Issues

With the increased inventory and shipping volume due to the business expansion of AVEDA, it became necessary to develop the next generation beauty logistics platform which allows for systematic management

AVEDA, a professional brand from the US, has strong insistence on natural ingredients and a fan base among women all over the world. AVEDA Service Co., LTD. is a group company of GAMO Group and sole distributer of AVEDA products to beauty salons in Japan. The company supplies products and services to about 350 AVEDA dealer beauty salons across Japan as a dedicated distributor of the global brand AVEDA. As a member of GAMO Group, they are an early adopter of the separation of sales and logistics. Although they had outsourced their logistic system since their establishment in 2004, it became necessary to reform the existing logistic system due to the recent business expansion.

Mr. Yoshiaki Kido, the Assistant Manager of AVEDA said “We felt limitations on the existing logistic system while the business was expanding and the number of dealer salons and sales were also increasing. We needed to enhance logistics platform that supports the increased cargo volume and take the first step towards next generation logistics which allows us to manage logistics in a systematic manner. Also, we were aware of issues in the quality of the delivery service which needed to be solved to protect AVEDA’s brand image.”

Under such circumstances, we faced an urgent issue that cargo volume was increasing and warehouse space was becoming tight because of the large number of items AVEDA handles and an increasee in sales. Mr. Kido talked about the warehouse situation at that time.

“As inventory volumes increased and cargo was placed on the floor, it was thought that the shortage of storage space would be an immediate issue.” Mr. Kido also added about the issue. “As storage warehouses were widely distributed, it was difficult to have accurate company-wide inventory management.”

Then, AVEDA decided to reform the logistic structure including securing of new warehouses. It has become an important mission for them to implement new warehouse management systems in line with the upcoming upgraded version of the core system and visualize overall inventories by connecting the new systems with each other.

“We wanted to develop a warehouse management system towards the development of new generation logistics. We aimed to establish a system which allows a short delivery time and cost reduction in the future.”Mr. Kido said.

Thus, the company started selecting a partner for the establishment of next generation logistics system.

Measures

In selecting 3PL, AVEDA appreciated the planning and proposal abilities including the provision of specific solutions for issues.

There were five new candidate partners. They provided their proposals based on AVEDA’s requirements including cost, quality, scalability and system support. Mr. Kido looked back at how they went through the selection. “It is true that candidates with experience of providing logistics solution to the beauty industry had a competitive advantage. However, we ended up selecting NTT LOGISCO as a partner, which have a lot of experience in the cosmetic industry nowadays but hardly any in the beauty industry back in the days. We selected them because we highly appreciated their attitude; they work on various issues together for improvements.”

Unlike general beauty dealers which deal with products from several manufactures and brands, AVEDA Service is a dedicated distributor which deals with products from a single brand, AVEDA. According to Mr. Kido’s analysis, they selected NTT LOGISCO because their proposal was based on this point.

“Reduction of delivery cost was a big appealing point but what made us choose NTT LOGISCO was their planning and proposal abilities. They presented specific improvement proposals on the issues we presented and the dedicated scheme they developed for us was critical for the determination. It showed their attitude that they thought about our issues, carefully considering our business type which is different from general beauty dealers.”

NTT LOGISCO’s being an NTT Group company with IT expertise also helped AVEDA to choose NTT LOGISCO to implement and inter-connect the warehouse management system in line with the reform of the core system. They also highly regarded and felt secure in the fact that NTT LOGISCO provides a cloud warehouse management system that allows real-time inventory management, product lot management, batch processing for order data and order information merging of deliveries with the same destinations.

Thus, the establishment of new logistic system started. Since it was the first time for AVEDA to change their logistic system, Mr. Kido said they were fairly concerned about it. “We felt relieved that we were able to exchange and coordinate our opinions through regular meetings and adjusted them in depth and in detail with NTT LOGISCO. In spite of the tight schedule, it allowed us to complete the implementation on schedule and launch the operation in June 2014.”

Outcomes

Sales increased by approx. 15% and the number of customers by 20% due to the enhancement of logistics platform
Improvement response to issues has become faster by visualizing logistics data

AVEDA has their logistics warehouse in the Chiba Logistics Center of NTT LOGISCO. It is fully air-conditioned to maintain the qualities of delicate products such as hair-care and skin care products for high-end beauty salons and products which used to be placed on the floor were stored on four level racks to flexibly respond to the increase and decrease in cargo volume. Mr. Kido appreciates the operational system that the whole logistics center provides, as follows.

“The warehouse space has increased and now we can expand the space and allocate the optimum number of staff on a shift basis depending on the increase and decrease in inventories. Hair salons receive three to four times more orders on Monday because many customers usually visit them on weekends. Chiba Logistic Center provides overall labor control which allows us to have the optimum number of staff based on the increase and decrease of cargo volume, using data-based cargo volume forecasts.”

Mr. Kido continued and said “We can understand shipment capacity by predicting cargo volume on a daily basis and manage the actual volume at both ends; we do not fail to ship products after the other end sends order data, and therefore we feel secure.”

Mr. Kido also talks about the skill levels of the staff at the logistic center.

“As leaders provide part time workers with a thorough education, their skills are consistent. Even the packing procedures for each process are standardized and a high quality is maintained. The logistics center is equipped with a training room for workers and we felt their enthusiasm towards human resource development on-site.”

Mr. Kido explained that what supports such improvement activities was the integration of all inventories into one logistics warehouse and visualized data in the warehouse management system.

“Now we can capture all inventories at one glance. It was also a significant change that product lots can be managed by system. As we deal with organic products, we put great emphasis on quality control and set expiration dates. We can now trace what product was delivered to which customer on a lot basis and we can promptly respond even if something happens. This has largely reduced our management efforts.”

We also work on providing improvement proposals to our customers using logistics data. We analyze logistics cost on a delivery destination basis and visualize the current situation where many salons place several orders a day. We therefore ask them to merge multiple orders into one as much as possible. This resulted in improvement and reduced the number of packing units.

It has already been 8 years since we had a partnership with NTT LOGISCO. We still have regular meetings on a monthly basis and continue improvement activities using visualized data. During these years our sales and the number of customers have expanded by approx. 15% and 20% respectively. We can say that one of the factors of the expansion was the increase in the logistics processing capacity and quality.

AVEDA said that for example, if damage is found in a product at the delivery destination, LOGISCO closely worked with the delivery company so that AVEDA can identify whether the damage was caused by the delivery or packing. This allows them to improve the packing method and take measures; for example increasing the cushioning by changing the thickness of carbon boxes, and helped them to drastically reduced product damages.

At the end, Mr. Kido summarized this project. “Our biggest goal was not only to reduce costs but also to extend AVEDA’s high quality brand image to the logistics. Through the partnership with NTT LOGISCO we were able to establish a logistics system with high comprehensive capabilities which achieves high quality storage, cargo handling and shipping. As NTT LOGISCO offers the necessary data at regular meetings in response to our request, we can improve the quality through prompt improvement activities. We would like to aim to become a model case that brings innovation to the future beauty industry and work with NTT LOGISCO to engage in initiatives that go beyond the logistics framework.”

NTT LOGISCO will continue promoting AVEDA’s logistics innovation to improve the image of the professional brand of AVEDA and assist in the success of their dealers, AVEDA salons, and the beauty of their salon customers.