Hitachi, Ltd. · TSE:6501
Hitachi — Investor Presentation (March 2012)
27 slides from Hitachi's investor presentation, Mar 27, 2012
Slide 1: Hitachi Smart Transformation Project
Hitachi Smart Transformation Project March 27, 2012 Makoto Ebata Senior Vice President and Executive Officer Chief Transformation Officer (CTrO) Hitachi, Ltd.
Slide 2: Contents
Hitachi Smart Transformation Project Contents １. Background to Start of Project ２. Project Outline ３. Examples of Activities
Slide 3: 1. Background to Start of Project
Hitachi Smart Transformation Project １. Background to Start of Project ２. Project Outline ３. Examples of Activities
Slide 4: 1-1 Project Background
1-1 Project Background Contribute to the development of sustainable social infrastructure Accelerate Social Innovation Business Global Fusion Environment Leverage Hitachi's strengths to promote a global growth strategy Focus business resources on the Social Innovation Business Strengthen the busines
Slide 5: 1-2 Benchmarking Global Competitors
1-2 Benchmarking Global Competitors FY 2010 Unit: %; Figures in parentheses represent indexed figures with Hitachi equal to 100. Hitachi Ａ Ｂ Ｃ Ｄ Ｅ Ｆ Ｇ (Japanese) (Japanese) (non-Japanese) (non-Japanese) (non-Japanese) (non-Japanese) (non-Japanese) （100） （102） （96） （87） （94） （93） （72） （89） Cost of sa
Slide 6: 1-3 Issues Related to Cost Structure Reforms
1-3 Issues Related to Cost Structure Reforms Developing a global growth strategy for the Social Innovation Business High cost structure dependent on domestic resources Inefficiencies and redundancies of resources due to multiple businesses, large organizations, and optimization at the individual com
Slide 7: 2. Project Outline
Hitachi Smart Transformation Project １. Background to Start of Project ２. Project Outline ３. Examples of Activities
Slide 8: 2-1 Scope of Project
2-1 Scope of Project All All costs All areas organizations Production cost Japan Three cost areas China 5 business groups Direct materials cost Asia 40 business entities Indirect cost Approx. 900 India companies Operating expenses Americas Administrative operations Europe Global business strate
Slide 9: 2-2 Project Structure and External Coordination
2-2 Project Structure and External Coordination In-house companies, Hitachi Group Corporate Hitachi Group companies Project owner: President President Leader: CTrO* Communication Officer in Steering Committee at each level charge of project (Corporate officers: 9 individuals) Smart Transformation Of
Slide 10: 2-3 Three Cost Areas and Initiatives
2-3 Three Cost Areas and Initiatives Globalization of the total value chain Production Centralization of common processes globally Enhance global procurement Production cost Direct capabilities and Total cost materials expand global procurement sites approx. Strengthen engineered sourcing ¥9 tri
Slide 11: 2-4 Corporate Functions and Roles of In-House Companies
2-4 Corporate Functions and Roles of In-House Companies and Hitachi Group Companies In-house companies, Hitachi Group Corporate Hitachi Group companies Strategy Formulate and promote global Establish KPIs for entire Group growth strategy Establish global benchmarks Benchmarking by individual c
Slide 12: 2-5 Project Period and Targeted Cost Savings
2-5 Project Period and Targeted Cost Savings 2012 Mid-term Management Plan To the next mid-term management plan (Steadily reap the benefits of (Implement full-scale transformation) short-term initiatives) Production costs •Formulate concept •Preparation •Benchmarks Direct materials costs Indirect co
Slide 13: 3. Examples of Activities
Hitachi Smart Transformation Project １. Background to Start of Project ２. Project Outline ３. Examples of Activities
Slide 14: 3-1 Production Cost Reforms (1) Globalization
3-1 Production Cost Reforms (1) Globalization Chains of Value Total value chain Steps for Future Reform (Using initiatives at in-house planning Product development Product Approval Procurement Production Sales Overseas companies and Hitachi Group business companies as examples) models Cost planning
Slide 15: 3-2 Production Cost Reforms (2) Centralization
3-2 Production Cost Reforms (2) Centralization of Common Processes Globally Integrate assembly and procurement of parts and materials for small and medium-lot printed circuit boards used by individual businesses Example of assembled circuit board Japan Currently approx. 40 sites China and Asia Curre
Slide 16: 3-3 Direct Materials Cost Reforms (1)
3-3 Direct Materials Cost Reforms (1) Fundamentally Enhance Procurement Capabilities Expansion in scope and scale Upgrade and expand procurement sites Transfer functions to China and Asia Cultivate and strengthen Benefits of ties with local suppliers this project overseas Establish a cross-funct
Slide 17: 3-4 Direct Materials Costs (2) Global Procurement Capabilities
3-4 Direct Materials Costs (2) Enhance Global Procurement Capabilities Hitachi Group Corporate Created new post of Chief Executive Officer for Asia Pacific (April 2012) Transfer China/Asian region procurement functions to local operations Hold supplier meetings in 12 cities worldwide Meetings comp
Slide 18: 3-5 Direct Materials Costs (3) Procurement Sites
3-5 Direct Materials Costs (3) Upgrade and Expand Global Procurement Sites Upgraded and expanded corporate procurement sites: from 15 cities to 25 cities (end of the first half of FY 2012) Existing procurement sites Increase allocation of engineering personnel New procurement sites Europe Total 200
Slide 19: 3-6 Direct Materials Costs (4) Engineered Sourcing
3-6 Direct Materials Costs (4) Enhance Engineered Sourcing Hitachi Group Corporate “Less engineering" to mitigate the risk of high resource prices Launch cross-Group, cross-functional project Allocate engineering resources from the Research & Development Group, MONOZUKURI Strategy Division and VEC P
Slide 20: 3-7 Indirect Costs (1) Reform
3-7 Indirect Costs (1) Reform In-direct Costs by Demonstrating the Group's Collective Capabilities Target areas Details Main Projects - Centralize the Group's common operating - Cost reduction projects expenses in specialized departments by cost item Operating expenses Make Centralize Centralize - L
Slide 21: 3-8 Indirect Costs (2) Expand Centralization Target Areas
3-8 Indirect Costs (2) Expand centralization target areas of Group's common operating expenses Newly established Step 1 Step 2 Step 3 “Integrated Logistics Center” Smart Transformation (October, 2011) From December 2003-2009 Project 2009 From April 2011 Machinery and regions Target Japan and buildin
Slide 22: 3-9 Indirect Costs (3) Logistics, Asset and Leasing Cost
3-9 Indirect Costs (3) Reform Logistics Cost, Asset and Leasing Cost Logistics Costs Establish Integrated Logistics Center Integrate activities with and utilize the expertise of Hitachi Transport System, Ltd. Integrate management of separate logistics for each company Maximize the use of the Group's
Slide 23: 3-10 Indirect Costs (4) Centralize Common Operations
3-10 Indirect Costs (4) Centralize and standardize common operations Group centralization and establishment of global shared services (Includes shifting operations offshore) Operational reform Establish at an early stage based on examples (Began in fiscal 2012, successive expansion projecting compl
Slide 24: 3-11 Develop Global IT Platform
3-11 Develop Global IT Platform Opened Global IT Center in the U.S. to provide IT support to 560 companies globally (April, 2011) Current global IT services Planned Model Standardize the services provided by the six regional headquarters Independent services provided by Establish an IT platform swif
Slide 25: 3-12 Conclusion
3-12 Conclusion Transform to a cost structure that can prevail globally Shift the focus of technologies to creating high-quality products at low cost © Hitachi, Ltd. 2012. All rights reserved. 25
Slide 26: END
END Hitachi Smart Transformation Project March 27, 2012 Makoto Ebata Senior Vice President and Executive Officer Chief Transformation Officer (CTrO) Hitachi, Ltd.
Slide 27: HITACHI
HITACHI Inspire the Next