ajinomoto group’s company-wide operational transformation

0Copyright（C）2020 AJINOMOTO CO., INC. All rights reserved

Confidential

Taro FujieCorporate Vice President Chief Transformation Officer (CXO)

March 23, 2021

Ajinomoto Group’s Company-wide Operational Transformation Initiatives

Contribute to greater wellness for people worldwide, unlocking the power of amino acids to

resolve the food and health issues associated with dietary habits and aging

To promote company-wide operational transformation and continual refinements as a solution-providing group of companies for food

and health issues

Increased ASV engagement

ASV

Group Vision for 2030DX goals for 2030

Business m

odel transformation

Promotion of digitalization

OEG

roup-wide adoption of

managem

ent indicatorsPromote “smart corporate”

Ajinomoto Group Vision

Mission

Overall Image of Company-wide Operational Transformation

1

1

3

2

OE* as a Group-wide standard to transform thefoundation of the whole Group (*Operational Excellence)

“Better job satisfaction and purpose of life for everyone”Improved ASV engagement“Improve the organization’s ability to get things done”Visualization of contributions and decision making through Group-wide adoption of management indicatorsEnhanced performance in the back office and cost reductions to contribute to growth by promoting “smart corporate”

Achieve shared companywide expenses equal to 2.5% of sales in FY2022 by promoting company-wide

operational transformation

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1 4

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Copyright © 2021 Ajinomoto Co., Inc. All rights reserved

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The Mechanism of Company-wide Operational Transformation

For growthReduce waste↓Enhance performance↑ +

Build the foundation for creating new value

Foster ASV engagement & a corporate culture of individual initiative

Key Goal Indicator:

ROIC

KPI: Engagement Survey Score

KPI: Percentage of shared expenses vs. sales (target 2.5%)

Adopt Operational Excellence (OE)Adopt management indicators to enhance management capabilities (improve ROIC and ability to forecast)Reduce costs and improve service through promoting the “smart corporate” concept (Procurement Dept., ADP,1 AFS2)

☆ Build ecosystems internally and externally, and continue with the above.

1. ADP: Ajinomoto Digital Business Partners Co., Inc.2. AFS: Ajinomoto Financial Solutions, Inc.

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4

3

２

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２１

Target for Reducing Shared Companywide Expenses

Trend in shared

expenses for Ajinomoto Co.

Integrate management through HQ systems after classifying functions and

reviewing work

Corporate systems

Manage eachfunction

individually

Launch a joint venture with partners with well-established work

efficiencies, continually improveefficiency

Promoting continual enhancements and efficiencies by working together withforward-thinking partners not just in our business activities, but in corporate divisions, too, will help reduce costs at a steady pace.

(billion yen)

% of Sales

0

10

20

30

40

28.5

37.3

33.0

Existing expenses (to be streamlined)

36.7

FY13(actual)

FY16(actual)

FY19(actual)

FY20 (forecast)

FY22 (forecast)

（3.1％）（2.9％）（3.3％）（3.4％）（2.5％）expected


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Ajinomoto Group’s Operational Excellence

Continuous improvement and reform based on ideas and methods that refine all operations to create added value and customer-centric solutions growing together as individuals and as a team to produce a competitive advantage.

Definition

1. Define customers and value required by

customers

Make clear who the customer is and what kind of value they

require

2. Set goals and analyze 3. Management based on data

Data(fact)

Logical Teach-able

Rational

3 Main Initiatives

OrganizationalGoal

Goal & Issues

Work

Measures

Optimize by using digital solutions

Digital solutions

１

Goal & Issues

Goal & Issues

Work Work Work

Measures Measures


Adopt Shared Group Management Indicators – to Enhance Execution Capabilities

FY2021Over 70% sales

Over 90％ sales

Expand Rollout

FY2022

3 Aims★Standardize parameters for

management accounting★Group-wide collection and analysis

system★Monitoring of priority KPIs

Visualization of Group management

★Promote portfolio management★Extend ROIC tree to all employees

Continually improve corporate value

★Stringently maintain ROE>ROIC>ROA>WACC

★Allocate resources to new and core businesses to achieve new vision

★Reduce/withdraw from non-core businesses

Highly efficient revenue structure

(ROIC-focused management)

３

5Copyright © 2021 Ajinomoto Co., Inc. All rights reserved

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Plan to Reduce Costs through Company-wide Operational Transformation

Initiatives planned in FY2020 are steadily being promoted, giving confidence in generating resultsRefine the ability to carry out plans formulated after FY2021

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Ajinomoto Co.

Ajinomoto AGF

Ajinomoto Frozen Foods

Work A

Work A‘

Work A“

Work A“Work A

Work A

Work AWork A

Improved top line

Reduced SG&A

expenses

Contribution to companiesAjinomoto Digital Business Partners Co., Inc.

RefineEnhance

Integrate and reduce waste

Bring together

Companies

BPO＋

Utilize Accenture’s wealth of experience in global, cutting-edge digital technologies

Visualization tool

Necessary workWork progress

What is busy, not busy, not necessary

RPAautomation

Quantitativemanagement

Zero-basedwork reforms

４ ADP: Mechanism to Upgrade and Increase the Efficiency of the Back Office


Copyright © 2021 Ajinomoto Digital Business Partners All Rights Reserved.

The data management system shows operational results. The system is used to see the state of operations from various angles as quantitative data and monitor continually.

Visualization of change in operating time by work. Can change scale to week, month, or year.

Breakdown of operation time can be seen based on times punched in and out, and for each work. Identifies work with high rate of operation.

Can switch view for each person in the concerned team

2

3

1

Shows metrics such as total operating time, operating rate, proportion of contract work, etc.

Example of Utilization of Digital in ADP４

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9

InternationalR

ollout４

Initial area(FY2020-2021）

Priority area(FY2021-2022）

Phase 1(FY20)

Ajinomotocorporate

AGF H

Q

Salesoffices

Kawasaki area(Office, R&D, AFM)

Tokai area(Office, R&D, AFM)

FFA

Expand target functions

Back O

fficeFront

HR

Other

SalesSupport

OtherCorporate Functions

Procurement

PR

GeneralAffairs

Head Office

Branch Offices Plants Research

Centers GroupAffiliates

Expand target organizations

3 phases for increasing efficiency and upgrading(Ajinomoto Co. only: by FY2023. Domestic Group companies: completed by FY2025

Phase 2

Phase 3Salesfrontwork

Indirect materials procurement

AGFSales &

production

ADP: Plan to Increase the Efficiency of, and Upgrade the Back Office


Direct Material Cost Reductions (FY2020-2022 Plan)

Major global

themes

Global procure-

ment

Change package material specs

Improve process for MSG manufac

ture

Recipe harmoni-

zation

1. Global procurement

Key Points of Initiatives1. Four main themes (global cooperation)2. Look for new themes for cooperation3. Cost reductions by division

2. Build a way to look for new cooperative themes

(1) Encourage daily communicationReview meetings, worker meetings, news

(2) Horizontal dissemination of successstories

3. Undertake cost reduction themes foreach division

1

・ Build the best procurement system・ Global use of purchasing know-how, etc.・ Flavors, instant coffee, etc.

1.

2

2. Recipe harmonization: standardization of ingredients

FY2020-FY2022cumulative: 4.3 billion yen

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Future Plan1. Three main initiatives(1) Optimize procurement

Transfer all to ADP’s procurement dept.

(2) Work standardization and visualization

Start using SAP Ariba (Oct)(3) Governance rationalization

New rules for purchasing indirect materials

Indirect Material Cost Reductions (FY2020 results and future projection)

Overall Plan for Indirect Material Cost Reductions

FY2020 ResultsFormulated plan, measures, and priority targets

Ref: Wave 1 (From late FY2020): Facilities and related services, communications, travel expenses, and maintenanceWave 2 (From FY2021): IT, sales and marketing, human resources, events

2. Priority targets and reduction amounts(1)Procurement of Ajinomoto Co. and Ajinomoto AGF, Inc. indirect materials

FY2020–FY2022 cumulative: ¥0.8bn, FY2020-FY2025 cumulative: ¥1.8bn(2) Prioritize scope of target range to create an early reduction effect

Operationoptimization

Costreductions

Governance

Phase 1（late FY20 early FY2021) Phase 2（FY2021） Phase 3（late FY2021）

Centralized management by using a purchasing system -> business efficiency

Business transfer & integration to PCT ->Move offshore

Establish fair rules and strengthen governance on purchasing

More negotiating power with better information

Wave 1 and Wave２Make small successes

Strengthen through HR development in PCT

CleaningTranslationEnergyTravel management

Pilot business transfer to PCT / Standard process verification

Better cost reductions of indirect materials through working with Ajinomoto AGF, Inc.

Systems SAP Ariba system concept

SAP Ariba function build SAP Ariba rolloutsupport

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Forward-looking statements, such as business performance forecasts, made in these materials are based on management's estimates, assumptions and projections at the time of publication. A number of factors could cause actual results to differ materially from expectations.This material includes summary figures that have not been audited so the numbers may change.Amounts presented in these materials are rounded down.

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ajinomoto group’s company-wide operational transformation

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