BreakThrough Interview

In response to significant changes in the “Manufacturing” environment. A new production system “Crowd Manufacturing” that contributes to the improvement of productivityHitachi, Ltd


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Toshiya Teramae from the Center for Technology Innovation-Production, Research & Development Group, Hitachi Ltd.


  • Contribute to society through the development of superior and original technology, and products
  • Global expansion of digital solutions
  • Contribute to the improvement of productivity by review and innovation of “Manufacturing” practices

Since its founding in 1910, Hitachi has been working on solving social issues that change with the times based on the corporate philosophy “Contribute to society through the development of superior and original technology, and products”. The company expanded its business from “Manufacturing” that develops and produces products with original technology. They have been honing control and operation technologies that drive the development and manufacturing of equipment at production sites and the system that is necessary for the process.
During the high growth period, the focus was on building large-scale systems to support infrastructure. By actively developing Information Technology (IT), they have deployed digital solutions across the global utilizing innovative technologies such as AI, big data analysis, and IoT in recent years.

Responding to Major Changes in the “Manufacturing” Environment

The company which has a history of over 100 years is currently facing a challenge. A significant change in the “Manufacturing” environment even at the global level. The following are the factors causing the change.
〇A decrease in the number of skilled engineers for manufacturing and technology development
〇Shorter product development cycles due to diversified consumption
〇Progress in the shift of the value of goods from tangible to intangible
〇Change in the labor environment with the economic growth of emerging countries
〇The progress of local production for “Manufacturing” even outside Japan
In addition to the above, digitization of industrial and social infrastructure has rapidly progressed worldwide. Therefore, the company devised a new production system to respond to major changes in the “Manufacturing” environment using digital solutions. The production system is “Crowd Manufacturing” where resources are shared to optimize “Manufacturing”. The writer spoke to Toshiya Teramae from the Center for Technology Innovation-Production, Research & Development Group of the company about the new production system.

Leverage 4M Resources to Improve Productivity

Mr. Teramae says, “The “Manufacturing” environment is undergoing a significant change with the diversification of customer needs and full-fledged entry into the IoT era. For example, there is an increase in the trend of optimizing the flow of manufacturing lines utilizing remote monitoring data of production equipment x AI and improving productivity by linking data between factories. From the international perspective, ROA (Return on Assets) in Japan is low, and it is an issue even for our company, and ROA is a major reason for implementing ‘Crowd Manufacturing’ mentioned above. I think this new system which effectively utilizes the processing equipment and increases capacity utilization rate, has hidden potential from the perspective of ‘Improved productivity’, and ‘Improved ROA’.”

ROA (Return on asset) of small and medium-sized enterprises of Japan is low when compared with several other foreign countries.
(Source: “2013 Annual Economic and financial report”, Cabinet Office)

“Manufacturing” practiced by manufacturing industries up to now was a closed production environment where each production base internally secured the 4M resources consisting of Machine, Man, Material, and Method.
However, “Crowd Manufacturing” proposed by the company connects the production resources of several factories and enterprises with an open environment and optimizes the value chain depending on the changes in the business environment. It accommodates 4M resources based on the requirement. This new system can establish a “Manufacturing” environment that accommodates production resources by sharing production information among factories and enterprises.

It opens up conventional manufacturing methods and accommodates 4M resources as needed.

Build a Flexible Manufacturing Environment Which Does not Depend on Man and Machine

“Crowd Manufacturing” is a platform to share production capacity (Asset) and enable mutual use by visualization of the manufacturing facilities of multiple business locations.
Mr. Teramae explained, “For example, when there is a drop in the capacity utilization rate of factory A, production can be shifted to factory B. Though many operators may belong to factory A, generally they are full-time operators of factory A. Even if operators are needed in factory B, it has to secure operators beforehand and recruiting new personnel takes time. The concept of ‘Crowd Manufacturing’ is to accommodate human resources such as operators.”

However, to share production capacity (Asset), the challenge is to establish manufacturing technology that does not depend on man and machine. For solving this problem, the company is promoting the standardization of business process named “Manufacturing digital recipe”. If manufacturing is implemented according to this process, the “Recipe” will ensure that the “Same quality can be assured when any machine is used by anybody, anywhere”. By utilizing the manufacturing digital recipe, it is possible to achieve “Manufacturing” technology of the same quality in multiple factories including those overseas without depending on skilled technicians and machines.

Innovate “Manufacturing” with Advanced Technology Development

One of the technologies promoted by the company is, “Development of error correction technology for the cutting process that can ensure process quality equivalent to skilled technicians”. By digitalizing the process know-how of skilled technicians, the control program can be corrected automatically depending on the cutting machine, tools, and workpiece shape before machining.
In the future, the company will further advance the cutting process and promote other metalworking technologies. With further advancement of technology development, the world of “Manufacturing” may undergo a significant transformation.

Though they promoted “Crowd Manufacturing” as an internal business, it has now attracted attention from other companies, and they are receiving inquiries from interested companies. This shows that many companies are trying to increase their awareness in response to the significant changes observed in the global “Manufacturing” environment.
Also, in addition to Japan, Hitachi, Ltd. is focusing on global development. Mr. Teramae says, “If the ‘Manufacturing’ quality can be ensured irrespective of the skill level of engineers, the possibility of emerging countries accepting such new developments will be high.”

A Future in Which Small and Medium-sized Enterprises Will Collaborate

“Crowd Manufacturing” of Hitachi Ltd was designed as an in-house initiative based on the idea of improving productivity by optimization of equipment utilization.
For Japanese companies struggling with low productivity and population decrease, one of the solutions for competing with global companies in the future is to connect them by “Crowd Manufacturing” to streamline resources and standardize know-how. It also seems to suggest the future to come.
Even in the case of small and medium-sized enterprises who have difficulty in investing for large equipment compared to large companies, they will be able to accommodate resources with “Crowd Manufacturing” by forming a cooperative system to accept large orders that cannot be handled by individual companies. Also, though there is no specific example as yet, the company has received many inquiries related to the introduction from other companies.

The “Crowd” in “Crowd Manufacturing” is not “Cloud” used in internet services, but it means “Crowd or Group”. This name suggests coordination and cooperation, and it may become an important signpost for “Manufacturing” in the future.

Interview Date: January 28, 2019

company information
Hitachi, Ltd.
Hitachi Ltd. is a unique company in the world with control and operation technology, and products in addition to digital technologies such as AI and big data analysis. By leveraging their forte, they are striving to solve social issues by providing digital solutions globally including social infrastructure with high added value. They will continue to strive and achieve the SDGs by contributing to the improvement of the quality of life of people and building a sustainable society through collaboration with customers and partners.

■The following is an example of the initiative taken by Hitachi, Ltd.
Hitachi, Ltd. has set up the “Open automation Lab” that uses mock setups and simulations to solve problems faced by customers from the industrial field who are engaged in global operations. Since the manufacturing process can be confirmed using actual machines, solutions to the issues can be discussed in detail.

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