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[Impact evaluation] Promotion of DX in the manufacturing industry


Summary

  • The introduction of smart factories is progressing, and the market size is expected to reach about 400 billion yen in FY2020, and it is expected to expand to about 1 trillion yen in FY2025. Accelerating the smartization of factories as labor shortages continue, especially at major manufacturing companies.

  • In addition to robotics, major domestic companies are actively developing related technologies and systems in the IT and communication service industries.

  • SMEs are also expected to benefit from smart factories. However, the introduction cost is high, and smart factory technology requires advanced technical skills and knowledge.



Contents

  1. The DX conversion in the manufacturing industry is a domestic initiative

  2. Leading company with smart factory related technology

  3. Benefits of SMEs introducing smart factories

  4. Subsidies for small businesses



1) The promotion of DX in the manufacturing industry is a domestic initiative


A smart factory is a manufacturing facility that uses advanced technologies such as AI, IoT, and robotics to improve factory production and operations. In a smart factory, everything in the factory is connected and automated to increase efficiency, reduce waste, and improve product quality. In the manufacturing industry, the introduction of smart factories that utilize cutting-edge technologies such as IoT and AI is progressing, and the market size is expected to reach approximately 400 billion yen in FY2020. It is expected to expand to about 1 trillion yen in FY2025.

Smart factories have many advantages for companies. For example, by optimizing production with data analysis and AI to prevent breakdowns and stoppages, it is possible to increase production volume and reduce costs. Profitability can be increased by substituting human work with robots and AI, reducing labor costs and improving precision and accuracy. You can quickly change your production line to accommodate new products, so you can respond quickly to consumer needs and market trends.

However, smart factories also have problems and challenges. For example, as automation advances, low-skilled jobs will disappear, and operations involving human intervention will become more sophisticated. As a result, workers who cannot keep up with this trend may lose their jobs or be left behind economically. Also, the high initial investment cost may make it difficult for SMEs to introduce this technology. In addition, connected devices and systems are at risk of being targeted by cyberattacks that can result in data leaks, factory shutdowns and money loss.

As described above, smart factories have advantages and disadvantages, and when a company adopts this technology, it is necessary to consider the balance between costs and advantages and take measures to reduce risks.

Also, as mentioned in previous report, Digitalization is also an important issue, and the market size will be about 150 billion yen in FY2020. It is expected to expand to about 300 billion yen in FY2025. Furthermore, the spread of smart factories requires digitization of software aspects such as human resource development and organizational reform. The market size is expected to reach approximately 100 billion yen in FY2020, and is expected to expand to approximately 200 billion yen in FY2025.


Typical technical examples of smart factories


IoT: Equipment and products in the factory are equipped with sensors and communication functions, and by collecting and analyzing data in real time, production status, quality control, failure prediction, etc. are performed. For example, Toyota Motor Corporation uses IoT to optimize energy consumption in factories and reduce CO2 emissions.


AI: Using artificial intelligence and machine learning to analyze factory data and support optimal decisions and actions for production planning, inventory management, quality improvement, etc. For example, Hitachi uses AI to detect manufacturing process anomalies and predict quality, thereby reducing the defective product rate.


Robotics: By introducing robots and automation equipment to replace human work, we aim to improve labor shortages, improve the working environment, and improve productivity and accuracy. Fanuc, for example, has introduced robots and automation equipment into its factories to create smart factories with little human intervention.


Cloud: By using cloud computing and edge computing to integrate and manage data and systems inside and outside the factory, it is possible to share information, collaborate, and respond quickly. For example, Nidec uses cloud computing to realize data linkage and visualization between factories that are deployed globally.


AR/VR: Utilizing technologies such as Augmented Reality (AR) and Virtual Reality (VR) to provide real-time information to workers in the factory and provide guidance from remote locations. By doing so, we aim to improve work efficiency and educational effects. For example, Mitsubishi Heavy Industries uses AR technology to display work procedures and points to note in aircraft engine assembly work, contributing to shortening work time and improving quality.


2) Leading company with smart factory related technology


There are many leading companies with smart factory related technologies in Japan. Below are five Japanese companies that will benefit from increased revenues from smart factory-related technologies.


SoftBank Group (9984):A company that provides IoT solutions for smart factories, including data collection and analysis, remote monitoring and control, predictive maintenance, and energy management. It also offers local 5G and private LTE services for industrial use cases. The company expects an increase in revenue from the IoT business by expanding its customer base and strengthening service provision. The company has a strong network infrastructure and spectrum portfolio to support IoT connectivity and data transmission. It also has a wide range of IoT solutions and platforms for various industries and use cases such as smart factory, smart city, smart agriculture, smart home, and smart mobility. In addition, we are leveraging global partnerships and investments with IoT leaders such as ARM to enhance our IoT capabilities and offerings. However, it faces stiff competition from other IoT service providers such as KDDI, NTT, Rakuten and Amazon.


Hitachi (6501):A company that develops AI technology for smart factories, such as anomaly detection, quality forecasting, demand forecasting, and production optimization. We also provide AI platforms and solutions for various industries such as manufacturing, automotive, and energy. We have knowledge and expertise in various industries and fields, such as manufacturing, automotive, energy, and infrastructure, and we have a comprehensive portfolio of smart factory solutions and platforms, including IoT, AI, cloud, and robotics. . They use their smart factories as showcases and testbeds for smart factory technology and innovation. In addition to being able to take advantage of the growing demand for smart factory services and solutions in Asia, where the manufacturing industry is booming and digitalization is progressing, the company will leverage partnerships and collaborations with major foreign companies to develop smart factory solutions. Ability and delivery can be enhanced. Competitors include other smart factory service providers such as Siemens and GE, which face fierce competition.


FANUC (6954): Manufactures and sells industrial robots and automation systems for smart factories. The company is a global leader and innovator of industrial robots and automation systems for smart factories. It also operates a smart factory using its own products and technologies. The company has strong R&D capabilities and a rich patent portfolio related to smart factory technology, as well as a diverse customer base that caters to various industries and regions. Especially in China, where industrial sophistication and innovation are being promoted, demand is rising and business opportunities are expanding. It will also create new smart factory opportunities in emerging fields and domains such as healthcare, agriculture and education. Competitors include other smart factory service providers such as Siemens, ABB and Yaskawa. In addition, the company is highly dependent on the manufacturing industry and may be subject to cyclical and seasonal fluctuations.


Fujitsu (6702): Similar to Fanuc. It manufactures and sells industrial robots and automation systems for smart factories, has strong R&D capabilities and a rich patent portfolio related to smart factory technology, and has a diverse customer base across various industries and regions. It will be able to capitalize on the growing demand for smart factory services and solutions in China, and explore new smart factory opportunities in emerging fields and regions. However, like Fanuc, it also faces stiff competition from other smart factory service providers such as Siemens, ABB, and Yaskawa Electric, which is highly dependent on manufacturing and is susceptible to cyclical and seasonal fluctuations. may receive it.


Sun Electronics (9928):Sun Electronics develops, manufactures, and sells game machines and casino equipment, and has high technological and creative capabilities. We also started developing an after-sales service support platform for industrial machinery manufacturers. In collaboration with Yaskawa Electric Corporation, a major industrial robot company, we provide functions based on the functions of the business efficiency system "AceReal" using AR technology developed by the company. Currently, products and services for smart factories are still limited, but as the demand for smart factories increases, the benefits and value of AR technology are appealing, and attention is focused on developing new partners, customers, and markets. . However, it is highly dependent on businesses such as game machines and casino equipment, and it may be difficult to respond to market changes and competition.

3) Advantages of SMEs introducing smart factories


SMEs can harness the power of smart factories to access new markets and improve productivity. However, SMEs should carefully assess their readiness and ability to adopt smart factory technology, as well as the potential benefits and risks.

Smart factories enable SMEs to customize their products and services, collaborate and integrate with other players to create new business opportunities, automate and optimize production processes, and increase flexibility and agility. Strengthening the quality of business can improve the operational efficiency and quality of SMEs. In addition, smart factories can leverage data and insights from production processes to improve the innovation capabilities and competitiveness of SMEs.

However, when SMEs adopt smart factory technology, the introduction cost is high, and smart factory technology may require advanced technical skills and knowledge, so there is a shortage of budget and human resources for SMEs. can be a barrier. Smart factory technology also poses potential cybersecurity risks and data breaches, and can also face privacy, legal and regulatory risks.

4) Subsidies for small businesses


There are the following public subsidy systems that can be used for smart factories.

Manufacturing, commerce, and service productivity improvement promotion subsidies are subsidies that support SMEs when they make innovative efforts to create new value. Specifically, the following efforts are targeted.

  • Improve productivity by utilizing digitization and IoT

  • Development and deployment of new businesses and new products

  • Entering overseas markets and strengthening international competitiveness

The subsidy rate is 2/3, and the upper limit is 500 million yen. Applicants must be small and medium-sized enterprises, prepare a business plan, and set productivity improvement indicators.

Example:

IST Co., Ltd.: In the manufacturing of automobile parts, we have introduced a quality control system and production control system that utilizes AI and IoT, reducing the defect rate and inventory rate, shortening the delivery time, etc. realized.

Universal Bearing Co., Ltd.: In the manufacturing of bearings, we have introduced predictive maintenance and production management systems for equipment that utilize AI and IoT to improve equipment operating rates, production efficiency, and reduce costs. is possible.

Hitec Co., Ltd.: In the manufacture of electronic components, we have introduced a quality control system and production control system that utilizes AI and IoT to reduce the defect rate and lead time and improve customer satisfaction. And so on.

A subsidy that supports collaboration between the manufacturing industry and the commercial and service industries to create new value. Specifically, the following efforts are targeted.

  • Efforts to develop and sell new products and services jointly by the manufacturing industry and the commercial and service industries

  • Efforts to improve productivity and customer satisfaction by jointly utilizing digital and IoT technologies between the manufacturing industry and the commercial and service industries

  • Efforts by the manufacturing industry and the commercial and service industries to jointly enter overseas markets and strengthen international competitiveness

The subsidy rate is 2/3, and the maximum amount is 45 million yen or less per year, and 97.5 million yen or less in total for 3 years. Applicants must be a business operator in manufacturing, commerce, or service, prepare a business plan, and sign a contract with a partner company.

Example:

NST Co., Ltd.: In food manufacturing, in cooperation with logistics companies in the commercial and service industries, we have introduced traceability systems and inventory management systems that utilize IoT and RFID to It has improved safety and reduced losses.

MSA Co., Ltd.: In the manufacturing of cosmetics, in cooperation with beauty salons in the commercial and service industries, we have introduced new customer acquisition tools such as online sales and delivery to improve sales and profits. , and the construction of a new business model.





Ingo Tietbale, Director of ESG Research and Solutions

Born in Kyoto and raised in Germany. After graduating from graduate school, joined SMBC Nikko Securities and engaged in M&A and IPO related business. After that, he moved to Morgan Stanley and worked as a securities analyst in the equity research department. Joined Adidas after working as manager of corporate planning and financial analysis. Leading our ESG solutions. 



Non-financial data bank for financial institutions, consulting firms, and corporate planningTERRAST Beta



■Smart disclosure and improvement of ESG, ESG/SDGs management promotion tools for business companiesTERRAST for Enterprise β (T4E)



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