For future generations

The world is changing at a drastic pace. While the issues facing the Earth change moment by moment, technological innovations are taking place throughout the world,
with typical examples being Artificial Intelligence (AI), Internet of Things (IoT), and Robotics.

Increasingly urgent social issues

OMRON has drawn up a medium-term management plan for the new era,
as we strive to resolve social issues by creating innovation, and pass on a better society to future generations.

OMRON's founder is Kazuma Tateisi, one of the pioneering entrepreneurs.
In 1933, he founded "Tateisi Electric Manufacturing Co." here in Osaka and started manufacturing timers for radiography.
While OMRON is now widely recognized as a Kyoto company, it started as a back-street factory in Osaka.

What has been driving OMRON's development is the "Corporate Motto" that the founder made in 1959.
"To improve lives and contribute to a better society"
This spirit has been inherited as “Our Mission", and OMRON has built a management foundation centered on the corporate philosophy.

Based on this philosophy, OMRON has developed products leading the world, capturing the needs of society.
The examples include, as you know, "traffic control systems", "online cash dispensers", "ATMs", and "automat ticket gates".
With the spirit of venture capital, OMRON has created a lot of innovative products which contribute to the development of the world and which are the first in the world or Japan.
OMRON's core technology, "Sensing & Control + Think", enabled these innovations.

To make our business that we introduced today grow, we need innovative technology as its driving force.
For 2020, we are going to thoroughly cultivate OMRON's core technology "Sensing & Control + Think" that supports business growth.
Our CTO Miyata will explain why the innovation of "Sensing & Control + Think" leads to big business opportunities in detail.

As a result of our commitment to the development of society through business focusing on "Sensing & Control + Think", OMRON is currently engaged in a wide range of businesses including "Industrial Automation", "Electronic and Mechanical Components", "Automotive Electronic Components", "Social Systems, Solutions and Service", "Healthcare", and "Environment Solutions", among others.

What characterizes us is that we have many businesses with the top market share.
We have many products with a large market share, for example, 40% market share of Industrial Automation in Japan and 20% global share in the Electronic and Mechanical Components Business, specifically relay products.
The size of the global market of home blood pressure monitors (BPM) is approx. 400 million units per year. OMRON's products comprise 200 million, meaning 50% share of the global market, overwhelming others.

OMRON deploys these businesses in 117 countries worldwide.

OMRON has approx. 36,000 employees worldwide. Seventy percent of them are non-Japanese and overseas sales have expanded to approx. 60% of total sales.

Thanks to rapid technological innovations represented by AI, IoT, Robotics, and so on, the market and environment are now changing dramatically in the area where we are engaged.
The change is a great opportunity for OMRON, which is engaged in growth areas such as Industrial Automation, Healthcare, and Automotive Electronic Components, to create new value.

Taking this opportunity and aiming for striking growth is the new midterm management plan "VG2.0".
Under "VG2.0", we are going to be "a global value-creating group that is qualitatively and quantitatively superior".

The quantitative goal is sales of more than 1 trillion Japanese yen and operating profit of 100 billion yen in FY2020.
We especially focus on higher GP margin, aiming at 41% or higher, enhancing our potential to make profits.

Let me explain the GP margin in detail.
This is a comparison chart of GP margins mainly with domestic electric appliance manufacturers.
As you can see, OMRON has an excellent GP margin in the industry.
For FY2020, we will continue to enhance the high GP rate, that is, potential to make profits, and proactively make investments for the future to ensure further growth.

Next, let me explain key measures to achieve the goal.
First of all, domain strategy. Under "VG2.0", we will concentrate the resources of the entire company on four domains promising business growth: "Factory Automation", "Health care", "Mobility", and "Energy Management" in which OMRON can demonstrate its strengths.
Today, I am going to introduce our specific engagement in "Factory Automation" and "Healthcare" driving the growth of the entire company.

Firstly "Factory Automation".
Now we are witnessing major changes in production floors around the world.
For instance, smartphones have advanced functionality as well as diverse designs and improved quality, which involve a short-term launch of production lines and mass production, demanding solutions for various challenges such as higher precision of assembly and productivity.
In addition, as local production for local consumption progresses globally, shortage of production engineers and soaring labor costs become an issue, making it more and more difficult to enhance worker skills to properly run facilities to ensure universal quality.
Under the change, new automation needs are growing.

For production floors with such challenges, OMRON offers new value with innovative automation.
In order to run the production line, you need "ILOR+S": "Input" from sensors, Logic such as controllers controlling the equipment based on the information from input, "Output" of motors driving the equipment based on instructions from the controllers, "Robot" to assemble components, and "Safety" to be ensured at the production floor. You need all of "ILOR+S".
And OMRON is the only company with all of "ILOR+S" in the industry.
Please look at the comparison table here.

OMRON offers not only a wide range of "ILOR+S" devices but also a set of application software that can intensely integrate these devices to realize advanced control with ease.
This is the advantage and strength of OMRON.
For example, control of the robot and the production line as a whole was conventionally done with separate controllers respectively. That is, the system had two brains. That made synchronization between robot and machine control really difficult.
OMRON has seamlessly integrated all of "ILOR+S" devices by one world-fastest controller, allowing optimal tuning of devices to run in a fast and precise manner with ease.
This allows our customers to dramatically enhance business efficiency.
OMRON will offer new value to production floors with the wide range of ILOR+S products of over 100,000 items and unique control application software.

This new innovation concept OMRON is going to provide is "i-Automation".
What is "i-Automation" like? We have a summary video for the concept. Please have a look.
How do you like it, everyone?
Here are some excerpts from the video you just watched, and I will explain them in more detail. Please have a look.
The video on the top left is a case study of OMRON's i-Automation actually adopted for the process of tightening bottle caps.
In the process, bottles are spinning at high speed while the caps are tightened at a higher spinning speed.
The process required reduction of spinning speed to ensure tightening of the caps before, while OMRON's i-Automation has materialized the process with higher speed and dramatically higher productivity.
The technology materializing this is high speed coaxial control, in the bottom right video.
As you can see, two spindles are spinning at high speed without colliding with each other. This is the technology that can be achieved by OMRON only, the company that can provide a wide range of devices, such as sensors, controllers, and motors, and application software as I explained before.

 

Next, let me explain key measures to achieve the goal.
First of all, domain strategy. Under "VG2.0", we will concentrate the resources of the entire company on four domains promising business growth: "Factory Automation", "Healthcare", "Mobility", and "Energy Management" in which OMRON can demonstrate its strengths.
Today, I am going to introduce our specific engagement in "Factory Automation" and "Healthcare" driving the growth of the entire company.

In the healthcare domain, we are engaging in three social issues; "cardiovascular diseases", "respiratory diseases", and "pain management".
Let me explain these issues.
As for cardiovascular diseases, it is said that the population of hypertensives in the world is now one billion. It is also said that approx. 17.5 million people are suffering from a stroke or myocardial infarction that that has developed due to hypertension. One estimate says that the medical expenditure for cardiovascular diseases spent for the treatment is 120 trillion Japanese yen.
And the number of respiratory disease patients worldwide exceeds 400 million, with medical expenses of 19 trillion yen when only major countries are taken into account. In reality, the actual rate of asthma patients in emerging countries is low. It is reported that in China with severe air pollution, only 5% of the estimated number of 20 million patients are treated.
What this means is that as air pollution progresses in emerging countries such as China and India, and as the examination rate rises, the number of respiratory disease patients will increase and medical expenses will skyrocket.
The last but not the least, pain management. As aging of the population progresses, the number of patients suffering from chronic back pain and joint aches is increasing.
We are engaging in these issues to make our business grow.

One of the strategies for that purpose is the strongest enhancement of the core categories; "blood pressure monitor (BPM)", "nebulizer", and "pain management".

We will enhance the quality and value of "home BPM", "nebulizer", and "low frequency therapy equipment" which is one of the devices for pain management.
Although we have already acquired the top market share of these products, by strengthening the ability to convey and deliver value to customers, we will achieve the overwhelming top share by 2020.
As for BPM which is our biggest earner in healthcare, we will develop a new product with much higher usability. We will further increase our market share by introducing the new product into the rapidly expanding Chinese online channels as well as huge potential markets such as India, aiming at a worldwide market share of over 55%.
As for nebulizer, we will introduce new products, especially for pediatric asthma.
We will expand sales in China, India, South America and Europe where the markets are expanding, aiming for a global share of over 40%.
And as for low frequency therapy equipment, we will strengthen marketing activities in Japan and the United States, while developing innovative devices for increased sales, aiming to achieve an overwhelming top market share.

Secondly, let me explain "Zero Cerebral and Cardiovascular Events" we have been engaged in for a longer, healthy life.
"Cerebral and Cardiovascular Events" are the onset of diseases such as stroke and cardiac infarction.
What is important for hypertension patients is to prevent stroke and cardiac infarction caused by high blood pressure.
Prolonged hypertension causes hardening of arterial walls and leads to life-threatening diseases such as cardiac and cerebrovascular diseases.
And cardiac and cerebrovascular diseases may not directly cause death but can make the patients bedridden or speech impaired, which will be a heavy burden for the patients as well as for the caregiving family members, significantly lowering their quality of life (QOL).
That's why we will focus on "Zero Cerebral and Cardiovascular Events" to prevent the onset of symptoms for a longer, healthy life.
In other words, it is important not to cause high blood pressure seizures.

OMRON will work on solving these issues through the creation of business to prevent "cerebral and cardiovascular events".
Specifically, we will make this wearable BPM we are currently developing to collect various vital data such as blood pressure. The collected data will be analyzed by AI technology to provide services that support diagnosis, prevention, and treatment.
This should prevent unfortunate events.
We plan to release this wearable BPM in FY2018, starting in North America.
This is the wearable BPM.
It has measurement accuracy as the world's first FDA compliant medical device.
And we aim to build a business model that can provide new solutions which support diagnosis, prevention, and treatment using the data from this device.

The key is capital alliance and business tie-up with a US venture company, AliveCor, Inc. announced in March this year.
AliveCor has the world's first mobile electrocardiograph (EKG) with FDA approval that can diagnose atrial fibrillation.
Atrial fibrillation is an irregular and dangerous heartbeat that can lead to blood clots which may cause stroke.
Their strength is, in addition to this mobile EKG, to have a service platform for EKG analysis for heart disease specialists and patients.
We will develop a new wearable EKG/BPM in combination with our wearable blood pressure monitor technology and AliveCor's electrocardiography measurement technology. We will also develop a new service platform using electrocardiogram and blood pressure data. So far, no one has realized such devices and service platforms. We are going to evolve our business model to be the world's first.
These are concrete examples of "Factory Automation" and "Healthcare" initiatives.

To make our business that we introduced today grow, we need innovative technology as its driving force.
For 2020, we are going to thoroughly cultivate OMRON's core technology "Sensing & Control + Think" that supports business growth.
Our CTO Miyata will explain why the innovation of "Sensing & Control + Think" leads to big business opportunities in detail.

Hello again, this is CTO Miyata.
I am going to explain OMRON's core technology "Sensing & Control + Think" introduced by Yamada, why it is OMRON's core technology, and what it means to keep refining the core technology while AI is in its prime.

OMRON has been developing products to contribute to a better society by providing human-centered automation, treasuring the corporate philosophy of the company founder Kazuma Tateisi; "To the machine, the work of the machine; to humankind, the thrill of unfettered creativity".
Developing technologies with an awareness of "relationship between humans and machines" to solve social issues. This is OMRON's DNA.

As it is said that the world is now in the third AI boom phase, the world is about to make a big change with the advent of innovative technologies such as deep learning.
In line with the evolution of IoT and robotics, machines are getting more and more sophisticated, and now they can do what traditionally only humans could do in the past, in considerable portions.
For instance, advanced autopilot technology is used on airplanes. Automobiles now have automatic brake as standard equipment these days, and the industry is in fierce competition to develop automated driving. Other examples include AI-supported service for customers and simple diagnosis. "Human-machine relationship" is considerably changing compared to a decade ago.
The most important and complicated part, however, is actually done by humans. OMRON believes that humans will remain involved even if machines can do more and more.

Let me explain "Human-Machine Relationship". "Human-Machine Relationship" represents a change in "What Machines Can Do" thanks to technological innovation.
In the past, when machines were not very advanced, the relationship with them was "replacement" and they took over people's pain and hardships. Nowadays, the relationship is becoming more like "collaboration of humans and machines" as machines can play a part of human intelligence through technological evolution such as AI. In the future, productivity and safety will increase more with the combination of specialty areas for humans and machines. OMRON envisions the future world further, from "collaboration" to "harmony".
"Harmony" means that machines can bring out abilities and possibilities of humans, enhancing total performance of humans and bringing joy and pleasure to humans. In horseback riding, the word "Jinba-Ittai (unity of rider and horse)" is often used. Regarding the machine as a horse, it is only a means of transportation in case of "replacement". In case of "collaboration", a human can manage the horse and run faster, and in case of "harmony" riding a horse gives the rider joy and pleasure.
OMRON is working on technologies that can innovate "human-machine relationship" while focusing on humans.

The key to materialization of "collaboration" between humans and machines is sensing technology that recognizes various states of "human", "matter", and "machine"
Only after grasping the correct state, "correct judgment" and "appropriate action" can be done. In that sense there is no difference between humans and machines.
OMRON has a number of excellent sensing technologies that can grasp various conditions correctly.
Today, I am going to introduce two examples of "OMRON's excellent sensing technology" that realize "collaboration of humans and machines" at production floors and medical sites.

At production floors, now you can detect the "machine's unusual running status" through the combination of excellent sensing technology and controllers equipped with AI.
Please look at the image on the right. This is an enlarged image of the belt unit of a production equipment. The controllers equipped with AI constantly monitor the operation status of each device and information from sensors, and learn the normal state. Gray dots indicate sensor information.
Blue dots indicate "usual running status" of the belt while red "unusual".
By analyzing data with accurate sensing data, the controllers can detect "machine's unusual running status", and you can perform maintenance and production improvement based on that information.

In the medical field, now it is possible to measure data of "continuous BP" and "EKG", which could not be easily acquired, by technology that allows constant measurement of blood pressure per beat only with the wrist and a mobile EKG.
The heart beats approx. 100,000 times a day, and blood pressure varies from beat to beat.
OMRON has developed technology to continuously measure blood pressure for each beat with the wrist only.
And conventionally, it was necessary to apply an electrode for measurement near the heart in order to record cardiogram, which made the measurement difficult. AliveCor's mobile EKG is designed with sensing technology to allow measurement of EKG just by touching the device with your fingers.
By combining these two new sensing technologies, we will be able to measure defects in the entire human circulatory system. Based on the analysis of that data, doctors will be able to provide appropriate diagnosis and advice to more patients.

For "cooperation" between humans and machines, it is important to acquire necessary data through sensing as mentioned before.
OMRON's core technology, "Sensing & Control + Think", consists of data acquisition by sensing and provision of feedback, and what is important for this is “production floor". In our business field, "factory automation", "healthcare", and "mobility", the most important thing is to capture the situation of the “production floor" that changes every moment and to provide appropriate output based on knowledge unique to the production floor, too.
This is not just about collecting technologies of sensor, control, and AI. In order to innovate "the relationship between humans and machines" and to realize the world of "harmony", it is necessary not only to incorporate the evolution of these technologies but also to create optimal technology to solve production floor tasks by highly integrating these technologies.
Let me introduce an example of OMRON's highly integrated elemental technology through our ping pong robot. Please watch this video.

Movie

In order to demonstrate OMRON's technologies, we keep developing the ping pong robot as "a robot that allows you to enjoy ping pong while improving your ping pong skills". A robot simply hits a ball hit by a human opponent. No special parts are used. It is a combination of commercial products, mainly of our factory automation business.
Incorporated elements are: "Sensing" to precisely measure three-dimensional position and speed of the ball, "Think" to plan its optimal return position, and "Control" to precisely operate the robot.

Two cameras installed at the top of the ping pong robot measure ball position and speed 80 times per second.
To return the ball with a racket, measurement accuracy is also important.
The measurement has only 10mm error.

The position of the ball is sent to the factory automation controller which estimates the trajectory taking aerodynamic characteristics into account as well. The estimated values are compared with actual ones to reduce errors.
The robot moves the racket to return the ball to a position the human opponent can easily hit, and the shortest movement path is automatically calculated within the range that does not apply too much load on its motors and mechanism.

At the same time as the automatic calculation of the shortest path, the robot also calculates rotational speed and power of the five motors that determine the position and angle of the racket. The calculated values are sent to the motor driver every 1/1000 seconds to move the racket to the calculated position and angle.

Ball position measurement, trajectory estimation, and racket path calculation are done at the same time as operating the robot. The key is "concurrency". The ball's trajectory, for instance, is affected by atmospheric pressure and humidity and shifted a bit from the estimated one. The robot must adjust this subtle shift of the ball trajectory to accurately hit the ball to return. This is really difficult.
In addition, the swing of the racket by the robot causes a considerable jolt. To reduce the jolt, damping control is incorporated into the robot: the motor driving power is lowered a little bit just before the end of the racket swing to stop the racket while absorbing the jolt.

In an analogy to a production floor, a robot can pick up moving objects, that is, those transported on a belt conveyor or those that fell off a pile. To accurately and quickly pick up a moving object, various elements must be integrated.
"Image sensor" which accurately finds and recognizes the target object among moving ones, "AI-equipped controller" which instantaneously calculates the movement of the robot from the movement and shape of the recognized object, "Robot" which faithfully executes the calculated movement and grabs the object quickly and accurately. And "integrated control" which fine-adjusts the series of operations from "recognition", "calculation", and "picking" based on the object's movement while the object is moving.
OMRON is the only company which has "ILOR+S" lineup and highly integrates "Sensing & Control + Think", that can integrate these elements and materialize the technology which can "quickly and accurately pick a moving object" ,unrealized by competitors.

Let me explain "Human-Machine Relationship". "Human-Machine Relationship" represents a change in "What Machines Can Do" thanks to technological innovation.
In the past, when machines were not very advanced, the relationship with them was "replacement" and they took over people's pain and hardships. Nowadays, the relationship is becoming more like "collaboration of humans and machines" as machines can play a part of human intelligence through technological evolution such as AI. In the future, productivity and safety will increase more with the combination of specialty areas for humans and machines. OMRON envisions the future world further, from "collaboration" to "harmony".
"Harmony" means that machines can bring out abilities and possibilities of humans, enhancing total performance of humans and bringing joy and pleasure to humans. In horseback riding, the word "Jinba-Ittai (unity of rider and horse)" is often used. Regarding the machine as a horse, it is only a means of transportation in case of "replacement". In case of "collaboration", a human can manage the horse and run faster, and in case of "harmony" riding a horse gives the rider joy and pleasure.
OMRON is working on technologies that can innovate "human-machine relationship" while focusing on humans.

To realize the world of "harmony between humans and machines" in which robots inspire human abilities and creativity, a process is required for machines to understand humans better.
To develop technology that allows machines to understand people more deeply, OMRON has started collaborative research with RIKEN, the global pioneer of brain science on June 1. In this collaborative research, we are trying to develop a technology that can materialize "human-machine harmony" that allows understanding of deep psychology and behavioral principle of humans, by combining OMRON's core technology "Sensing & Control + Think" with the world's most advanced brain science and knowledge about AI from the brain science perspective that RIKEN has cultivated.
Specifically, to materialize sensing technologies which comprehends the state of people and technologies to provide feedback to people and optimally control machines according to individual conditions and characteristics, we focus on "brain" that controls state and action of people to study from two aspects; "physical condition" such as "physical condition" and "cognition", and "state of mind" such as "emotion" and "intention".

OMRON has made achievement and has held a unique position in "Factory Automation", "Healthcare", "Mobility", and "Energy Management".
We will further cultivate the core technology "Sensing & Control + Think" based on knowledge and field data such as unique data accumulated in healthcare and real data of production floors obtained by IoT sensors and AI-equipped controllers.
Specifically, we will expand joint research with leading experts in the field of AI and robotics, establish development bases in Tokyo and the West Coast, and strengthen front functions to create onsite tasks and data with customers. We will also promote cooperation with the science field towards "harmony of humans and machines".
In order to realize a better relationship between "humans and machines", OMRON will provide products and services to solve social issues through our business by incorporating faster-evolving technologies and strengthening "Sensing & Control + Think" technology.

Now, lastly Yamada will show you details.

Well then, let me explain quantitative figures of the mid-term management plan. In "VG2.0" as well, we set six management indicators to realize corporate growth with profitability. By implementing the policies and strategies explained today, we aim to achieve sales of 1 trillion yen addressed in VG2020.
We will continue to make investments to ensure business growth for the coming four years by acquiring growth investment resources driven by ratio of gross profits to sales. While continuing active investment, we will secure ROIC and ROE of more than 10% each.

Next is the goal for each business segment. We will realize dramatic growth in "Factory Automation" and "Health care" segments.
We will make our business grow in the Electronic and Mechanical Components Business at an annual rate of 10%, and will expand it to 480 billion yen, which accounts for about half of the company's total sales.
We will make the healthcare business grow as high as 10% per year, too.

In order to realize dramatic growth for "VG2.0", we will continue investment focusing on "factory automation", "healthcare" and "technological innovation".
Growth investment of 1,000 to 200 billion yen is for M & A as well as alliances which will be actively discussed to achieve further growth in the "Factory Automation" and "Healthcare", to not only enhance product appeal but also acquire technologies and services required for construction of new business models.
R & D expenditure of 270 billion yen will be actively invested in R & D focusing on AI technology such as joint research and development with RIKEN. We are also planning to set up a base for AI technology development in Tokyo and the west coast of the United States.
Capital expenditure of 160 billion yen will be for IT infrastructure reinforcement to back up business process reforms aimed at work style reforms and strengthening of automation center to promote technical exchange with FA customers.
In addition, we plan to hire mid-career employees at a scale of 1,000 people by 2020 to ensure advantage over competitors. We will strengthen not only AI engineers, but also the front desk of sales to further enhance both quality and quantity of customer problem solving.
We are considering special treatment for acquiring human resources on AI.
As can be seen, we will continue investment to ensure the achievement of "VG2.0" and growth ahead of that.

Lastly, let me introduce our video of Hannover Messe held in Germany in April.

 

Thank you for your attention today.

Challenges that OMRON aims to meet on the way to 2020

Our long-term vision targeting the decade leading to 2020 is called
“Value Generation 2020 (VG2020).” Announced in 2011,
OMRON set the goal of becoming “a value-generator for people and

the Earth that is qualitatively and quantitatively superior.”
In fiscal 2017, OMRON launched the final
medium-term management plan toward the achievement of VG2020 goals.
With the aim of resolving issues that will emerge
in society resulting from unprecedented changes worldwide,
we named the new medium-term management plan “VG2.0.”

innovation

We will strive to create innovation based on technological evolution revolving around OMRON’s core technology of
“Sensing & Control + Think.” We will do so through collaborations with
our customers and partners as we aim to achieve further growth by addressing social issues.

OMRON’s Medium-Term Management Plan “VG2.0”

Sense, Think and Control. For a Brighter Future for People and the Earth.

Our goal is to address the challenges facing people and the Earth today, in order to build an optimal future.
We will continue to strive for “a value-generator for people and the Earth that is qualitatively and
quantitatively superior” to help achieve a sustainable Earth and society through our sensing and control technologies.

Target Image for VG2.0

A value-generator for people and the Earth that is qualitatively and quantitatively superior

Sales (FY2020):
1 trillion yen
Operating income (FY2020):
100 billion yen

OMRON Group’s Policy

Achieve self-driven growth by proactively creating
innovation originated by technological evolution

OMRON will advance our core technologies through technological
innovation and leverage them to address social issues.
While generating value for people and the Earth through business,
OMRON will also attain its own self-development.

Pivotal Strategies

  • To identify the potential issues and needs of customers and explore business opportunities based on them, OMRON seeks to develop essential technologies ahead of others and commercialize them. By doing so, OMRON will implement its unique customer-centric technology management.
  • OMRON intends to encourage a diversity of people to actively exchange opinions and link together to generate new synergistic reactions. To this end, OMRON will strengthen its people, organizations, corporate culture, and work environment to help people enjoy the process of creating innovation together.
  • OMRON will enhance operations and functions that accelerate innovation.

Value that OMRON seeks to generate in high-growth fields

Innovation driven by social needs is a core tenet of the OMRON Principles.
Having gained a deep insight into social change,
we have defined four focus domains in anticipation of the emerging needs of society.
Through our business in these domains as well as initiatives to support VG2.0 as a whole,
we will contribute to achieving the Sustainable Development Goals set by the United Nations.
OMRON is committed to solving social issues through innovation,
passing on a better Earth to future generations.

SDGs

OMRON is a company that solves social issues, guided by the OMRON Principles. To this end,
we incorporated sustainability initiatives into our VG2.0 medium-term management plan.
As we reach our goals for sustainability,
we will also build greater corporate value by creating value for society.