Creating Approx. 60 Million Yen in Cash in Half a Year via Inventory Reduction, Improving Gross Profit by 8%. Transforming 'Sleeping Money' into 'Living Money' through Real-time Visualization of Tea Leaf Raw Materials

SmartMat Co., Ltd. (Headquarters: Shinagawa-ku, Tokyo, Representative Directors: Takayuki Shiga / Hidetoshi Hayashi), operator of the IoT inventory management system 'SmartMat Cloud', has published a case study utilizing it at Tokyo Tea Trading Co., Ltd. (Headquarters: Shibuya-ku, Tokyo, President & CEO: Mitsuhiro Saito).

In this case study, we introduce an initiative that solved management issues—such as uncertainty in inventory counts and chronic overstocking caused by analog management of tea leaf raw materials, resulting in retained funds and pressure on gross profits due to discount sales from approaching expiration dates—by implementing SmartMat Cloud. This resulted in an inventory reduction of approximately 60 million yen and an 8% improvement in gross profit.

[Link to Case Study Article: https://www.smartmat.io/case/others/7771]

■ Background of Implementation
Tokyo Tea Trading Co., Ltd. has established an integrated system where tea leaf raw materials procured mainly from Taiwan are processed and manufactured at its own factory and shipped to mass retailers. However, the management of raw material inventory was done through analog operations centered on paper, visual checks, and Excel, leading to a situation where they could not accurately grasp 'how much inventory is there right now' in real-time.

Since tea leaf raw materials are used in multiple products in particular, it was easy to hoard inventory under the judgment of 'we will use it eventually,' and the level of appropriate inventory was not clear. Such overstocking became a factor in retaining funds, putting pressure on cash that could have otherwise been used for the next purchase, capital investment, or sales promotion measures.

Furthermore, as a result of proceeding with manufacturing under the assumption that raw materials were available, product inventory deviating from sales plans was generated, and cases occurred where discount sales were forced due to approaching expiration dates. As a result, a structure that pushed down gross profit was created.

To fundamentally solve both management and on-site issues caused by this 'invisible inventory,' the company decided to introduce SmartMat Cloud as a mechanism to visualize raw material inventory in real-time.

■ Results After Implementation
After introducing SmartMat Cloud, the company established a system to grasp tea leaf raw material inventory in real-time. As a result of gradually reducing inventory while quantitatively verifying inventory transitions, the inventory value was reduced by approximately 60 million yen in about half a year, creating cash of the same scale. The funds that had been retained as raw material inventory until now were converted from 'sleeping money' to 'living money,' improving to a state where investment capacity for purchasing and new measures could be secured.

In addition, inventory visualization did not stop at mere inventory reduction; it led to a review of the traditional manufacturing judgment of 'make it because we have raw materials' and a shift to planned production based on sales plans. This suppressed the occurrence of excessive product inventory and succeeded in breaking the chain of discount sales due to imminent expiration dates. As a result, gross profit improved by 8%. They achieved a state of 'stabilizing' rather than simply suppressing manufacturing costs, evolving into a management structure where monthly gross profit outlooks can be established.

Furthermore, retained...