With a rapid expansion of the business, GAMO Co.,LTD. completely reformed their logistics system in the western Japan area.
They visualized their inventories by establishing a logistic center that integrates operations in western Japan.
Enhance logistics systems in the western Japan area and improve and stabilize the service quality
Improve SCM efficiency by centrally managing buying and inventories
Established a logistics center that integrates logistics in branch offices and group companies in western Japan area
Outsourced their logistics operations to NTT LOGISCO, which has comprehensive proposal capabilities and IT strength
Outsourcing the whole logistics operations allows sales representatives to focus on their core operations
Aggregating inventories allows GAMO to centrally manage buying and inventories, which optimized their inventory levels.
GAMO Co.,LTD. is a comprehensive beauty dealer which distributes more than 18,000 kinds of products to beauty salons across Japan. With their expanded business areas across Japan and increased sales, some issues were identified in their logistics system.
Mr. Yoshihiko Kuramochi and Mr. Hideki Nogami from the Management Division of GAMO gave a talk about how they resolved the issues.
With the rapid business expansion and increase in the number of group companies, GAMO had a critical need to completely reform their logistic system in western Japan area.
With a motto to “distribute what customers need, in the amount they need, by the time they need it’”, GAMO Co.,LTD. started working on logistics innovation as an early adopter of the separation of sales and logistics to become Only One Dealer of beauty salons and decided to outsource their logistics system in 1997. They have spent the time saved by this logistics improvement on close communication with beauty salons and expanded their sales, providing high quality products and services that customers demand. However, as the business area expanded nationwide, issues in their existing logistic systems were gradually revealed.
The growth of the GAMO Group gives rise to the need for enhancing the logistics system for the western Japan area, where their branch offices and sales offices as well as group companies had established their own logistic systems. Mr. Yoshihiko Kuramochi, the general manager of the Management Division said “distributors in the western Japan area used to have their own logistics systems. The purchase pattern of salons is unique and they place orders frequently for a large variety of products in small lot sizes. Products have been developed to provide a full-range of servicees, and GAMO started to handle more and more product every year. In order for us to “distribute what customers need, in the amount they need, by the time they need it” to all the salons in western Japan area while maintaining the same service level, we needed to reform the logistics environment.”
They used to cover the business in western Japan area by collaborating with the offices in Nagoya and Fukuoka and group companies in each region. These group companies had their own logistics system, sales representatives did deliveries by themselves in some regions, and delivery quality was fully dependent on the group companies. Also, as each group company managed their own logistics, GAMO was not able to centrally manage the overall inventories of GAMO Group, which made them decide to construct a new logistics center in the western Japan area.
Mr. Hideki Nogami, the deputy director of the Procurement Logistics Department talked about the reason and said “GAMO Group can take advantage of the scale of economy by centrally controlling and adjusting inventories of the products we handle. We also thought that, from lessons learned from the Great Eastern Japan Earthquake, placing a logistics site in western Japan apart from the existing one in eastern Japan is effective for business from a business continuity perspective.”
This is how the eastern Japan logistics center establishment project has been launched.
GAMO appreciated NTT LOGISCO’s empathetic, one step ahead attitude towards their proposal and selected NTT LOGISCO as a partner due to its strong IT capability
When selecting an outsourcing partner for a logistics center, one of the important requirements is to have a better understanding of your logistics situation. Although GAMO had an option to entrust the operation to the outsourcing company of the existing center in eastern Japan area, they took the decision to look for another outsourcee. They thought establishing and employing two logistics centers and partners would allow them to mutually strengthen each other and it would improve the overall logistic level of the company.
They listed logistic companies which they had yet to work with, received proposals from them, and started comparing and selecting an outsourcing partner for the western Japan logistics center. The deputy director Nogami explained the criteria and selection points as follows. “We proceeded with the selection according to our requirements, based on the categories of cost, warehouse location, business process, information system connection, and on-site operation system. It was NTT LOGISCO that offered a proposal which best suited our requirements.”
Mr. Kuramochi gave another reason why they choose NTT LOGISCO. “To tell you the truth, if we had looked at proposal contents only, we might have chosen another company. However, we highly regarded NTT LOGISCO’s empathetic, one step ahead attitude towards our issues and the desire to resolve them with us together. Choosing a good advisor who can provide continuous improvement suggestions even after the establishment of the center is also an important factor when we choose a partner. ”
The logistics world currently has waves of digitalization such as AI, IoT and robotics. Mr. Nogami said that NTT LOGISCO’s being an NTT Group company with IT expertise in such IT domains also helped GAMO choose NTT LOGISCO. “In addition to the trust and assurance that they have been developing for a long time as the logistics department of NTT Group, we highly regarded their familiarity with IT, which will be a competitive advantage for future logistics industry. We also have an expectation that they will be involved in our entire supply chain outside of logistics with their skills and know-how. We also appreciated their corporate attitude towards CSR and compliance.”
Choosing NTT LOGISCO as a partner, we will start launching the western Japan logistics center. We would like to closely work with the eastern Japan logistics center and logistics departments of group companies and gradually change the logistics system. The new logistics center will launch their operations almost on schedule.
Visualized GAMO Group’s inventories by integrating logistics
Contributed to GAMO’s sales expansion by optimizing their inventory levels and enhancing the logistics system
With the launch of the western Japan logistics center, GAMO’s logistics will be mainly controlled by two-poles; east and west. This resolves the variation of logistics quality and makes the delivery services consistent, which used to vary depending on group companies; for example some of them used to deliver products on the following day except for in some areas. Mr. Nogami also highly regarded the strength of flexible staffing that only 3PL can provide; which can allocate staff based on fluctuating cargo volumes depending on days of week and time specific to the beauty industry.
“In the western Japan area many salons are closed on Mondays. Therefore, a lot of orders are placed on Sunday and the shipping amount is about double on Mondays. To address this issue, the logistic center provides overall labor control and has developed a system to respond flexibly to the fluctuations in cargo volume. We currently have NTT LOGISCO operate at full operation even on national holidays, except for on Sundays, by adjusting shift schedules. This is one of the factors that facilitates their prompt delivery lead time for the western Japan logistics center, adding value to GAMO Group.”
Also, separating the logistics department from the group reduced the burden of sales representatives who used to directly deliver products to customers. They are now able to concentrate on their core operations and this helped them to develop an environment where they can focus on communicating with beauty salons, which GAMO Group considers important. With the positive sales growth in western Japan area, GAMO’s sales have been growing on a steady basis. Based on Mr. Kuramochi’s analysis the reform of this logistic system indirectly contributes to this sales growth.
“As we have visualized all our inventories in aggregated form by linking with our sales management system, we can now have real-time inventory.”
It has been two years since the launch of the western Japan logistics center. In this period we experienced an adverse event in the increase in delivery fees. Under such circumstances, Mr. Nogami appreciates NTT LOGISCO’s attitude which has continuously provided improvement suggestions every month in monthly meetings.
“NTT LOGISCO allocates responsible persons to each unit including sales, systems, LE (logistics engineering) and on-site operations to promote improvements, visualize the changes in production, improve the efficiency of shipping operations, and analyze logistics costs of each group company by setting specific KPI targets. Their proposal capabilities to resolve our issues and on-site capabilities to promptly visit our warehouse to make improvements help our business. Focusing too much on cost reduction does not help logistics work well. For customers of beauty salons who are sensitive to even slight damage to a package, it is important to develop a system to improve overall logistics quality including that in delivery.”
What we are aiming for in the future is to develop a Beauty Village of Logistics. We think eliminating various waste by establishing a beauty industry platform based on a gigantic supply chain involving manufactures and industry peers will bring huge benefits for customers of beauty salons. Mr. Kuramochi thinks that what is important to achieve this is the use of data making use of IT. “This is also why we chose the company with strong IT capabilities. I believe those who understand and make use of data that connects manufacturers and dealers will be the winners in the future beauty industry. I expect NTT LOGISCO would provide such a dream proposal.”
Logistics innovation of GAMO Group will continue. NTT LOGISCO continues supporting the logistics future that GAMO Group envisions.
GAMO is the largest beauty dealer in Japan providing commercial-use beauty products and equipment and services such as seminars and events for beauty salons. Their motto is to provide the best product and service through close communication with customers in order to become a great partner of beauty salons and make their dreams come true.