Inventory Reduction Creates Approx. 60M Yen Cash in 6 Months, Improving Gross Profit by 8%. IoT-based Real-time Visualization of Tea Ingredients Turns 'Sleeping Money' into 'Living Money.'

S-MAT Co., Ltd. (Headquarters: Shinagawa-ku, Tokyo; CEOs: Takayuki Shiga / Hidetoshi Hayashi), operator of the IoT inventory management system 'SmartMat Cloud,' has published a utilization case study of Tokyo Tea Trading Co., Ltd. (Headquarters: Shibuya-ku, Tokyo; President: Mitsuhiro Saito).

This case study introduces initiatives that solved management challenges such as uncertainty in inventory counts due to analog management of tea raw materials, chronic overstocking, resulting stagnant funds, and gross profit pressure caused by discount sales due to approaching expiration dates. By introducing SmartMat Cloud, the company achieved an inventory reduction of approximately 60 million yen and an 8% improvement in gross profit.

### Background of Implementation Tokyo Tea Trading has an integrated system for processing and manufacturing tea raw materials procured mainly from Taiwan at its own factories and shipping them to mass retailers and other outlets. On the other hand, raw material inventory was managed through analog operations centered on paper, visual checks, and Excel, leading to a situation where it was impossible to accurately grasp the real-time inventory level.

Particularly since tea raw materials are used in multiple products, it was easy to accumulate inventory under the judgment that 'it will be used eventually,' and the level of optimal inventory was not clear. Such excess inventory became a factor in stagnating funds, squeezing cash that should have been used for the next procurement, capital investment, or sales promotion measures.

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

To fundamentally solve these challenges for both management and the front lines caused by '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 raw material inventory in real-time. As a result of gradually progressing with inventory reduction while quantitatively verifying inventory trends, they reduced the inventory amount by approximately 60 million yen in about half a year, creating an equivalent scale of cash. Funds that had been stagnant as raw material inventory were transformed from 'sleeping money' into 'living money,' improving the state to where investment capacity for procurement and new measures could be secured.

In addition, the visualization of inventory did not stop at mere inventory reduction; it reviewed the conventional manufacturing judgment of 'making because there are raw materials' and shifted to planned production based on sales plans. This succeeded in suppressing the occurrence of excess product inventory and breaking the chain of discount sales due to approaching expiration dates. As a result, gross profit improved by 8%. They evolved into a management system capable of establishing monthly gross profit forecasts by achieving a state of 'stabilizing' manufacturing costs rather than simply suppressing them.

Furthermore, by visualizing stagnant inventory, it became possible to review SKUs and make decisions on discontinuation based on slow-moving raw materials, significantly changing the awareness of 'holding inventory' throughout the entire company. Judgments for ordering and replenishment became more logical and strict, and a system was established where the front lines, sales, and management could make decisions based on the same data.

Going forward, after the phase of inventory optimization, the company aims to further improve the inventory turnover rate as the next goal and will proceed with initiatives toward maximizing gross profit and sales.

### Overview of SmartMat Cloud SmartMat Cloud is a DX solution (SaaS) that visualizes the actual inventory of all types of items on-site using IoT, simplifying and automating inventory management and advancing process improvement. It achieves labor-saving and sophistication by fully automating inventory counting, which previously required significant manpower, advanced item count management such as real-time actual inventory grasping that was impossible for humans, and even ordering. Since its launch in the winter of 2018, it has been adopted by a wide range of customers including the manufacturing and service industries, as well as medical institutions. It is already being used by over 1,400 companies. URL: https://www.smartmat.io/

### About S-MAT Co., Ltd. Aiming to make the daily flow of goods 'ultra-smart,' S-MAT develops inventory management automation and DX solutions using IoT weight scales. For B2B markets such as the manufacturing industry and medical institutions, it operates 'SmartMat Cloud' (https://www.smartmat.io/), a SaaS that automates the management, inventory counting, and ordering of all types of inventory. Company Name: S-MAT Co., Ltd. Location: South Wing Higashi-Gotanda, 2-9-5 Higashi-Gotanda, Shinagawa-ku, Tokyo Representatives: Takayuki Shiga / Hidetoshi Hayashi Established: November 2014 URL: https://s-mat.co.jp/