Daifuku Co., Ltd., a world leader in material handling systems, has announced a new management philosophy: Automation that Inspires. At a time when many companies are at the mercy of the pandemic and struggle to envision the future of their business, Daifuku dares to renew its philosophy─the foundation of its management. We asked Hiroshi Geshiro, President and CEO, why Daifuku took on the challenge of formulating a new management philosophy and the thinking behind it.
(Interview by Shoichi Terayama, President, Nikkei BP Consulting, Inc.)
- *This article is a reconstruction of "New Year's Greeting - Revising Our Management Philosophy -" published in the public relations magazine "DAIFUKU NEWS No.233" (issued in January 2022).
The pandemic as a sign of the need to renew our management philosophy
In April 2021, you launched your three-year business plan: Value Transformation 2023 (referred to below as the "business plan"). When did you start thinking about this revision of Daifuku's management philosophy?
I, myself, began thinking about it in the latter half of 2020. At that time, we were in the process of formulating our three-year business plan, and the COVID-19 pandemic gave me a sense of the difficulties in coming up with a plan, but I felt that it was precisely in times like these that we needed to look ahead.
When we formulated the new business plan, we looked at four changes taking place that affect our business. The first is market trends: e-commerce is expanding globally, and at the same time, the need for automation is increasing. The second is change in our business environment: as competition intensifies due to the progress of digital transformations and the rise of emerging companies, especially in China, we must also change. The third is change in the operating environment: as more non-Japan companies join the Daifuku Group through mergers and acquisitions, strengthening governance has become even more necessary. We are also reviewing our analog operations and accelerating digitalization. The fourth is change in the social environment. This change means that, in addition to improving stakeholder engagement, contributing to society through our business activities has become increasingly important.
For the Daifuku Group to continue to grow sustainably amid these four changes, we must also consider how we can cater quickly to the demands of these changing times and of society, and how we can reform the way we work in our new normal. With eight years having passed since the last revision, and particularly with all the changes and developments around the world, we judged that now is the time to revise our management philosophy.
What thinking went into your new management philosophy, Automation that Inspires?
Daifuku's latest brand video highlights the Group's new management philosophy
Daifuku's latest brand video highlights the Group's new management philosophy
The Daifuku Group's management philosophy clearly expresses our sense of purpose and the value we provide. Automated material handling technology is the foundation of our business and the wellspring of our competitiveness. The word "inspire" expresses our belief that people's lives will be enriched and made more convenient by the movement of various goods, and that we can contribute to society through our business. This philosophy is a universal concept for all those involved in logistics.
What we value is freeing people from hard labor and simple repetitive tasks. Heavy lifting and repetitive work can be supported by robots and machines, thus enabling people to work on more creative tasks. Especially with the current labor shortage, distribution center and factory operations have to be carried out with a limited number of workers. This also ties in with respect for the human rights of workers.
We changed our brand message to "Automation that Inspires" at the same time that we announced our new management philosophy. This phrase is not a direct translation from the original Japanese since a direct translation would not convey the message to English speakers. "Inspire" is a reworking of the Japanese phrase, which is literally "moving the heart," and was chosen from the perspective of what comes to pass when we move things and automate things through our technology.
Tackling challenges as an element of social infrastructure
When I was a reporter, I used to read your PR magazine, DAFUKU NEWS, as part of my research on the industrial sector, and I am surprised to see how your company has grown in scale since around 2004 or 2005.
Compared to those days, many people now recognize our company name, and material handling itself seems to be gaining recognition as being part of the societal infrastructure. As a result, our responsibility as a company when it comes to sales and profits has become greater, leading to thinking about how we maintain those numbers. Of course, this is important, but it is markedly different to the time when the main challenge was to bring new products to the world.
We have produced many firsts in Japan and the world. For example, in 1966, we developed Japan's first automated warehouse, which in 1969 developed into an automated warehouse with online computer control. 1993 saw the development of the world's first monorail conveying system with a non-contact power supply, which has been widely adopted by the automotive industry for providing a clean environment free of abrasive powder. We later applied this technology to cleanroom conveyance systems for the semiconductor and LCD industries. I recall how the engineers who developed these systems and those in the sales department worked on them together with great enthusiasm. We have also developed a variety of other systems, evolving their functions with the times. In recent years, we have also been developing more advanced products and services using AI and IoT.
Daifuku's DNA and spirit of creating new things has been maintained to the present day.
Yes, we have grown through our Automotive business, so we are well aware of the importance of helping keep our customers' factories running. Automobile manufacturers shut down their production lines during the long holidays to update their equipment, but if they can't get the equipment ready for operation after the holidays, thousands of employees will have nothing do to. For this reason, Daifuku Group members go above and beyond to meet those deadlines. Beyond the automobile industry, in other industries as well, this adherence to operational deadlines has brought acclaim from our customers; so, we have incorporated this DNA and mindset to take on new challenges into our management philosophy.
What Daifuku can do for all its stakeholders
In 1983, Hiroshi Geshiro joined Daifuku Machinery Works Co., Ltd. (now Daifuku). Since joining the company, he has been engaged mainly in sales, and was appointed President and CEO in April 2018 after serving as corporate officer and general manager of the Sales Division of FA&DA Operations in 2012, managing director and general manager of FA&DA in 2014, and director and managing officer in 2015.
There are three points cited as the right mindset and approach by which to put your management philosophy into practice. The first is to "strive to realize a sustainable society that minimizes burdens on people and the environment, respects human rights, and encourages responsible manufacturing." Can you tell us about this first point?
In addition to the mission of material handling, which is to free people from hard and repetitive labor, we have incorporated elements of sustainability management, such as minimizing the burden on the environment through efforts toward a decarbonized society and concern for biodiversity. We have been working on environmental measures for a long time and, at the Shiga Works, have established a permanent monitoring system at our wastewater treatment facilities, maintaining water quality in compliance with laws and regulations. In addition, in 2013, we installed a mega solar power generation facility that can generate 4.4 megawatts, which is about one-third of the electricity needed by our plant. We are planning to install similar solar power generation facilities at our plants in China and Thailand. We will continue to carry out responsible manufacturing with concern for the environment and human rights in close cooperation with our customers, suppliers, and local communities.
The second of the three points of the management philosophy is to "work together with customers around the world to create optimal smart logistics solutions that incorporate innovative technologies." I believe that this has already been achieved.
Thank you very much. Our strength is in our ability to finish the job without shying away from the difficulties, and we have long been building long-term relationships of trust with our customers based on our desire to respond in earnest to their demands and provide them with a competitive advantage. However, as the demands placed on us by our customers continue to increase, we cannot afford to accept the status quo. The entire Daifuku Group understands and shares the importance of building a relationship of trust with customers as we meet their expectations, and we will continue to push forward in offering smart logistics services to them.
Can you speak to the third point, which is to "ensure a fair and open corporate culture that respects diversity and allows each individual to excel. Further, we will strengthen our fundamental management practices globally to have a high level of transparency"?
We have a free and open corporate culture, cultivated over the years. I want our employees to work with enthusiasm, and to take on new challenges without fear of failure. This is the most important thing. Moreover, we maintain our stance of making an ongoing contribution to the achievement of a sound society by connecting with stakeholders, which include our customers, companies we do business with, partner companies, and local communities. To this end, we have adopted a perspective of aiming to "transform the value we provide," as stated in our business plan.
We strive to lead the future of logistics, taking up the challenge of creating new value
Finally, tell us about your future prospects. Do you think the logistics sector will continue to grow in the future?
What interests us now is what the next generation of logistics will look like in the area of delivery to homes and consumers.
Demonstration tests are being conducted on drones and automated vehicles on public roads but, with the various risks involved in flying drones, it will take some time before they are put to practical use and become widely used. Issues such as legislation are also involved here.
The ultimate goal is to have all goods delivered automatically. It would be a world just like in the science fiction comic books I read as a child. But it's not a technological fantasy to have a world where you can message about what you want and have a drone bring it from a distribution center to your home.
Today, material handling systems are an important part of societal infrastructure. Daifuku aims to be a company that takes on the challenge of creating new value by looking ahead to what the next generation of logistics will look like, and by looking ahead to what we can do. This requires flexible and creative thinking unconstrained by convention, and the ability to implement changes within the existing framework. We will continue to lead the future of logistics while contributing to the sustainable growth of the Daifuku Group and the creation of a sustainable society.