School of Business, Public Policy and

Social Entrepreneurship

SUBJECT- 303

OPERATIONS MANAGEMENT

REPORT ON

Under the guidance of Submitted by :

Dr. Anshu Gupta Ahmad Ali

Assistant Professor Amrita Arora

School of Business, Public Policy Deepanwita Bhattacharya

& Social Entrepreneurship (SBPPSE) Rahul Chaudhary

Ambedkar University Delhi (AUD)

YAKULT DANONE INDIA PVT. LTD.

INDUSTRIAL TRIP, January 20,2015

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Acknowledgement

We have taken efforts in this report. However, it would not have been possible

without the kind support and help of many individuals and organizations. We

would like to extend our sincere thanks to all of them.

We are highly indebted to Anshu Gupta ma’am for her guidance and constant

supervision as well as for taking us to this industrial visit which was a great

learning experience.

We would also like to thank the manager of Yakult Danone India Pvt. Ltd., Rai

manufacturing facility for sharing with us the valuable information regarding the

working of the process.

We would like to express our gratitude towards our families & members of School

of Business, Public Policy and Social Entrepreneurship, Ambedkar

University, Delhi for their kind co-operation and encouragement which helped us

in completion of this report. Our thanks and appreciations also go to our colleagues

in developing the project and people who have willingly helped us out with their

abilities.

Ahmad Ali

Amrita Arora

Deepanwita Bhattacharya

Rahul Kumar Chaudhary

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TABLE OF CONTENTS

ACKNOWLEDGEMENT

Chapter 1 YAKULT DANONE INDIA LTD. – AN

INTRODUCTION

ABOUT YAKULT

HISTORY

GLOBAL PRESENCE

JOINT VENTURE IN INDIA

PHILOSOPHY AND VISION

Chapter 2 OPERATIONS MANAGEMENT

LOCATION ANALYSIS

PRODUCT ANALYSIS

INPUTS

OUTPUTS

ORDER WINNER

ORDER QUALIFIER

PROCESS ANALYSIS

PROCESS FLOWCHART

CYCLE TIME

BOTTLENECK

PRODUCTION CAPACITY (OUTPUT MEASURE)

CAPACITY UTILIZATION

CAPACITY CUSHION

MAKE TO STOCK

CONTINUOUS PRODUCTION

QUALITY MANAGEMENT

MATERIAL MANAGEMENT (JUST IN TIME)

LAYOUT ANALYSIS

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WASTE MANAGEMENT

DISTRIBUTION SYSTEM

TECHNOLOGY

SOCIAL RESPONSIBILITY

Chapter 3 OUR EXPERIENCE

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Chapter 1 YAKULT DANONE INDIA LTD. –

AN INTRODUCTION

ABOUT YAKULT

Yakult (ヤクルト Yakuruto?) 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 graduated from the Medical School of Kyoto University in

1930. In 1935, he started manufacturing and selling Yakult.

Official claims state that the name is derived from jahurto, an older form of jogurto,

the Esperanto word for "yogurt". Since then, Yakult has also introduced a line of beverages for

the Japanese market that contain Bifidobacterium breve bacteria, and has also used its lactobacilli

research to develop cosmetics.

More recently, the Yakult Honsha played a major role in developing the chemotherapy drug

irinotecan (Camptosar, CPT-11).

HISTORY

1930 : Dr. Minoru Shirota succeeds in culturing and utilizing lactic acid bacteria

(Lactobacillus casei strain Shirota).

1935 : Yakult is manufactured and introduced to the market.

1938 : Yakult is registered as a trademark.

1955 : Yakult Honsha Co., Ltd. is established. (Nishi Hatchobori, Chuo-ku,Tokyo) &

Research Institute is established in Kyoto.

1963 : Yakult launches its unique Yakult Ladies system of door-to-door distribution.

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1964 : Yakult Co., Ltd. (Taiwan) begins operations as the company's first overseas

operation base.

1967 : Yakult Central Institute for Microbiology Research is established in Kunitachi,

Tokyo.

1968 : - The company takes over the management of the Sankei Atoms

baseball team (now the Yakult Swallows).

- Yakult S/A Ind. E. Com. (Brazil) begins operations.

- Yakult is introduced to the market in a new plastic container.

1969 : Hong Kong Yakult Co., Ltd. begins operations.

1971 : - The company begins the full-scale sale of cosmetics.

- Yakult (Thailand) Co., Ltd. and Korea Yakult Co., Ltd.

Begin operations

1972 : New head office building is completed in Higashi Shimbashi,

Minato-ku, Tokyo.

1978 : Yakult Philippines, Inc. is established.

1979 : Yakult (Singapore) Pte. Ltd. begins operations.

1981 : Yakult S.A. De C.V. (Mexico) begins operations.

1986 : Fuji Susono Plant is completed for dairy-product manufacturing.

1991 : P.T. Yakult Indonesia Persada begins operations.

1994 : Yakult Australia Pty. Ltd. and Yakult Nederland B.V. begin operations.

1995 : Yakult Belgium S.A./N.V. begins operations.

1996 : Yakult UK Ltd., Yakult Deutschland (Germany) and Yakult Europe B.V. is

established.

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1997 : Yakult Argentina S.A. begins operations.

2002 : Guangzhou Yakult Co., Ltd. begins operations.

2004 : - Yakult Malaysia begins operations.

- Sales of Yakult are begun in New Zealand and Ireland.

- Yakult Brazil begins operations.

- Shanghai Yakult Co., Ltd. begins operations.

2005 : Yakult (China) Co., Ltd. and Beijing Yakult Co., Ltd. is established to oversee

operations in China.

2007 : - Yakult Italia S.r.l. begins operations.

- Sales of Yakult are begun in California, USA.

2008 : - Yakult DANONE India Pvt. Ltd. begins operations.

- Yakult Vietnam Co., Ltd. begins operations.

GLOBAL PRESENCE

After its introduction in Japan and Taiwan, Yakult was first sold in Brazil in 1966, due to the

large number of Japanese immigrants in the country, before it was marketed elsewhere. Today,

Yakult is sold in 31 countries, although its bacteria cultures are provided from a mother strain

from Japan regardless of production location.

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(NOTE: Taken from the Yakult Annual Report 2014)

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JOINT VENTURE IN INDIA

Yakult DANONE India (P) Ltd is a 50:50 JV between Yakult

Honsha, Japan and Groupe DANONE of France, both of which are

global probiotic leaders. The JV was formed in 2005 to manufacture

and sell probiotic products in the Indian market. Yakult, a probiotic

drink was launched in India in 2007, and is presently available in

Delhi, NCR, Chandigarh, Punjab, Jaipur, Mumbai, Pune and

Bangalore. Yakult is manufactured at an ISO 9001: 2008 and HACCP certified manufacturing

facility in Sonepat, Haryana in India.

As a pioneer in probiotics, Yakult has formidable research capabilities and product technologies

in the field of probiotics. Yakult Central Institute for Microbiological Research has for years

researched the use of intestinal bacteria as a factor in health maintenance, conducting a wide

range of studies on the benefits of microorganisms in Japan

In India too, Yakult DANONE India is working actively to build awareness about probiotics and

contribute to a healthier society.

Yakult‟s benefits have been scientifically established through years of research and 30 million

people in 32 countries drink Yakult every day.

PHILOSOPHY AND VISION

Philosophy: "We contribute to the health and happiness of people around the world through

pursuit of excellence in life science in general and our research and experience in

microorganisms in particular"

Vision: "We believe in what we do. In our little bottle. In probiotics. We want to raise the quality

of life for people throughout the world."

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CHAPTER 2 OPERATIONS MANAGEMENT

LOCATION ANALYSIS

Yakult Danone India Pvt Ltd has set up an 8 acres manufacturing facility in Rai near Sonipat in

Haryana.

The 186 acres Food Park in Rai Industrial Estate, developed by Haryana State Industrial

Development Corporation (HSIDC) has proven to be an excellent choice for setting up this

factory because of its following locational advantages:

Infrastructure

The food park has excellent infrastructure facilities like electricity, water, roads and

communication

Close Market

The Yakult factory has proximity to one of the largest

consumer markets of Delhi and the adjoining urban

agglomerations

Easy Availability of Inputs

Home to the Murrah Buffalo, Haryana has a good

base for production of milk and holds the potential for

growth of milk and dairy based industry

Skilled Labor Force

In order to facilitate capacity building and cater to the needs of skill development for this sector,

the HSIIDC has allotted 100 acre of land at Kundli (Sonepat) for the establishment of National

Institute of Food Technology, Entrepreneurship and Management (NIFTEM), being set up by the

Ministry of Food Processing, Government of India. The institute would be one of the premier

institutions for imparting training and offering courses in the field of food technology and other

management streams.

Government Support

The ministry of food processing industries has launched a centrally sponsored scheme of the

National Mission on Food Processing (NMFP) in the current five-year plan, and Haryana has the

distinction of being one of the first states to utilise 100 per cent of the grant provided by the GoI

in the first year of the scheme.

Strong support from HSIDC and the state government of Haryana has facilitated the

development of this facility.

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PRODUCT ANALYSIS

INPUTS

For the production of Yakult, following inputs are used:

Skim milk powder

Sugar

Glucose

Natural and Natural Identical Flavor

Filtered And Sterilised Water

6.5 billion Live Lactobacillus Casei Shirota Strain

Below is the nutrition information panel for Yakult.

Servings per bottle = 1 (65ml)

Energy 218Kj

Carbohydrate 11.9g

Fat Less than 0.1g

Protein 0.8g

Sodium 10.1 g

Cholesterol NIL

OUTPUT

Yakult is made available in India in a pack of 5

bottles of size 65ml each.

Yakult has a shelf life of 40 days, when

refrigerated below 10°C.

Each bottle of Yakult is designed in such a way

that it has the ability to withstand pressure and

weight.

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ORDER QUALIFIER

Order qualifiers are “those competitive characteristics that a firm must exhibit to be a viable

competitor in the marketplace.” In case of Yakult, they are:

Brand Name- Both Yakult and Danone are pioneers and global leaders in Dairy product

markets.

Price- It offers a competitive price in the market

Packaging- The bottles are made of recyclable virgin plastic, which is safe according to industry

standards.

ORDER WINNER

Order winners are “those competitive characteristics that cause a firm‟s customers to choose that

firm‟s goods and services over those of its competitors. In case of Yakult, they are:

Only probiotic drink that has more than 6.5 million bacteria in a bottle of 65ml.

They provide a unique Home Delivery System.

Easy availability in the market through various retail outlets like EasyDay, Spencers, etc.

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PROCESS ANALYSIS

PROCESS FLOWCHART

Capcity, Number and Cycle Time of Each Machine

OPERATION CAPACITY NUMBER CYCLE TIME

SEED TANK

2.8 Million per day

or

14,00,000

bottles/day/machine

2 Machines

2 Hours

CULTURE TANK 3,00,000 per day

or

50,000

bottles/day/machine

6 Machines 7 Days

STORAGE TANK 4,80,000 per day

or

2,40,000

bottles/day/machine

2 Machines 1 Day

MIXING TANK 56,00,000 bottles per

day

or

28,00,000

2 Machines 1 Day

SEED TANK CULTURE

TANK QUALITY

CONTROL ROOM

STORAGE TANK

MOULDING

FILLING PACKAGING

INVENTORIE

S

ooooff

INVENTORIE

S MIXING TANK

BOTTLING

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bottles/day/machine

MOULDING

ROOM

28,00,000 bottles per

day

--- ---

FILLING ROOM 56,00,000 bottles per

day

--- ---

PRINTING AND

PACKAGING

36,00,000 bottles per

day

--- ---

BOTTLENECK

Culture Tank – 7 Days

PRODUCTION CAPACITY (OUTPUT MEASURE)

Production Capacity is the volume of products that can be generated by

a production plant or enterprise in a given period by using current resources. The Yakult factory

has a capacity of making 1 million bottles per day. The line capacity is 45,000 bottles per hour.

CAPACITY UTILIZATION

Capacity utilization is the extent to which an enterprise actually uses its installed

productive capacity.

At Yakult, on an average 2,00,000 bottles are manufactured in a day. So, it‟s capacity utilization

is

(2,00,000/10,00,000) * 100 = 20%

This is too low, but according to reports, Yakult is planning a phased capacity expansion

CAPACITY CUSHION

Capacity cushions are the amount of reserve capacity a process uses to handle sudden changes

Capacity cushion for Yakult is 80% (100% - 20%)

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MAKE TO STOCK

Yakult uses Make-to-Stock (MTS) system. This is because:

Only one variety of product and high production volume

case of continuous flow systems

Demand is likely to be continuous and substantial

Demand fluctuations are covered by inventory, not much risk of carrying excess inventory

CONTINUOUS PRODUCTION

Yakult uses continuous production system as its facilities are arranged as per the sequence of operations

from the first operations to finished product. The items are made to flow through the sequence of

operations through material handling devices such as conveyors, transfer devices, etc.

Advantages of Using this System

Standardisation of product and process sequence.

Higher rate of production with reduced cycle time.

Manpower is not required for material handling as it is completely automatic.

Person with limited skills can be used on the production line.

Unit cost is lower due to high volume of production.

Limitations of Using this System

Flexibility to accommodate and process number of products does not exist.

Very high investment for setting flow lines.

Product differentiation is limited.

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QUALITY ANALYSIS

Yakult maintains a comprehensive quality management system that complies with the

International Organization for Standardization (ISO 9001:2000). This ensures that its products

and services meet the highest international food-manufacturing standards. To make sure that

Yakult‟s product is of the highest quality, samples are collected for laboratory analysis

throughout the production process to confirm that the quality assurance measures and the quality

control testing have been effective.

Yakult testing involves more than 120 samples per production run, upon which a total of more

than 120 tests are conducted. These determine Lactobacillus case numbers, check for potential

contaminants, microbiological quality, composition, acidity, physical attributes and taste. In

addition, each bottle is inspected for undesirable markings and incorrect printing.

Quality assurance measures are in place to maintain standards for personnel and factory hygiene,

equipment cleaning, processing methods and parameters, and product handling. Yakult's quality

assurance utilises a system called „Hazard Analysis and Critical Control Points‟ (HACCP). The

principles of HACCP are internationally recognised as an excellent method for assuring

stringently high standards.

Yakult manufacturing facility at Rai, Sonepat, has also received OHSAS 18001:2007

certification. OHSAS demonstrates to the stakeholders the confidence in the organisation's

ability to meet health and safety legislation requirements. Not only does it highlight commitment

to implementing, maintaining and improving health and safety policy, but it also provides Yakult

a competitive edge

MATERIAL MANAGEMENT (JUST IN TIME)

With a just-in-time approach, specific number of Yakult bottles is produced just-in-time to meet

the demand for them. Data for the demand is collected by the Sales Team, according to which

production is done. In this way, the amount of cash tied up in stocks and in work-in-progress is

kept to a minimum, as is the amount of space devoted to costly warehousing rather than to

revenue-generating production. Yakult's just-in-time process depends not on human frailty but

on machine precision.

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LAYOUT ANALYSIS

The factory is spread over 8 acres and out of this more than 30% area is the green belt area. The total

factory is designed as per international standards and special care was taken while designing to maintain

the highest level of hygiene standards and deliver the best quality product to its consumers.

The Yakult factory is divided into two parts. The first part is used for display of Yakult history and

achievements and for conducting presentations. The second part is where the manufacturing process takes

place. To facilitate continuous flow of manufacturing, there is a long vertical area dedicated to it (red

marked area in the picture). Also, a glass corridor has been made keeping in mind Yakult factory visits.

DISTRIBUTION SYSTEM

Retail Stores

Yakult is available in more than 6000 retail

stores, supermarkets, bakeries and chemists in

Agra, Ambala, Amritsar, Bangalore, Chandigarh,

Chennai, Delhi, Faridabad, Ghaziabad, Gurgaon,

Hyderabad, Jaipur, Jalandhar, kanpur, lucknow,

Ludhiana, Meerut, Mohali, Mumbai, Mysore,

Nasik, Noida, Panchkula, Panipat, Patiala, Pune,

Ropar, Yamuna Nagar and Zirakpur.

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Home Delivery

Yakult lady system is a unique home delivery system that the company has adopted globally for

the convenience of the consumers. It provides free delivery of Yakult at the customer's doorstep

and is presently available in Delhi NCR, Mumbai, Chandigarh, Jaipur and Pune.

WASTE MANAGEMENT

Cleaning: Yakult adheres to a comprehensive hygiene and sanitation program, following a cleaning

program that is predominantly governed by CIP (Cleaning in Place). Steam, an environmentally friendly

cleaner, is used to sterilise the pipes and tanks. A single-phase chemical cleaner is used, reducing the

numbers of chemicals introduced into the drains; chlorine-based chemicals are not used.

Solid wastes: the amount of solid waste is relatively small and a number of measures are made to reduce

waste. Recycling occurs where it is economically and environmentally viable. Paper products (skim milk

powder bags, etc.) are recycled. The bottles are crushed and mixed with other resin to be made into a

variety of plastic products, such as chairs and tables.

Liquid wastes: any liquid waste goes into a holding tank in our water treatment facility. The acidity (pH)

of the water is adjusted with acid or alkaline to meet Melbourne Water standards before being released

into the sewage system.

TECHNOLOGY

The process of making Yakult is completely automated and there is no human touch at any point

of time.

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SOCIAL RESPONSIBILITY

Yakult first established an internal organization dedicated to preserving the global environment

back in November 1991. In June 1997, Yakult created “Yakult Basic Policy on the

Environment”, guided by the environment philosophy and directives for action. In March 2001,

the company drafted the first stage plan of the plan and starting from the fiscal year ended March

31, 2002 we have implemented environmental protection measures in all business areas,

including R&D, production, sales and administration, to reduce the environmental burden caused

by our business activities. The policy has been revised in January 2010. In the end of March 31,

2014 we have implemented the fifth stage of the plan, which includes measures to reduce

greenhouse gas emissions and waste, and cut the volume of printer paper we use.

In 2010, Yakult established “Yakult Eco Vision 2010”, which aims to help preserve the global

environment and create a sustainable society and has attained successful results. This was

followed by the start of “Yakult Sustainable Ecology 2020” from the fiscal year ended March 31,

2013 to the target year of 2020. In March, 2014, Yakult carried on its initiatives, continuing to

introduce renewable energy with solar power generation and other forms, implementing

greenhouse gas reduction efforts at dairy product plants and in logistics operations, striving to

achieve zero waste emissions, and promoting fuel conversion

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OUR EXPERIENCE

Date: January 20, 2015

Venue: Yakult Danone India Pvt. Ltd,

Plot No. 402-405

Food Park, Rai Industrial Area,

Hsidc. Sonipat, Haryana

Participants: Class of MBA 1st Year, Operations Management

Yakult was born over 75 years ago and since then has been loved by 28 million of consumers overseas.

However, in India, Yakult is still a young and growing company. Yakult Danone India Pvt. Ltd. was

launched here in 2007.

The factory visit was held successfully on 20 January 2015. On that morning we gathered at the campus

at 8 a.m. and took a bus to our destination. We arrived at the destination around 9.45 a.m . Right after we

arrived, the representative of Yakult gave us a warm welcome speech and brief introduction about Yakult.

We entered into a room and the representative conducted a presentation. The presentation included the

background of the Yakult company and product, followed by an educational video showing the

importance of good bacteria for a healthy digestive system. We then had the opportunity to sample their

freshly made products.

After the presentation, we are able to view the entire production process of Yakult. The Yakult factory

was built specially with visitors in mind. This is because; we could view the whole production process

from a lobby on the first floor, through specially constructed glass walls. We were impressed by the scale

of the production .With high technology machining integrated production and quality control progress,

production time can be shortened and quality control can be enhanced. We were also bemused with the

small number of workers in the factory because the machines are actually doing all the works which

definitely will reduce the labour cost. The machines that we were able to see and the steps of production

are the sterilisation tank -> seed tank->culture tank ->mixing and storage tank->injection blow moulding

machine->bottle storage tank ->filling and packaging machine->refrigeration room and delivery.

After photo session, we headed back to our university at 12.00 p.m. It was a successful visit because it

showed the open character and the clear structure of the company. As students of operations management

class, we learned few applications about industrial productions. We managed to understand and observe

the operations and the management of the factory generally. We found the visit was very impressive and

informative. All of us enjoyed it very much.