2. What is “Connected factories”? (First published in Japanese in June, 2014)

 Three scenarios are introduced for assumption to explain “Connected factories” in Japan as a new concept. Scenario 1 is a model of a niche top company that manufactures the final product at first.

Scenario 1

 Hosei Kogyo (tentative name) announced an assistive device for people with disabilities in 2018 which was developed for the Tokyo Olympics and Paralympics. The manufacturing process incorporated a 3D printer and some metal parts were very complicated and planned to be produced about 10 units per month. This was introduced in Scandinavian media, and the business was gradually expanded to a production system of 2000 units per month as of 2022. By using the manufacturing community platform, they had a plan of construction of their own factory in Fukushima Prefecture in future with controlling investment costs and risks with a network-type fab method.

 Since so-called 3 D printer is oriented to non-repeating orders of small lots, it is better to go to factory equipment investment in the case of mass production and the corresponding cost of one unit will be less expensive. The problem is in between. It can be said that the niche top companies are always going through this process. “Connected factories” can be used as a manufacturing consignment mechanism for such intermediate production lots.

On the other hand, Scenario 2 below is an example of a support industry company.

Scenario 2

 Hosei Seimitsu (tentative name) applied for a joint development program with a major material manufacturer and established difficult processing technology for new composite materials. After getting third-party technology evaluation and intellectual property management, orders of processing were stably obtained, and new inquiries through the manufacturing community platform increased, and orders from overseas also increased dramatically. Although there were mass production or repetitive orders, the company did not expand its scale and licensed the processing, while concentrating management resources constantly on the development of new processing technologies.

 As is well known, the high processing technology of SMEs supports manufacturing process of major manufacturers. A further leap can be expected by guaranteeing the system not only for the matching between companies but also for trade and technology assessment and intellectual property management. In addition, by collaborating in the fields such as logistics and customs clearance, orders from overseas can increase.

And the last example is the image of a completely new type of manufacturing and service company.

Scenario 3

 Hosei (tentative name), a major contract manufacturing service company specialized in machining, has the third largest sales in Japan as of 2025. The EMS (contracted electronics manufacturing service) business was significantly reduced in 2014 and the business is shifted to machining and resin products. The process management is thoroughly standardized, and the process is streamlined by combination of relatively inexpensive press + sheet metal processing and welding robots with making from 1 to 5,000 products per month. Mainstay is the interior parts of electric cars. The line is in conjunction with the customer’s production management system and the flight digital signage are delivered 2 times per day through the cloud.

 With the advancement of electronics, mechanical elements have been increasingly replaced by electric and software ones, and these have been made into IC chips and printed circuit boards, which can be outsourced to EMS companies. However, on the other hand, there are still some mechanical elements that require manufacturing by combination technologies, and it cannot be a manufacturing service based on Western ideas. Efficient manufacturing such parts with high quality is the strength of manufacturing industries in Japan, and this is likely to become a killer content for manufacturing business in future.

 The characteristic of “Connected factories” is that the process of making products by linking each other beyond companies. Supply chains were often linked by selling and buying of products as transactions between different companies until now. On the other hand, when manufacturing processes are directly linked, not only transactions in standard units such as materials, parts, module products, and products, but also exchanges and manufacturing in units such as intermediate products and works in progress and a form of partially entrusting processes are realized more flexibly than ever.

 There is a history that SMEs and small-scale enterprises have been getting such manufacturing processes as subcontractors of outsourced manufacturing. The pricing right was on the consignment side, and the consignment side also determined and evaluated manufacturing process there. On the other hand, the supply chains are configured from equal standpoints or, in some cases, from trustees in the applications of “Connected factories”. As a result, companies with advanced processing technologies, detailed production preparations, material technologies and elemental technologies can concentrate on improving their technologies. In addition, in response to the ever-increasing variety of product needs and individual customer demands, it will be possible to realize Monozukuri (Manufacturing in industries) that integrates design and manufacturing across corporate boundaries.