office
Branch Offices Plants Research
Centers GroupAffiliates
Expand target organizations
3 phases for increasing efficiency and upgrading(Ajinomoto Co. only: by FY2023. Domestic Group companies: completed by FY2025
Phase 2
Phase 3Salesfrontwork
Indirect materials procurement
AGFSales &
production
ADP: Plan to Increase the Efficiency of, and Upgrade the Back Office
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Direct Material Cost Reductions (FY2020-2022 Plan)
Major global
themes
Global procure-
ment
Change package material specs
Improve process for MSG manufac
ture
Recipe harmoni-
zation
1. Global procurement
Key Points of Initiatives1. Four main themes (global cooperation)2. Look for new themes for cooperation3. Cost reductions by division
2. Build a way to look for new cooperative themes
(1) Encourage daily communicationReview meetings, worker meetings, news
(2) Horizontal dissemination of successstories
3. Undertake cost reduction themes foreach division
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・ Build the best procurement system・ Global use of purchasing know-how, etc.・ Flavors, instant coffee, etc.
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2. Recipe harmonization: standardization of ingredients
FY2020-FY2022cumulative: 4.3 billion yen
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Future Plan1. Three main initiatives(1) Optimize procurement
Transfer all to ADP’s procurement dept.
(2) Work standardization and visualization
Start using SAP Ariba (Oct)(3) Governance rationalization
New rules for purchasing indirect materials
Indirect Material Cost Reductions (FY2020 results and future projection)
Overall Plan for Indirect Material Cost Reductions
FY2020 ResultsFormulated plan, measures, and priority targets
Ref: Wave 1 (From late FY2020): Facilities and related services, communications, travel expenses, and maintenanceWave 2 (From FY2021): IT, sales and marketing, human resources, events
2. Priority targets and reduction amounts(1)Procurement of Ajinomoto Co. and Ajinomoto AGF, Inc. indirect materials
FY2020–FY2022 cumulative: ¥0.8bn, FY2020-FY2025 cumulative: ¥1.8bn(2) Prioritize scope of target range to create an early reduction effect
Operationoptimization
Costreductions
Governance
Phase 1(late FY20 early FY2021) Phase 2(FY2021) Phase 3(late FY2021)
Centralized management by using a purchasing system -> business efficiency
Business transfer & integration to PCT ->Move offshore
Establish fair rules and strengthen governance on purchasing
More negotiating power with better information
Wave 1 and Wave2Make small successes
Strengthen through HR development in PCT
CleaningTranslationEnergyTravel management
Pilot business transfer to PCT / Standard process verification
Better cost reductions of indirect materials through working with Ajinomoto AGF, Inc.
Systems SAP Ariba system concept
SAP Ariba function build SAP Ariba rolloutsupport
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Forward-looking statements, such as business performance forecasts, made in these materials are based on management's estimates, assumptions and projections at the time of publication. A number of factors could cause actual results to differ materially from expectations.This material includes summary figures that have not been audited so the numbers may change.Amounts presented in these materials are rounded down.
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