Table of Contents

Overview

In recent weeks, under the leadership of Chen, Christian in the Asia-Pacific region, we completed a focused round of review and optimization planning for carton procurement in Korea and established a much clearer direction for the next phase. This work was not simply about comparing prices. Instead, it concentrated on three practical priorities within the local procurement landscape: price reasonableness, specification consolidation, and structured follow-up actions. As a result, we have already moved from broad review into a more actionable stage with defined opportunities and a clear path forward.

Negotiation Opportunities Identified

First, we completed a full review of 573 SKUs currently involved in carton procurement in Korea. From this overall portfolio, we identified 213 SKUs with negotiation potential. This indicates that Korea carton procurement is not broadly out of control, but that there are clear and meaningful improvement opportunities in selected materials. In particular, several sleeves, partitions, and special structural components have emerged as priority areas for follow-up. For these items, we now have a solid basis to support more focused supplier discussions in the next phase.

Standardization and Consolidation Potential

At the same time, we also advanced the standardization agenda. By reviewing how materials are currently used, we identified 118 consolidation groups across the Korea carton portfolio. The value of this outcome goes beyond simply reducing SKU count. More importantly, it creates the foundation for future pooled purchasing, harmonized specifications, and simpler category management. In procurement, fragmented specifications often limit scale effects and reduce pricing transparency. Identifying these consolidation opportunities opens up room for a more standardized purchasing structure in Korea and demonstrates that this initiative is improving not only cost, but also procurement architecture.

Korea-China Price Positioning

We also completed a results-based comparison between carton purchasing levels in Korea and China. The final figures show that the unit-area purchasing price in Korea is approximately 39% to 60% higher than in China. At first glance, the gap appears significant. However, when assessed in the context of actual business conditions, this level remains broadly reasonable. In other words, Korea purchasing prices do not indicate a widespread abnormality, and it would not be appropriate to directly force Korean suppliers down to China price levels. This conclusion is important because it clarifies the real focus of the next stage: not generalized cost pressure across the full Korea scope, but selective action on internally higher-cost items, material structure optimization, and more targeted procurement interventions.

What This Means for the Project

This means the Korea initiative has already evolved from simply “looking at prices” to “focusing on the right priorities.” The current picture is clear: overall pricing in Korea is generally reasonable, while selected items still show practical, actionable, and negotiable improvement potential. For the prioritized high-cost SKUs, we now have the basis to move toward focused negotiation. For the identified consolidation groups, we now have the basis to promote simplification and bundling of demand. The project has therefore shifted from broad discussion to targeted execution.

Business Value Delivered

From a business value perspective, this phase has delivered three important outcomes.

First, the issues have been quantified. In the past, identifying which materials were overpriced and which items were worth addressing relied more heavily on experience and judgment. Today, that focus has been narrowed to 213 priority SKUs. This gives the procurement organization a much stronger operational handle for next actions.

Second, the structure has become visible. The Korea carton portfolio is not a simple pricing issue. It also reflects fragmented specifications, elevated pricing in selected categories, and opportunities to optimize certain structural or material choices. By identifying 118 potential consolidation groups, we have already laid the groundwork for structural improvement.

Third, the action path is now clear. Since the overall Korea price level is broadly reasonable, the next phase should not rely on across-the-board price pressure. Instead, the right approach is to focus on priority items, priority categories, and priority supplier discussions, using a more targeted and layered execution model to deliver higher-quality and more sustainable savings.

Next Steps

Looking ahead, the Korea carton procurement optimization initiative will continue across three main directions. The first is to advance focused negotiations for the SKUs already identified as high-priority cost items. The second is to drive internal alignment and procurement consolidation around the identified standardization groups. The third is to further assess selected material and structural optimization opportunities based on local Korea requirements and supply realities. The objective is not short-term pressure, but a more transparent, reasonable, and sustainable procurement model while maintaining supply stability and operational fit.

Conclusion

Overall, this initiative has already reached an important milestone. We completed the structured review of 573 SKUs, identified 213 negotiation opportunities, and defined 118 consolidation groups to support standardization and future pooled purchasing. More importantly, we have clarified the real strategic direction for Korea carton procurement: not broad comparison for its own sake, but focused action based on identified results, prioritized opportunities, and structural improvement. This marks the transition of the Korea carton optimization initiative from analysis into a clearly executable implementation phase.

We would also like to extend special thanks to Park, SeongWoo for the strong support and collaboration that helped advance this initiative.