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Transforming the Food Supply Chain: Synops and Itochu Team Up

In a remarkable development, Synops Inc., headquartered in Toyonaka, Osaka, and Itochu Corporation, based in Tokyo, have joined forces to streamline their food value chain through the "DeCM-PF" (Demand Control Management Platform). This project aims to optimize the entire food supply chain, focusing on extending promotional lead times, a vital aspect for retailers.

Over the past year and a half, this collaboration has attracted participation from more than 100 companies involved in production, logistics, and sales within the food value chain, marking a staggering 440% increase from the previous year. This surge indicates the willingness of many companies to address pressing challenges in food logistics efficiency and the optimization of the food value chain.

The Backdrop of Optimal Food Value Chain Services

The food sector is grappling with several issues, particularly in logistics. One of the most pressing challenges is the workforce shortage due to a declining population, especially a critical shortage of truck drivers. This issue is further compounded by the booming e-commerce market and the growing diversity of consumer demands, creating immense pressure on logistics operations. Moreover, the new labor reforms set to take effect in 2024—termed the "2024 Problem"—generate considerable anxiety regarding existing transportation systems.

To tackle these challenges, Synops leveraged its extensive experience with demand forecasting technologies in its "sinops" series and partnered with Itochu, known for its vast network in the food distribution sector, to develop and offer the DeCM-PF platform aimed at solving food distribution challenges.

Platform Expansion Post-Launch

The first service launched under DeCM-PF, designed to extend delivery lead times for promotional products in grocery stores, has gained significant attention by aligning with retail business practices. Within just 18 months, numerous companies involved in all aspects of the food value chain have engaged with this service.

Traditionally, retailers would place orders one week prior to promotional periods, with additional orders often made one to two days before the desired delivery date during these promotions. This approach made it challenging for manufacturers and wholesalers to accurately predict demand during promotional periods, resulting in various inefficiencies—excess inventory, emergency truck dispatch arrangements, and poor loading efficiency.

To address these issues, the "Promotional Lead Time Extension Service" employs cutting-edge demand forecasting technology that considers each promotion's characteristics, store-specific flyers, and presentation methods. This approach suggests and confirms additional orders for the week following the promotion simultaneously with the initial order, two weeks prior to the promotional start. As a result, it has successfully curtailed additional orders during promotional periods, helping manufacturers and wholesalers manage stock shortages and reduce excess inventory.

Feedback from participating companies highlights the service's effectiveness: comments like, "We no longer worry about emergency truck dispatch," "Our warehouse inventory has decreased," and "We've avoided exceeding stock limits during busy seasons" reflect the positive impact on their operations.

Future Developments

Looking ahead, DeCM-PF plans to expand its offerings beyond the promotional lead time service. This expansion will include support for wholesalers combining promotions with staple products, optimizing logistics for food manufacturers, and balancing store operations with inventory management at logistics centers. The goal remains clear: to realize optimal supply and demand across the entire food value chain and contribute solutions to the logistics challenges facing the industry.

About Synops Inc.

Synops Inc. has set forth an ambitious vision to reduce waste globally by 10%. As a software company, it develops and markets the demand forecasting-based automatic ordering service "sinops." Specializing in short shelf-life products, like fresh foods and prepared meals, Synops has successfully automated complex categories, leading to widespread adoption among various food retailers. By optimizing factors like personnel, resources, finance, time, and information related to inventory, Synops aims to contribute significantly to society through effective resource utilization. The company is publicly listed on the Tokyo Stock Exchange (Growth Market, stock code: 4428).

About the DeCM-PF Service

DeCM-PF serves as a platform that connects retail, wholesale, and manufacturing sectors to optimize the entire food value chain. As manufacturers and wholesalers face challenges in accurately gauging consumer demand, resulting in surplus inventory and inefficient logistics, DeCM-PF uses AI-driven high-precision demand forecasting data, based on actual retail performance, to address these issues and promote value chain optimization.

About the Automatic Ordering Service "sinops"

Designed for products like perishables and baked goods, "sinops" helps automate the ordering process, improving productivity for retailers while reducing markdowns and waste, and enhancing profit margins. It offers a comprehensive suite of services, including the ability to adjust shelf layouts via tablet devices with "sinops-Pad" and facilitate easy checks of product expiration dates in sales areas and backrooms using "sinops-Dcont."