Kao Corporation

Matriculation No: 20011919

Subject: Logistics and Supply Chain Management
Subject code: B3107
Word count: 2730 (Main Body)

Ace International Business School

In the partial fulfillment of the requirements for the degree of

Bachelor of Business Administration

Queen Margaret University

10 July 2024
Business Report: Future Direction of LSCM Function at Kao Corporation's Bioré Brand

Chapter 1: Introduction (c250 words)

1.1 Overview

This business report aims to outline the future direction of the Logistics and Supply Chain
Management (LSCM) function for Bioré, a leading skincare brand owned by Kao Corporation.
The focus is on enhancing customer-centricity to drive business growth over the next five years.
The report will analyze key elements of a robust LSCM function, identify enablers of success,
and present practical examples from the industry.

The expected outcome of this report is to provide actionable insights to improve Bioré’s supply
chain performance, aligning with its strategic goals. By adopting best practices in sourcing,
customer relationship management, and cost management, Bioré can strengthen its supply
chain capabilities and achieve its growth objectives.

1.2 Industry Analysis

Bioré operates in the highly competitive skincare industry, characterized by rapid innovation and
evolving consumer preferences. The skincare market is vast, encompassing products for
cleansing, moisturizing, and treating various skin conditions. The industry faces challenges such
as fluctuating raw material prices, stringent regulatory requirements, and the need for
continuous innovation to meet changing consumer demands. Bioré’s entry into new markets will
leverage Kao's extensive experience in FMCG and its commitment to sustainability.

Chapter 2: Theory: “What would you do and why” (c1,200 words)

To enhance Bioré’s LSCM function, it is essential to focus on three key elements: customers,
cost, and sourcing. Additionally, five enablers will support successful LSCM implementation:
information and technology, corporate social responsibility, complexity and risk management,
LSCM management, and future LSCM management.
Essentials

1. Customers

Customers are at the heart of any LSCM strategy. Understanding and meeting customer
expectations is crucial for Bioré to enhance customer satisfaction and loyalty. This involves
ensuring product availability, timely delivery, and exceptional customer service.

Ensuring Product Availability and Timely Delivery:

Bioré must maintain optimal inventory levels to ensure products are available when and where
customers need them. This requires effective demand forecasting and inventory management
systems to avoid stockpots or overstock situations. Timely delivery is equally important,
necessitating efficient logistics and distribution networks.

Enhancing Customer Service:

Providing exceptional customer service is vital for building strong relationships with customers.
Bioré should invest in customer relationship management (CRM) systems to gather and analyze
customer feedback, address concerns promptly, and personalize the customer experience.

2. Cost

Cost management is crucial for maintaining profitability. Different types of costs in LSCM include
internal costs, outbound costs, and operational costs.

Internal Costs:

Internal costs are incurred within the organization and include:

1. Procurement Costs: Expenses related to acquiring raw materials.

2. Manufacturing Costs: Costs associated with converting raw materials into finished products.
3. Inventory Holding Costs: Costs for storing and managing inventory.
Outbound Costs:

Outbound costs are related to delivering products to customers and include:

4. Transportation Costs: Expenses for shipping products to customers.

5. Distribution Costs: Costs associated with warehousing and handling finished goods.

Operational Costs:

Operational costs are ongoing expenses required to run LSCM functions and include:

6. Labor Costs: Wages and benefits for employees involved in LSCM activities.
7. Utilities Costs: Expenses for utilities required to operate warehouses and manufacturing
facilities.

Value Creation and Value Destruction in LSCM:

Value creation in LSCM involves activities that increase efficiency, reduce costs, and enhance
customer satisfaction. For instance, optimizing inventory levels through just-in-time (JIT)
systems can significantly reduce holding costs and minimize stockouts, creating value.
Conversely, value destruction occurs when inefficiencies, delays, or poor quality impact the
supply chain negatively. Poor demand forecasting leading to excess inventory or stockouts can
result in value destruction due to increased costs and lost sales.

3. Sourcing

Sourcing is integral to LSCM, particularly in a globalized industry. Globalization allows

companies to source raw materials and products from different regions, reducing costs and
increasing availability.

Importance of Globalization in the Industry:

Globalization enables access to a broader range of suppliers, economies of scale, and

competitive pricing. It also necessitates efficient supply chain management to handle the
complexities of international logistics and regulatory compliance. For Bioré, leveraging global
suppliers can help in securing high-quality ingredients at competitive prices, ensuring the
consistent availability of products to meet consumer demand.
Developing Strong Supplier Relationships:

Building long-term partnerships with suppliers is crucial for ensuring quality and sustainability.
Bioré should implement strategic sourcing practices and foster collaborative relationships with
key suppliers to enhance supply chain resilience and efficiency.

Enablers

1. Information and Technology

Information technology is a key enabler in LSCM. Advanced data analytics, real-time tracking,
and integrated systems enhance visibility and decision-making.

Function of LSCM Information Systems in the Industry:

LSCM information systems manage data flow across the supply chain, enabling real-time
tracking of inventory, demand forecasting, and efficient order processing. These systems
enhance coordination between suppliers, manufacturers, and distributors, ensuring smooth
operations. By leveraging big data and predictive analytics, Bioré can gain insights into market
trends, optimize inventory levels, and improve demand forecasting.

2. Corporate Social Responsibility

CSR initiatives are increasingly important in supply chain management. Ethical sourcing,
environmental sustainability, and fair labor practices enhance corporate reputation and meet
consumer demands.

Role of CSR in the Industry and Triple Bottom Line:

CSR in LSCM involves ensuring that products are sourced ethically, operations are
environmentally sustainable, and labor practices are fair. The triple bottom line emphasizes the
importance of social (people), environmental (planet), and financial (profit) performance in
achieving sustainable business success. Bioré should integrate CSR principles into its supply
chain strategy, ensuring sustainable and ethical practices across its operations.
3. Complexity and Risk Management
Supply chain complexity and risk management are critical in ensuring resilience and continuity.
Product Complexities and Risk Impact on the Industry:
Product complexities include the variety of products, customization, and regulatory
requirements. Risks in LSCM can arise from supplier disruptions, natural disasters, geopolitical
tensions, and market fluctuations. Effective risk management involves identifying potential risks,
developing contingency plans, and diversifying suppliers to mitigate these risks. Bioré should
implement a comprehensive risk management framework to proactively identify and address
potential supply chain disruptions.

4. LSCM Management
Effective LSCM management includes strategic planning, performance monitoring, and
continuous improvement initiatives.
Type of LSCM Management in the Industry:

LSCM management in the skincare industry involves coordinating procurement, production,

logistics, and distribution activities. It requires strong leadership, cross-functional collaboration,
and a focus on innovation and efficiency. Bioré should develop a clear LSCM strategy, set
measurable performance goals, and foster a culture of continuous improvement to drive supply
chain excellence.

5. Future LSCM Management

Future LSCM management will involve advanced technologies, such as automation, artificial
intelligence, and block chain, to enhance supply chain synchronization.

Possibility of Supply Chain Synchronization in the Industry:

Supply chain synchronization involves aligning supply chain activities with market demand in
real-time. Technologies like IoT, AI, and block chain enable better coordination, transparency,
and efficiency, allowing companies to respond quickly to market changes and improve overall
supply chain performance. Bioré should stay abreast of emerging technologies and continuously
innovate to enhance its supply chain capabilities and maintain a competitive edge.

Chapter 3: Bioré (c250 words)

Bioré, a brand under Kao Corporation, is renowned for its innovative skincare products that
cater to various skin types and concerns. The brand's product range includes cleansers, pore
strips, exfoliators, and moisturizers, designed to provide effective skincare solutions.

Bioré's key competitors in the skincare market include Neutrogena, Clean & Clear, and Cetaphil.
These brands, like Bioré, focus on providing high-quality skincare products backed by scientific
research and innovation. Bioré’s primary markets are in Japan, the United States, and other
parts of Asia and Europe, where it has established a strong presence.

Bioré's core LSCM practices focus on sustainability, innovation, and customer satisfaction. The
brand is committed to reducing its environmental footprint through initiatives such as minimizing
plastic usage, improving energy efficiency, and promoting recycling. Bioré leverages advanced
technologies to enhance its supply chain operations, ensuring timely delivery of high-quality
products to its customers.

However, Bioré faces significant challenges in maintaining supply chain efficiency, managing
costs, and adapting to changing consumer preferences. To address these challenges, Bioré
must continually innovate and improve its LSCM practices, focusing on customer-centric
strategies that enhance satisfaction and loyalty.

Chapter 4: What results should be expected and what do we need to watch out for? (c1,200
words)

In this section, we will analyze the overall view of the three essentials—customers, cost, and
sourcing—and how enablers can help Bioré grow its LSCM function.
1. Customers
Essentials:
Customers are at the heart of Bioré's LSCM strategy. Ensuring that the right products are
delivered at the right time and place is crucial for enhancing customer satisfaction and loyalty.
Key LSCM activities impacting customers include demand forecasting, inventory management,
and distribution network optimization.

 Demand Forecasting: Accurate demand forecasting helps Bioré predict customer

needs and prepare adequately to meet these demands, thus avoiding stockouts or
overstock situations (Mentzer et al., 2001).
 Inventory Management: Maintaining optimal inventory levels ensures that products
are available when customers need them. Effective inventory management reduces
lead times and enhances customer satisfaction (Christopher, 2016).
  Distribution Network Optimization: Efficient logistics and distribution networks ensure
timely delivery of products to customers, which is essential for maintaining customer
trust and loyalty (Harrison & van Hoek, 2011).

Enablers:

 Information and Technology: Implementing advanced data analytics and

CRM systems can help Bioré gain insights into customer behavior and
preferences, improving demand forecasting accuracy and inventory
management. Real-time tracking systems ensure that customers receive their
orders on time (Hugos, 2018).
 Corporate Social Responsibility: Ethical sourcing and sustainable practices
appeal to socially conscious consumers, enhancing Bioré's reputation and
customer loyalty. Ensuring fair labor practices and reducing environmental
impact can attract more customers who value corporate responsibility (Carter
& Rogers, 2008).

2. Cost

Essentials:

Cost management is crucial for maintaining profitability. Different types of costs in LSCM include
internal costs, outbound costs, and operational costs.

- Internal Costs: These include procurement costs, manufacturing costs, and inventory holding
costs. Managing these costs effectively ensures that production processes are efficient and
cost-effective (Simchi-Levi et al., 2008).
- Procurement Costs: Expenses related to acquiring raw materials.
- Manufacturing Costs: Costs associated with converting raw materials into finished products.
- Inventory Holding Costs: Costs for storing and managing inventory.

- Outbound Costs: These include transportation and distribution costs. Efficient logistics and
distribution can reduce these costs and improve overall profitability (Stevens, 1989).
- Transportation Costs: Expenses for shipping products to customers.
- Distribution Costs: Costs associated with warehousing and handling finished goods.
- Operational Costs: These include labor and utilities costs, which are ongoing expenses
required to run LSCM functions.
- Labor Costs: Wages and benefits for employees involved in LSCM activities.
- Utilities Costs: Expenses for utilities required to operate warehouses and manufacturing
facilities.

Value creation in LSCM involves activities that increase efficiency, reduce costs, and enhance
customer satisfaction. For instance, optimizing inventory levels through just-in-time (JIT)
systems can significantly reduce holding costs and minimize stockouts, creating value.
Conversely, value destruction occurs when inefficiencies, delays, or poor quality impact the
supply chain negatively. Poor demand forecasting leading to excess inventory or stakeouts can
result in value destruction due to increased costs and lost sales (Christopher, 2016).

Enablers:

- Information and Technology: Utilizing data analytics and AI can help Bioré identify
inefficiencies and optimize costs. Advanced systems can automate routine tasks, reduce labor
costs, and improve decision-making processes. IoT devices can monitor energy usage and
reduce utilities costs (Harrison & van Hoek, 2011).
- Complexity and Risk Management: Developing robust risk management strategies can help
Bioré mitigate potential disruptions that could lead to increased costs. Diversifying suppliers and
creating contingency plans ensure that the supply chain remains resilient and cost-effective
(Jüttner et al., 2003).

3. Sourcing

Essentials:
Sourcing is integral to LSCM, particularly in a globalized industry. Effective sourcing practices
ensure reliable and cost-effective procurement of raw materials. Key activities include supplier
selection, procurement strategies, and sustainable sourcing practices.

o Supplier Selection: Choosing the right suppliers is crucial for ensuring the quality
and consistency of raw materials. Long-term partnerships with reliable suppliers
can reduce costs and improve supply chain efficiency (Simchi-Levi et al., 2008).
 o Procurement Strategies: Implementing strategic procurement practices, such as
bulk purchasing and negotiating long-term contracts, can reduce costs and
ensure a steady supply of raw materials (Stevens, 1989).
o Sustainable Sourcing Practices: Ensuring that sourcing practices are sustainable
and ethical enhances corporate reputation and meets regulatory requirements
(Carter & Rogers, 2008).

Enablers:

o Information and Technology: Digital platforms for supplier collaboration and

communication streamline processes and enhance transparency. Using
blockchain technology can ensure the traceability and authenticity of raw
materials, improving trust and reliability (Hugos, 2018).
o Corporate Social Responsibility: Emphasizing ethical sourcing and sustainability
in procurement practices can build trust with consumers and stakeholders. Bioré
can differentiate itself in the market by demonstrating a commitment to
responsible sourcing (Carter & Rogers, 2008).
o Future LSCM Management: Adopting innovative technologies, such as AI and
machine learning, can optimize procurement strategies by predicting market
trends and identifying the best suppliers. Automation can streamline procurement
processes and reduce costs (Simchi-Levi et al., 2008).

Expected Results and Potential Risks

Customer Impact:
By focusing on accurate demand forecasting, optimal inventory management, and efficient
distribution, Bioré can ensure high product availability and timely delivery. These efforts will
enhance customer satisfaction and loyalty, leading to increased market share and sales growth.
However, potential risks include inaccuracies in demand forecasting, which can lead to stock
outs or excess inventory. To mitigate this, Bioré should continuously refine its forecasting
models and maintain a flexible supply chain that can adapt to changes in demand (Christopher,
2016).

Cost Management:

Effective cost management through advanced technologies and robust risk management
strategies will result in significant cost savings. These savings can be reinvested into further
improving the supply chain and enhancing product quality.
Potential risks include unforeseen disruptions in the supply chain, such as natural disasters or
geopolitical tensions, which could increase costs. Developing comprehensive risk management
plans and diversifying suppliers can help mitigate these risks (Jüttner et al., 2003).

Sourcing:

By developing strong supplier relationships and implementing sustainable sourcing practices,

Bioré can ensure a reliable and cost-effective supply of high-quality raw materials. This will
enhance product quality and appeal to ethically conscious consumers.

Potential risks include supplier unreliability or ethical issues within the supply chain. Bioré
should conduct regular audits and engage with suppliers to ensure compliance with ethical
standards and sustainability goals (Carter & Rogers, 2008).

Overall Growth:

Integrating advanced technologies, adopting sustainable practices, and enhancing customer-

centric strategies will drive Bioré's growth. The brand will benefit from increased customer
loyalty, reduced costs, and a stronger market position.

To ensure these outcomes, Bioré must remain vigilant and proactive in addressing potential
risks. Continuous improvement and adaptation to market changes will be crucial for maintaining
a competitive edge and achieving long-term success.

By focusing on these essentials and leveraging enablers effectively, Bioré can enhance its
LSCM function, leading to improved performance, customer satisfaction, and sustainable
growth. The strategic use of technology, ethical practices, and robust risk management will
position Bioré as a leader in the skincare industry, capable of navigating challenges and seizing
opportunities in a dynamic market.

In conclusion, Bioré must focus on three essential elements—customers, cost, and sourcing—to
drive its LSCM function towards excellence. By adopting best practices in sourcing, fostering
strong supplier relationships, and leveraging technology, Bioré can enhance supply chain
resilience and efficiency. A customer-centric approach, supported by advanced CRM systems
and efficient distribution networks, will significantly enhance customer satisfaction and loyalty.
Effective cost management practices, such as optimizing inventory levels and implementing
lean principles, will ensure profitability and sustainable growth.
The five enablers—information and technology, corporate social responsibility, complexity and
risk management, LSCM management, and future LSCM management—are crucial for
maintaining a competitive advantage and aligning with market expectations. Continuous
improvement and adaptation to future trends will ensure that Bioré's supply chain remains
resilient, efficient, and customer-centric. By embedding these principles into its operations, Bioré
can achieve its strategic goals and deliver long-term value to its customers and stakeholders.

Appendices
1. LSCM Flowchart
2. Market Analysis Data
3. Case Studies on LSCM Best Practices Chapter 5: Conclusion (c150 words)

References

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Christopher, M. (2016). Logistics & Supply Chain Management. 5th ed. Harlow: Pearson.

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This report, supported by a minimum of 20 references and adhering to the Harvard Referencing
System, provides a comprehensive analysis of Bioré’s LSCM function, offering strategic insights
for future growth and customer satisfaction.

Appendices
1. LSCM Flowchart
2. Market Analysis Data
3. Case Studies on LSCM Best Practices