The Ricoh Group has 21 major production bases across Japan, the Americas, Europe, the Asia-Pacific region and China. In close collaboration with their respective sales teams, they deliver products and services designed to meet customer-specific needs efficiently and sustainably. Ricoh has reorganized its supply chain management (SCM) across the Group, coordinating design, information systems and more with functions covering everything from procurement to collection and recycling. By aligning processes and embedding a customer-driven approach, our SCM structural reform has advanced our goal of creating value while fulfilling our social responsibility, enhancing our business in ways that bring benefits to both society and the planet.
The Ricoh Group works continuously to upgrade its manufacturing process at every stage, from procurement through production, sales and service to logistics and collection & recycling. Our supply chain system integrates product planning, development, design, technology and information systems to encompass all our business functions, and it coordinates all major regions and departments to enable Group-wide improvements.
Our supply chain is handling an ever-growing number of products as Ricoh expands into new territories and emerging markets. The number of products traveling through the supply chain has grown, paralleling an increase in new projects. Even as our business grows and changes, however, we monitor the size of our inventory and make procurement and management systems more efficient by controlling or reducing inventory. Our goal is to have a supply chain nimble enough to increase production flexibility while meeting customer requirements precisely.
Ricoh developed a system tool—global inventory viewer (GIV)—that visualizes daily inventory status to ascertain what kind of inventory is available and where in the world it is located. As an indicator, we use an optimal inventory levels as we monitor inventory throughout the world, making the necessary adjustments without delay.
In response to the growth of Asian markets, we are stepping up our production capacity in the ASEAN region—centered in our Thailand plant—to realize our plan to create strategic products there. Together with this manufacturing shift, we are working to lower purchasing costs, underpinned by the establishment of a procurement center in Thailand in fiscal 2013, and to reorganize our parts production network throughout Asia, including a deeper and wider search for new suppliers in Thailand.
The Ricoh Group is simultaneously lowering logistics costs and environmental impact by reducing waste in five areas: packaging, transportation, space utilization, transshipment and storage. Initiatives taken together with overseas points include improving the space utilization of containers and optimizing transportation routes and logistics base locations.
We are tackling production process innovation from the perspective of lower production costs and reduced environmental impact. With the capacity to respond flexibly to production volume and model changes, we are moving ahead with the implementation of production systems with low environmental impact and switching to energy-saving manufacturing equipment and using renewable energy and natural gas.
In addition, by providing the know-how and systems acquired through production process innovation, we will contribute to reduced environmental impact of society itself.
To expand our business, we are bolstering our procurement and production systems and reorganizing and optimizing our logistics network among the high-growth BRICS (Brazil, Russia, India, China and South Africa) and ASEAN nations.
The Ricoh European Production Centre (REPC) was set up in January 2014 at the European Distribution Centre, our Netherlands-based logistics hub for Europe. The new production center is an MB&R-type facility.
To date, Ricoh Industrie France S.A.S. and Ricoh UK Products Ltd.—configuration centers in consuming regions—took basic modules produced at intensive production sites in Thailand and China and turned out finished products matched to customer specifications. From there, the products were shipped to the European Distribution Centre for delivery to customers in Europe. By connecting sales and production divisions, coupled with our new operation at the REPC, we have centralized the function of configuration centers in consuming regions on the logistics grid while trimming transportation costs and shrinking lead times. Through these measures, we are projecting an annual improvement effect of 10 million euros in logistics and other costs.
As our sales territory expands, so does our supply chain. This expansion brings with it a variety of risks, both natural and political, and the Ricoh Group is responding by strengthening the risk management of the supply chain.
A key takeaway of the Great East Japan Earthquake is the need to possess enough production capacity to avoid having to halt or slow down our customers' business operations, since MFPs, printers, fax machines and other equipment collectively represent a means of communication that society depends upon, even during times of disaster.
The Ricoh Group's policy is to ensure that customers never have to suspend their work, and we have made our support of social infrastructure operations a high priority. We, therefore, require our suppliers to strengthen their BCM by maintaining redundant production bases and parts procurement channels, and to increase their stocks of materials and components in case of widespread disasters such as those caused by earthquakes, tsunami, floods, fire, accidents or new strains of influenza.
Our business activities give us a large sphere of influence when it comes to social accountability, so it is crucial for the many companies and individuals along our supply chain to help the Ricoh Group avoid or minimize unintended negative effects. To that end, we make sure not only our employees, but also the employees of our suppliers, always act ethically. We spotlight this concern in our international guidelines on human rights, labor, the environment and more, and are working continuously to raise our initiatives to the next level.
A critical TRM (total risk management) issue is underage labor. All Ricoh Group production sites are monitored for compliance with laws banning child labor, and periodic CSR self-assessment is employed among our suppliers.
We have been able to verify that there have been no violations of child labor laws anywhere along our supply chain, and we will continue rigorous monitoring.