Value Chain Analysis

1. Supply chain management Thai ingredients are used for the manufacture of Yakult (Thailand). Consists of cultured Lactobacillus casei Shirota strain, skim milk powder, sugar, flavours and water. There are no artificial colours and flavours in Yakult. A 'just-in-time' system of production is followed, which means Yakult is manufactured on demand to ensure the product is always delivered with a full shelf-life. Yacult (Thailand) is manufacturing its entire product line in one size, one type of packaging, and one flavor at a fully utilized plant located behind Kasetsart University, Bangkok, Thailand. 2. Operation Polystyrene bottles are packed in groups of five in polyethylene wrap and then packaged into a slab for distribution (a slab consists of ten five-packs, that is 50 bottles). The polystyrene bottles are made from a food grade plastic and are a number six on the Plastic Identification Code. The bottles are sealed using a foil lid, which is not resealable to ensure that the product is consumed upon opening. This minimises any risk of contamination once opened.

3. Distribution

Yacult (Thailand) relies heavily on over 3,000 Yacult Ladies, who use motorcycles or bicycles to deliver 2.3 million bottles of Yacult to the Thai consumers each day with no inventory in stock or account receivables. These Yacult Ladies currently receives 25 Satang (1/4 Baht) for each bottle of Yacult they sell at 6 baht to the consumers. Since 1975, Yacult (Thailand) has never changed its production base, packaging, or distribution method. 4. Sales and Marketing Based on the idea that unbalanced diet, stress, natural ageing and some medications, especially antibiotics, can cause an upset in the balance of beneficial bacteria in the intestines. It is recommended that the product be consumed on a daily basis for maximum benefits. Advertising is carried out through Yakult ladies where these ladies market the products through door to door selling. 5. Service The Yakult Information Service (YIS) plays an integral role in the promotion of the product through its education service. Staff includes a fully qualified microbiologist, nutritionists and teachers. The YIS offers a range of free activities, resources and educational services to health professionals, community groups, consumers and educational establishments.

6. Profit margin Profit margin represents the percentage of revenue that a company keeps as profit after accounting for fixed and variable costs. It is calculated by dividing net income by revenue. Yakult Honsha Co Ltd Gross Profit Margin Quarterly of September 2012 is 4.25%.