Strategic Global Partnership with Daifuku

Takuya Jimbo
Group Senior Vice President, Fast Retailing Co.,Ltd.

Today’s Presentation① Confusion in UNIQLO’s Logistics Operations② Initiatives for Logistics Reform③ Lessons from Logistics Reform④ Cooperative Measures with Daifuku⑤ Future Development

① Confusion in UNIQLO’s Logistics Operations (2015)

① The Confusion in UNIQLO’s Logistics Operations

 Delivery operations left entirely to UNIQLO’s logistics partner,
difficult to determine what was happening at distribution site
 Logistics Department tried to solve problems on their own
 We were unable to formulate a comprehensive picture and strategy

② Initiatives for Logistics Reform (September 2016)

② Initiatives for Logistics Reform
Phase.1

Phase.2

Phase.3

Wide‐ranging organizational
reforms, including
management structure

Identify essential issues
utilizing “3G Principle:”

Rebuild mutual trust withlogistics partner and solve
issues together

 Logistics Department wasdissolved and Global SupplyChain Management Department
established
Personnel assigned included not justthose with logistics background, but
those connected to supply chain,including planning, production,
distribution and sales

GENBA (Actual Place)
GENBUTSU (Actual Things)
GENJITSU (Actual Situation)

 Measures to quickly revolve
immediate areas of confusion:
Establish special team,Management Cockpit/SCM
 Essential issues identified byInformation Center to visualize all
diving headfirst into GENBA:
information
Hold inventory at warehouses in
Key numerical figures on supply
chain and flow of goods were unclear producing countries where wages
are lower
Early and large volume inventory
Unify contract system andintakes unrelated to sales
warehouse operations with
Disjointed warehouse operations
logistics partner
reliant on logistics partner
Establish management team forInconsistent cost management
logistics

③ Lessons from Logistics Reform③ Lessons from Logistics Reform
Rising personnel costs
Realized diving headfirst into
addressing GENBA issues andpursuing reform using humanwave tactics would eventuallyreach its limit

Recruiting difficulties Training costs

Improve sales/profits
Needed to reorganize thewhole supply chain to treat
logistics as the profit center,not the cost center

Increase customer
satisfaction

Knowledgeof logistics

③ Lessons from the Logistics Reform

A constantly evolving, highlabor-saving apparel warehouse that utilizes
the world’s most advanced technologies

④ Cooperative Measures with Daifuku (December 2016)

④ Cooperative Measures with Daifuku: Why Did We Partner with Daifuku?

Requirements for aPartner

Partner Selection

ResultTo implement
warehouse automation
strategy, met with every
material handlingcompany around world

Daifuku has 80-year
history and leading
market share in material
handling industry, while
also incorporates latest
technologies andinnovates continually① Global business withwide-ranging experienceand knowledge② World-leading
technologies③ Adaptable to changesin
times/markets, technicaladvancements④ Compatibility ofcorporate culture⑤ Management
commitment

Fast Retailing andDaifuku have similar
philosophy,
management iscommitted to promoting
innovation inwarehouse industry

④ Cooperative Measures with Daifuku: Creating an Automated Warehouse

Initial Planning

Co-action/Cooperation

Began automating Ariake
Warehouse, center forreforms under Ariake Projectand Fast Retailing’s
dedicated e-commerce
warehouse in Japan

Employees from both companies
worked as one team, with
common goal of creating world’s
most advanced and largest
automated warehouse

Ariake was largest warehouseautomation project Daifuku had
ever attempted

Despite repeated setbacks,
team remained firm in its
commitment to achieve goal
and worked in earnest.

Conventional wisdom had itthat project would take 3 years

ResultAlthough initial timeframeto establish an automatedwarehouse was estimatedto be 3 years...

Completed in
18 months

④ Cooperative Measures with Daifuku: Automated Warehouse Equipment(3) Automaticstorage warehouse(2) Automatic RFID checker
Automatic
RFID checker

Storage(5)QPS(Quick pick station)(7) Box-assembling machine

Quick pickstationBox assembly(9) Automatic empty
container folding machine(4) Auto sorting warehouse

Folding andstacking
containers

Sorting(1) Automatic unloading
and warehousing machineTransferringandwarehousing(8) Sorter for each direction(6) Automatic carton former

Sorter for eachdelivery area

Carton former

④ Cooperative Measures with Daifuku – Changes in Numerical
Values Following Warehouse Automation

Warehousing
Productivity

Shipment
Productivity

Storage
Efficiency

80 Times

19 Times

TripleHuman Resource
SavingSteps Requiredfor Picking

90％

0 stepsCut Expenditureon Education

80%
Cut

Automatic RFID
Checker Accuracy

100％Operation

24 hours

AI Camera RemoteMonitoring

24 hours

④ Cooperative Measures with Daifuku: Essence of Automated Warehouse

Other E-commerce Companies

Warehouses need to handle
diverse range of products

Fast Retailing

Specialized warehouse only forour merchandise

Fast Retailing’s automated warehouse is brand new
type of facility designed and developed specifically for
an apparel specialist⑤ Future Development (from October 9, 2018)⑤ Future Development