INTEGRATED
REPORT
2024
1
Since 2012, OMRON has been publishing the Integrated Report
annually to promote constructive dialogue with all stakeholders.
This year's Integrated Report (hereinafter referred to as “this
issue”) is the 13th. With the theme, “All for Creating Customer
Value,” we aim to show the path to value creation under the
long-term vision Shaping the Future 2030 (SF2030). In editing,
we paid particular attention to highlighting “management issues
and the value creation story,” which are the aspects of today’s
OMRON of most interest to stakeholders, and to responding to
their “expectations for the integrated report.”
To highlight “management issues and the value creation story,”
we emphasized three items throughout the report. Firstly,
Structural Reform Program NEXT 2025. We take a deep dive
into management’s intention to undertake companywide
structural reforms and the key issues involved. Secondly, a
growth strategy from a medium- to long-term perspective that
looks beyond structural reforms. As in this Integrated Reports,
this one is structured according to the five material sustainability
issues so that our value creation story synchronizes social
sustainability with OMRON’s sustainability. Thirdly, collaboration
with JMDC Inc., which became an OMRON Group company in
fiscal 2023. We cover from multiple perspectives the
collaboration and synergies with JMDC Inc., which are key to
the evolution of the business model toward the realization of
SF2030.
We also address three points with regard to “expectations for
the integrated report.”
Firstly, the chapter structure has been revised. In Integrated
Report 2023, we included a chapter on “Sustainability” for the
first time in line with the requirement to disclose sustainability
information in an annual securities report from fiscal 2023
onward. However, we changed the pagination, having
concluded that a chapter structure based on the framework of
OMRON’s five material sustainability issues would more
accurately express OMRON’s initiatives and value creation story,
which fully integrates our business strategy and sustainability
strategy. Secondly, we sought to further clarify the connectivity
between financial and non-financial information. In fiscal 2023,
we verified the hypothesis of a correlation between the
performance indicators of human resource policies, which
corresponds to “S” of ESG, and financial indicators. This year,
the scope of the verification was expanded to cover “E.” We also
took on the challenge of impact-weighted accounting, which
translates the impact of OMRON's environmental, product, and
employment initiatives on society into monetary values. In this
issue, we report on the progress to date. Thirdly, reduction in
the number of pages. Having reviewed the content in light of
feedback from stakeholders, we were able to reduce the
number of pages by about 13% compared with last year’s
report.
In the production of this issue, the Board of Directors, the Audit
& Supervisory Board, and executive divisions worked closely
together and engaged in a series of discussions. Regarding key
non-financial indicators, we obtained assurances from
independent third parties to enhance reliability. I hereby state
that I, as the Publisher and Editor-in-Chief of the Integrated
Report, certify that the production process for this issue was
legitimate and honest, and that the information contained
herein is accurate.
We will continue according great value to our dialogue with
you. It is our earnest desire that this issue will facilitate your
deeper understanding of OMRON.
Managing Executive Officer
Senior General Manager, Global Corporate Communication &
Engagement HQ and Sustainability Executive
Tsutomu Igaki
Editorial Policy: OMRON’s Integrated Report aims to create a
virtuous cycle of “fostering mutual understanding” and
“enhancing our management” through dialogue with all
stakeholders. In editing, we refer to the “International
Integrated Reporting Framework” of the International Financial
Reporting Standards Foundation (IFRS), the “Guidance for
Collaborative Value Creation 2.0” of the Ministry of Economy,
Trade and Industry (METI), the Guidelines for Governance of
Intellectual Property and Intangible Assets Ver. 2.0 of the
Cabinet Office, and the resources of The World Intellectual
Capital/Assets Initiative (WICI). We are striving to strengthen
communication of OMRON’s value creation story in an
integrated manner encompassing all corporate reporting,
centering on the Integrated Report, while also endeavoring to
enhance the quality of dialogue.
Covered Organizations: As a general rule, this report covers
165 companies in the OMRON Group, consisting of OMRON
Corporation, 156 subsidiaries, and 9 affiliates (as of March 31,
2024).
Covered Period: Fiscal 2023 (April 1, 2023 through March 31,
2024). However, this report includes some disclosure items
and business activities that were initiated after April 2024.
Caution Concerning Performance Forecasts Statements:
Performance forecasts and other forward-looking statements
are based on information available at the time, as well as on
certain assumptions deemed reasonable by OMRON Group
management. Actual results may vary materially depending on
a variety of factors. See “Outlook for Fiscal 2024” when using
the projection of results and conditions of assumptions for the
results.
About Integrated Report 2024
OMRON INTEGRATED REPORT 2024
2
About the Cover
The brand concept for realization of SF2030 is “Sparks
of Creation.”
The key to achieving SF2030 lies in the challenge
each one of us at OMRON will take on. Each
employee creates innovation driven by social needs,
thus putting the OMRON Principles into practice to
create a sustainable Earth and society. “Sparks of
Creation” expresses that will and the creativity
unleashed.
The cover art of this issue is inspired by the process
whereby OMRON is creating and proposing a new
tomorrow.
VISION
4
The OMRON Principles
5
OMRON’s Core Technologies
6
SINIC Theory: Predicting the Future Through the
Interrelationships of Science, Technology, and
Society
7
History of Innovation
9
Long-term Vision“Shaping the Future 2030”
11
Value Creation Model
13
Progress of and Changes to the Medium-term
Management Plan “SF 1st Stage”
15
Structural Reform Program NEXT 2025
17
OMRON’s Business and Fiscal 2023 Results
18
Outlook for Fiscal 2024
20
CEO Message
24
CFO Message
GOVERNANCE
80
Interview with the Chairman of the Board
82
Interview with the Outside Directors
88
Dialogue between Audit & Supervisory Board
Members
94
Corporate Governance
104
Risk Management
110
Directors, Audit & Supervisory Board
Members, and Executive Officers
CORPORATE INFORMATION
114
Initiatives to Increase Visibility of Non-financial
Information and Monetize Impacts
117
Evaluation of OMRON’s Sustainability by External
Parties
118
Financial and Non-Financial Information
124
Corporate Information and More
STRATEGY & BUSINESS
28
Industrial Automation Business (IAB)
30
SF2030 Topics
“Realization of a Digital Society”
32
Healthcare Business (HCB)
34
SF2030 Topics
“Extension of Healthy Life Expectancy”
35
Social Systems, Solutions and Service Business
(SSB)
37
Device & Module Solutions Business (DMB)
39
Data Solution Business (DSB)
41
Discussion: OMRON x JMDC toward Evolution
INNOVATION & TECHNOLOGY
47
CTO Message
50
Innovation Exploring Initiative HQ (IXI)
52
Technology and Intellectual Property HQ
ENVIRONMENT
63
Achieving Decarbonization and Lower
Environmental Impact
69
SF2030 Topics
“Achievement of Carbon Neutrality”
HUMAN RIGHTS
74
Respecting Human Rights in the Value Chain
PEOPLE
58
CHRO Message
Contents
OMRON INTEGRATED REPORT 2024
3
VISION
4
OMRON’s history began in 1933 with the passion and ambition
of Kazuma Tateishi.Over the 90 years since then, OMRON has
continued to take on the challenge of anticipating future
social needs and has grown by creating various innovations
as a pioneer.
The foundation of this centripetal force and the driving force
for OMRON’s development is the Corporate Mission, “to improve
lives and contribute to a better society,” established by our
founder in 1959.
The founder incorporated two aspirations he had into the
Corporate Mission. One is the conviction that “a business
should create value for society through its key practices.”
The other is the “to take the initiative as pioneer.” The establishment
of the Corporate Mission created a sense of unity throughout
the company, which led to subsequent dramatic growth.
Those of us working at OMRON today inherit the spirit of
the Corporate Mission. The OMRON Principles were established
in 1990, building on the Corporate Mission. Subsequently,
following revisions in 1998 and 2006 to meet the changing
times, the current OMRON Principles were established in 2015.
At the same time, the Management Philosophy was introduced
that indicates OMRON’s management stance and approach
to sustainable enhancement of corporate value, putting the
corporate principles into practice. Furthermore, practice of
the corporate principles has been included in the articles of
incorporation since fiscal 2022 in order to clarify that we will
continue to put our corporate principles into practice, always
striving to contribute to the development of society while
enhancing corporate value.
OMRON Principles
Management Philosophy
• We uphold a long-term vision and solve social issues through
our business.
• We operate as a truly global company through our fair and
transparent management practices.
• We cultivate strong relationships with all of our stakeholders
through responsible engagement.
We believe a business should create value for society
through its key practices.
We are committed to sustainably increasing our long-term
value by putting Our Mission and Values into practice.
Articles of Incorporation
Article 2
In the spirit of Our Mission, which is “to improve lives and
contribute to a better society,”
the Company will put our corporate principles into practice,
contribute to the
development of society through its business, and strive to
increase its value
The OMRON Principles
The OMRON Principles
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OMRON INTEGRATED REPORT 2024
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“Sensing & Control + Think” represents OMRON’s core proprietary
technologies. To create value that ushers in each new era,
OMRON constantly evolves these unique technologies.
“Sensing & Control + Think” represents “Sensing technology”
to extract necessary information from the field, “+Think” to
analyze the accumulated field data using human knowledge
and wisdom, and “Control technology” to provide solutions
to the field based on such information. We have evolved
each of these core technologies in our own unique way, as
we combine them for social implementation in the form of
products and services. Going forward, we will continue
evolving our core technologies, while utilizing disruptive
technologies that may arise along the way, to keep creating
new value.
In order to achieve the goals of SF2030, namely, achievement
of carbon neutrality, realization of a digital society, and extension
of healthy life expectancy, OMRON is focusing its technological
development efforts on robotics, sensing, power electronics,
and the AI/data analysis technologies that support these
technologies as “Sensing & Control + Think” evolves.
OMRON will continue evolving its core proprietary technologies
to continue to create new value that will usher in a new era.
OMRON’s Core Technologies, “Sensing & Control + Think”
Core Technology
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Past
Future
Ind
stor
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Han
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Ind
ustr
ializ
atio
n
Need
Seed
Innovation
Impetus
Our founder, Kazuma Tateishi, believed that solving social
issues through business to create a better society required
the ability to anticipate future social needs. He believed that
a company needed a compass to help predict the future.
As our compass, Mr. Tateishi formulated the SINIC predictive
theory, which projects the future from the cycle of interrelationships
between Science, Technology, and Society. OMRON first
announced this predictive theory to the world at the International
Future Research World Congress in 1970. Since then, the SINIC
Theory has been our compass for projecting into the future.
The basic philosophy behind the SINIC Theory is that the
interrelationships among science, technology, and society lead
to social change. Let us use the Cybernation Society as an example.
We can see how the rise of cybernetics, computer science,
and other synthetic sciences in the 1940s became the seeds of
electronic control technologies, programming, and other
technologies. These technologies gave rise to the PC and the
internet, leading to the advent of the Cybernation Society.
Society demanded more data, along with more accurate and
rapid data analysis. These demands forced us to produce CPUs
and GPUs with faster processing power, make advancements
in deep learning and other artificial intelligence technologies,
and reach higher levels of sophistication in neuroscience and
cognitive science.
The current Optimization Society is in a transitional period
characterized by a paradigm shift from the Industrial Society
to the Autonomous Society. At a time when society is undergoing
significant change and the future seems uncertain, we openly
share the SINIC theory and promote its use as social knowledge
for future creation through discussions with various people.
* SINIC: Seed-Innovation to Need-Impetus Cyclic Evolution
Science
Society
Technology
Seed
Need
Coexistence-
oriented
desires of
humans
Innovation
Impetus
Potential
Aspirations and
ethics
Exploring
R&D
Participation
SINIC* Theory:
Predicting the Future Through the Interrelationships of Science, Technology, and Society
SINIC Theory
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1933
1959
1970
1990
1998
1934
1973
1994
1933
1971
1991
1972
1943
1948
1974
1960
1987
1963
1988
1964
1966
1989
1967
1955
1980
1995
─ Production of X-ray timers
started
─ World’s first
Online automated cash dispenser developed
─
Yokohama Laboratory and Kumamoto
Laboratory established
─ Fuzzy logic-based blood pressure
monitor developed
─ OMRON Taiyo Co., Ltd. established
─ General-purpose electromagnetic
relay developed
─ Programable controller developed
─ OMRON’s first blood pressure
monitor debuted
─ Japan's first Microswitch developed
─ Company name changed to
Tateisi Electronics Co.
─ Tateisi Institute of Life Science
established
─ Regional controlling company for Greater
China established in China
─ Power conditioner for photovoltaic power
generation systems launched
─ OMRON’S first digital thermometer
for home use developed
─ Industry’s first Vision sensor developed
─ Distance warning system developed
─ Facial image sensing technology
OKAO VISION developed
─ World’s first Non-contact switch developed
─ World’s first
Fuzzy logic controller developed
─ Japan's first
Meal ticket vending machine
developed
─ Regional controlling company for Europe
established in the Netherlands
─ Regional controlling company for the
Asia-Pacific region established in Singapore
─ World’s first
Automated traffic signal
developed
─ MY mechanical relay developed
─ Regional controlling company for North
America established in the U.S.
─ World’s first
Unmanned train station
system realized
1990 ─ Long-term vision “Golden ’90s Plan”
launched (1990-2000)
─ Referred to as “The first year of Automation.”
Full-scale launch of the automation business
Tateisi Electric
Manufacturing Co.
established
Our Mission
established
SINIC Theory
announced
Company name
changed to OMRON
OMRON Principles
established
OMRON Principles
revised (first revision)
History of Innovation
Automation Society [1945-74]
Cybernation Society [1974-2005]
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History of Innovation
Optimization Society [2005-]
1999
2000
2019
2004
2014
2015
2005
2016
2007
2009
2023
2017
─ Japan's first
Digital fiber sensor developed
─ Japan's first Mobility as a Service (MaaS)
application combining private vehicle-for-hire by
residents and public transportation such as bus
and taxi started
─
Sold Automotive Electronic Components Business
─ World’s first SCARA robot
with predictive maintenance
functions developed
─ Environmental sensor that measures temperature,
humidity, air pressure, illuminance, ultraviolet rays,
sound pressure, and acceleration developed
─ World’s first On-vehicle sensor using artificial
intelligence (AI) developed
2003
2020
─ Global R&D hub, Keihanna Technology
Innovation Center, established
─ OMRON HEALTHCARE Co., Ltd. established
─ OMRON RELAY & DEVICES Co., Ltd. established
─ World’s first
Integrated controller launched
─ Blood pressure monitor with
electrocardiograph launched
in the U.S.
─ Touchless hybrid elevator switch
launched
─ Fully automatic Spot Arm blood
pressure monitor
─ OMRON VENTURES CO., LTD. established
─ OMRON R&D Collaborative Innovation
Center (Shanghai) opened
─ World’s first
Real-color three-dimensional
vision sensor developed
─ World’s first
“ene-brain” CO2 visualization system launched,
system capable of automatically analyzing
areas for potential energy conservation
─ Data Solution Business HQ established
─ CT-type automatic X-ray inspection
systems that enable high-speed 3D
inspection developed
─ Automated ticket gate system that allows the
use of both QR Code tickets and IC card
tickets began operation
─ AI-incorporated machine automation controller
developed
─ Smare® self-check-in terminals launched
2006
2015
2022
2024
OMRON Principles
revised (second revision)
OMRON Principles
revised (third revision)
2001 ─ Long-term vision “Grand Design 2010”
launched (2001-2010)
2011 ─ Long-term vision “Value Generation 2020”
launched (2011-2020)
─ Long-term vision“Shaping the Future 2030”
launched (2022-2030)
─ Structural Reform Program NEXT 2025
launched (April 1, 2024-September 30, 2025)
Internal company
system introduced
2010
2018
─ OMRON SWITCH & DEVICES Co., Ltd. established
─ OMRON Automotive Electronics Co., Ltd.
established
─ OMRON SOCIAL SOLUTIONS Co., Ltd. established
─ Industry’s first Power conditioner equipped with
anti-islanding control technology (AICOT®) launched
─ Innovation Exploring Initiative HQ (IXI) established
─ World’s first High-performance smart camera
with multi-color light launched
─ World’s first Wearable blood pressure
monitor developed
─ DriveKarte® driver management
service for safe driving launched
2022
The corporate principles incorporated
in the articles of incorporation
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9
In light of OMRON’s fundamental purpose and the changes
in society toward the year 2030, OMRON launched a long-
term vision, “Shaping the Future 2030 (SF2030),” in fiscal
2022. SF2030 expresses OMRON’s desire for all OMRON
employees to put the OMRON Principles into practice as
they work together with stakeholders to create a sustainable
society by applying OMRON’s core technologies, “Sensing
& Control + Think.”
OMRON’s fundamental purpose
OMRON’s fundamental purpose is “to create social value
through business and continue to contribute to society.”
This is OMRON Principles in action and we will remain true
to those principles regardless of changes in society.
Society in 2030 Envisioned by OMRON
We have attained material wealth through an “Industrial
Society” that values and pursues efficiency and productivity.
However, people’s sense of value is shifting dramatically
from material wealth to spiritual wealth. For example,
people’s awareness of environmental issues and the values
shaping their attitude to work have changed dramatically.
As well as choosing sustainable products and lifestyles,
people are increasingly rethinking their work-life balance as
they seek work that allows them to demonstrate their
abilities. OMRON believes that the transition to a new social
and economic system toward 2030 will inevitably lead to
clashes between old and new values, strain the current
social and economic systems, and lead to the emergence of
new social issues.
OMRON will continue to create social value by resolving
these social issues and contribute to the realization of a
society where individual fulfillment is compatible with the
society’s affluence.
Social Value to be Created by OMRON
In formulating the long-term vision, OMRON views the
coming decade, in which existing social issues will become
more pressing and new ones will arise, as a great
opportunity to create new markets and businesses. Under
SF2030, in order to be sure to seize this opportunity, we
have identified three priority change factors: “The Aging of
Population,” “Climate Change,” and “Increasing Economic
Disparities among Individuals.” Based on these three
change factors, we have identified three social issues that
OMRON should address, namely, “Achievement of Carbon
Neutrality,” “Realization of a Digital Society,” and “Extension
of Healthy Life Expectancy.” We selected these three issues
in view of their huge impact on society and from the
perspective of leveraging OMRON’s strengths in
automation, our customer assets, and business assets.
For the achievement of carbon neutrality, we will contribute
to the creation of energy systems that strike a balance
between safety, security, convenience, and the natural
environment. For the realization of a digital society, we will
contribute to manufacturing and infrastructure that will free
people from all restrictions, regardless of age or wealth, and
realize an enjoyable, creative, and sustainable society. And
for the extension of healthy life expectancy, we are tackling
the problems of the aging society by building healthcare
systems that enable people to lead healthy, prosperous, and
independent lives.
To address these three social issues, we revised the OMRON
Group’s business domains and set four domains, namely,
“Industrial Automation,” “Healthcare Solutions,” “Social
Solutions,” and “Device & Module Solutions,” defining social
value corresponding to these domains. Through Industrial
Automation, we aim to contribute to the advancement of
manufacturing that will support a sustainable society.
Through Healthcare Solutions, we aim to contribute to the
achievement of “Zero Events” for cardiovascular diseases.
Through Social Solutions, we aim to contribute to the spread
and efficient use of renewable energy and the sustainability
of the infrastructure supporting a digital society. In addition,
through Device & Module Solutions, we aim to contribute to
the spread of new energy and high-speed communications.
Direction of OMRON’s Evolution
OMRON is changing the way it perceives value creation,
shifting its emphasis from “products” to “products and
services” in order to create social value. We pursue
realization of value not only through products and other
goods but also through combinations of products and
services that help solve the fundamental problems
confronting society. When society and markets are at a
turning point, intrinsic value is not limited to products but
can be in services, such as consulting services, operation
support services, and upgrading services of i-BELT in the
Industrial Automation Business. In addition, we will promote
co-creation with partners, rather than relying exclusively on
our own resources, to enhance the speed of execution and
feasibility. To deliver value through the combination of
Long-term Vision “Shaping the Future 2030”
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products and services and co-creation with partners,
establishment of a data platform to serve as a base is
necessary. We will develop a data platform that links data
generated by OMRON devices and services with our
partners’ data and leverage the data in development of new
solutions through the combination of products and services.
Based on this concept, the OMRON Group will transform its
business structure over the medium to long term,
transitioning to a revenue structure that includes a recurring
service model in addition to a business model centering on
products.
Material Sustainability Issues
Under SF2030, our aim is to maximize corporate value by
creating social value and economic value through business.
In order to remain true to this purpose, material
sustainability issues are fully reflected in SF2030 and the
medium-term management plan “SF 1st Stage.” In
identifying material sustainability issues, we adopted three
viewpoints: “the OMRON Principles and fundamental
purpose,” “backcasting from a society envisioned for 2030
and beyond,” and “calls on companies to contribute to
environmental and social sustainability.” Five material issues
were identified as a result of a series of management
discussions, reflecting suggestions gained through internal
discussion and dialogues with external experts.
(See Figure 1 ).
*1 Scope 1 and 2: Direct and indirect GHG emissions from the company
*2 Scope 3, Category 11: Scope 3 corresponds to GHG emissions from the company’s value chain. Category 11 of Scope 3 corresponds to emissions from use of manufactured/sold products,services, etc.
Resolving Social Issues through Our Business
Creating social value and driving OMRON’s sustainable
growth by resolving social issues through our business
1
Maximizing the Capability to Innovate Driven
by Social Needs
Evolving business models, endowing OMRON with the
competitiveness required for achieving sustainable growth,
and expanding new business generation efforts
2
Generating Diverse Talent Taking on the
Challenge of Value Creation
Evolving human resources management to bring out the
capabilities and skills of OMRON’s diverse talent, who will
be the source of OMRON’s sustainable growth
3
Achieving Decarbonization and Lower
Environmental Impact
By viewing climate change from the two aspects of
opportunities and risks, practicing corporate social
responsibility and building further competitive advantage
4
Respecting Human Rights in the Value Chain
As part of our corporate social responsibility, exerting our
influence for the respect of human rights for workers in the
value chain and at OMRON
5
The state of contributing to the sustainable
development of society by resolving the social issues
tackled Group-wide, namely, achievement of carbon
neutrality, realization of a digital society, and extension
of healthy life expectancy from the social change factors
focused on in SF2030: an aging population, climate
change, and economic disparity among individuals
The state of continuously generating new businesses by
demonstrating our capability to innovate driven by
social needs in both existing and new business domains,
through actions such as evolving essential core
technology development and incorporating it into
business models
The state of bringing diverse talent together where
everyone can succeed, regardless of nationality, gender,
or work style, where OMRON provides opportunities for
its diverse talent to grow and evolves its human
resources management to maximize their capabilities
and skills
The state of building further competitive advantage
while solving social issues through reducing greenhouse
gas (GHG) emissions in the value chain and establishing
a resource recycling model
• Scope 1 and 2
*1 : 65% cut vs. FY2016
• Scope 3, Category 11
*2 : 18% cut vs. FY2016
In line with the UN Guiding Principles on Business and
Human Rights, the state of exerting our in uence for the
respect of human rights for workers not only at OMRON,
but also in the value chain, and establishing a culture
and system that does not permit or cause human rights
violations
Material Sustainability Issues under SF2030
SF2030 Goals (ideal configuration)
Figure 1
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OMRON INTEGRATED REPORT 2024
11
In
n
o
v
at
io
n
D
ri
v
e
n
b
y
S
o
ci
al
N
e
e
d
s
C
o
m
m
er
ci
al
iz
at
io
n
Business Creation Process at OMRON
Management
Capital
Sensing & Control
+ Think
Open Innovation
Develop Products
and Services
Launch and
Monetize Businesses
1
2
3
4
5
Identify Social
Issues
Near-Future Design
Core
Technology
Evolution and
Business Model
Design
The OMRON Principles
Shareholders’ equity JPY 786.7 billion
(As of March 31, 2024)
Operating cash flow JPY 250.0 billion
(Plan under SF 1st Stage)
Financial
Capital
Manufactured
Capital
Intellectual
Capital
Human
Capital
Natural
Capital
Social and
Relationship
Capital
Input
Output
*Cumulative investment by OMRON VENTURES CO., LTD. only
Rating AA- (R&I)
(As of March 31, 2023)
Growth Investment JPY 200.0 billion
(including M&A)
(Plan under SF 1st Stage)
Number of production sites
worldwide 26 sites
(As of March 31, 2024)
Capital expenditures
JPY 130.0 billion
(Plan under SF 1st Stage)
Number of patents held
13,334 patents
(As of March 31, 2024)
R&D expenses
JPY 165.0 billion
(Plan under SF 1st Stage)
Number of employees
28,450 employees
(As of March 31, 2024)
Investment in human resources
development JPY 6.0 billion
(Plan under SF 1st Stage)
Energy consumption:
225,418 MWh
(As of March 31, 2024)
Water resource intake:
1,000 km3
(As of March 31, 2024)
Investment in startups: Invested in 25* startups (cumulative total)
(As of March 31, 2024)
Number of Countries where OMRON
products are sold: Over 130 Countries
(As of March 31, 2024)
Brand value (converted to financial value)
USD1.5 billion
(Plan under SF 1st Stage)
Demographic
Trends
Limited
Resources
Technological
Innovation
Value Creation Model
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1) Resolving Social
Issues through
Our Business
Digital, environmental mobility (NEV),
food and daily goods, logistics, and medical
(+ robotics and service business)
Industrial Automation
Industrial Automation Business (IAB)
Cardiovascular, respiratory, pain management,
remote patient monitoring services
Healthcare Solutions
Healthcare Business (HCB)
(Residential / industry / mobility)
energy management and services,
network protection
Social Solutions
Social Systems, Solutions and Service
Business (SSB)
DC equipment, high-frequency devices,
Device & Module Solutions
Device & Module Solutions Business (DMB)
Data solutions
Data solution Business (DSB)
Creating new businesses
Innovation Exploring Initiative HQ (IXI)
Technology and Intellectual Property HQ
2) Maximizing the
Capability to Innovate
Driven by Social Needs
3) Generating diverse
talent taking on the
challenge of value creation
4) Achieving
de-carbonization and lower
environmental impact
5) Respecting Human
Rights in the Value Chain
• Conduct human rights due diligence in line with the UNGP
• Establish human rights redress mechanisms into the value chain globally
• Scope 1 and 2: 68% cut vs. FY2016
• Scope 2: Achieve Carbon Zero at all 76 sites in Japan
• Scope 3, Category 11: Implement energy-saving designs for new products
• Implement business model transformation, environmentally friendly design, collection and
recycling, and sustainable procurement in response to transition to a circular economy
• Ratio of non-Japanese in key managerial positions overseas: 80% or more
• Ratio of women in managerial roles: 17.4% or higher (OMRON Group worldwide)
• Realize employment of persons with disabilities at 26 overseas sites and maintain the ratio of
employees with disabilities at 3% in Japan
• VOICE SEI: 70P or higher
Output
Social Value
Focus Businesses
Domains
Material Sustainability Issues
Evolve the OMRON Group’s overall business model through data
solutions and create growth businesses that help solve social issues
Outcome
Data solution business integrating on-site data
owned by four business companies with JMDC’s
capabilities
Input
Establishment of manufacturing sites where both harmony with the
global environment and worker satisfaction are achieved and that
will support a sustainable future
Realization of healthier and more comfortable lives for people
around the world, including extension of healthy life expectancy
and reduction of medical expenditures
Realization of a better society in which people around the world
can continue to live in a safer, more secure and comfortable society
by expanding renewable energy and providing people-friendly
next-generation systems
Contribution to the improvement of human life on the planet and
the development of society through the spread of new energy and
high-speed communications
Each employee practices the resolving of social issues through
business
Contribution to the creation of a sustainable society by establishing
a system to ensure the effectiveness of initiatives for “reducing
greenhouse gas (GHG) emissions,” “transitioning to a circular
economy,” and “coexisting with nature”
Mitigate human rights risks throughout the value chain. Ensure that a culture and system are
in place that do not permit or cause human rights violations
Through pursuit of “automation to empower people” to resolve the three
social issues, realization of the Autonomous Society that
embodies our founder’s management philosophy: “People should
leave what machines can do to machines and enjoy activities in
more creative areas.”
Development of core technologies in 4 areas of
technological focus: Robotics, Sensing, Power
Electronics, and AI and Data Analysis
Value Creation Model
P29
P33
P36
P38
P40
P52
P58
P63
P74
P50
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Having positioned fiscal 2022 to fiscal 2024 as the
“transformation acceleration phase” to accelerate the shift to
value creation and sustainable growth in response to social
issues, in order to achieve the vision of SF2030, we aimed to
achieve strong growth by seizing growth opportunities
arising from changes in the social structure and by
leveraging the competitiveness we have cultivated to date.
In fiscal 2023, however, the business environment
deteriorated more than expected, owing to the slowdown of
the Chinese economy and supply chain disruptions. Since
OMRON was unable to respond to this rapid change
because of overdependence on certain businesses and
areas as OMRON’s growth drivers, the financial performance
deteriorated significantly. In light of these circumstances, we
withdrew SF 1st Stage, which was originally scheduled to
run through fiscal 2024, and designated April 1, 2024 to
September 30, 2025 as a structural reform period for
implementing the Structural Reform Program NEXT 2025.
Plans call for the next medium-term management plan “SF
2nd Stage” to run from fiscal 2026 to fiscal 2030.
Under SF 1st Stage, we pursued “taking on the challenge of
value creation by accelerating transformation” and set three
Group strategies to achieve this goal. The first Group
strategy is transformation of business. Specifically, we
promoted evolution of four core businesses (Industrial
Automation Business, Healthcare Business, Social Systems,
Solutions and Service Business, Device & Module Solutions
Business), expansion of customer asset-type service
businesses, and creation of new businesses sparked by
social issues.
To evolve four core businesses, we identified the growth
field in each of the core businesses, set focus domains, and
aimed at driving sales growth by achieving new value
creation. The second Group strategy is transformation of
corporate management and organizational capabilities. In
order to keep creating value while adapting to change in
the business environment, we implemented initiatives for
acceleration of diversity and inclusion, data-driven
enterprise operations through digital transformation (DX),
and enhancement of supply chain resilience.
The third Group strategy is strengthening of sustainability
initiatives. Specifically, we pursued reduction of greenhouse
gas (GHG) emissions for decarbonization and minimizing
environmental impacts, and strove to ensure thorough
respect for human rights throughout the value chain. Based
on the above strategies, under the SF 1st Stage, we have set
financial targets and non-financial targets that integrate
business strategies with sustainability. In fiscal 2022, despite
significant impacts, such as the lockdowns in Shanghai,
rising inflation worldwide, and tight supply of parts and
materials, both net sales and operating income set new
records and return on invested capital (ROIC) and return on
equity (ROE) both exceeded the 10% level. This was mainly
due to the rapid ramp-up of supply capacity to respond to
the heavy order backlog and the ongoing companywide
efforts to improve value added ratios through price
optimization and other measures. In fiscal 2023, however,
financial performance deteriorated significantly and
indicators we set as financial targets also significantly
declined compared to fiscal 2022. On the other hand, the
initiatives for non-financial targets continue to be generally
favorable. GHG emissions achieved the initial target, and the
progress of human rights initiatives was as planned. With
these initiatives recognized, we continued to be included in
the Dow Jones Sustainability World Index (DJSI World) for
fiscal 2023.
SF 1st Stage Financial Targets and Progress
Financial Targets
FY2022 (Results)
FY2023 (Results)
FY2024 (Plan)
[Reference] FY2024 (Initial Targets)
Net Sales
JPY 876.1 billion
JPY 818.8 billion
JPY 825.0 billion
JPY 930.0 billion
Operating Income
JPY 100.7 billion
JPY 34.3 billion
JPY 49.0 billion
JPY 120.0 billion
ROIC
10.40%
1.0%
around 1%
>10%
ROE
10.60%
1.1%
around 1%
>10%
EPS
JPY 372
JPY 41
JPY 43
>JPY 400
Progress of and Changes to the Medium-term Management Plan “SF 1st Stage”
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SF 1st Stage Strategic Objectives and Progress
SF 1st Stage Non-financial Targets and Progress
Notes:
1. Figures presented for the non-financial targets are the initial SF 1st Stage targets set in fiscal 2022.
2. Net sales of focus domains that lead to “achievement of carbon neutrality,” “realization of a digital
society,” and “extension of healthy life expectancy.”
3. GHG: Greenhouse gas
4. Regions: Americas, Europe, Asia, Greater China, South Korea, and Japan
5. Aggregated figure for the Company and its consolidated subsidiaries as of April 20, 2023, including OMRON KIRIN TECHNO-SYSTEM CO., LTD., in which investment was completed on April 3, 2023.
6. Figures for fiscal 2022 GHG emissions reflect the temporary impact of the Shanghai lockdowns, etc.
7. Aggregated figure for the Company and its consolidated subsidiaries as of April 20, 2024
8. Non-financial targets (8) to (10) were decided by employee vote.
9. Figures with * include JMDC Inc.
Non-financial targets (Note 1)
FY2022 (Results)
FY2023 (Results)
1
Increase sustainability-related sales (Note 2), an indicator of contributions to the resolution of the three social
issues,by 45% vs. FY2021
Sustainability Sales: JPY 417.8 billion
+28% (vs. FY2021)
Sustainability Sales: JPY 433.8 billion
+33%* (vs. FY2021)
2
Increase the ratio of women in managerial roles to 18% or higher (OMRON Group worldwide)
16.6% (Note 5)
19.1% (Note 7)*
3
Realize employment of persons with disabilities at 28 overseas sites and maintain the ratio of employees with
disabilities at 3% in Japan
Overseas: 27 sites, Japan: 3.1%
Overseas: 28 sites, Japan: 3.5%
4
Reduce Scope 1 & 2 GHG (Note 3) emissions by 53% vs. FY2016
62% reduction (Note 6) (vs. FY2016)
68% reduction (vs. FY2016)
5
Achieve Carbon Zero at all 76 sites in Japan
10 sites
39 sites (cumulative)
6
Conduct human rights due diligence in line with the UNGP and build a human rights remedy mechanism into the
value chain
- Identified human rights issues
- Developed and piloted a primary
human rights redress mechanism
- Formulated measures to resolve identified
human rights issues
- Operated and monitored redress mechanism
7
Continue implementing sustainability initiatives steadily to maintain our listing in the Dow Jones Sustainability
World Index (DJSI World)
Selected for DJSI World
Selected for DJSI World
8
100% participation by global managers in management training to effectively capitalize on the capabilities of
diverse human resources
46%
70%
9
In all regions, introduce a training program covering the basic knowledge required for DX: statistics, data
analytics, AI and others
Began pilot operation of a training
program in Europe
Began training in all areas except Japan
10
Make full use of digital tools to reduce use of paper
44% reduction (vs. FY2019)
54% reduction (vs. FY2019)
+1
Top management of each region (Note 4) declares their commitment to their host community in accordance with the
OMRON Sustainability Policy
Declared in each region and
continued implementation
Declared in each region and continued
implementation
Industrial Automation Business (IAB)
Healthcare Business (HCB)
Number of customers using innovative-Automation
4315 companies
Global blood pressure
monitor sales
44.69million units
(Target: 5000 companies)
(Target: 94million units)
(Target: 60 million units)
(Target: 170 million units)
(Target: 600000users)
Number of telemedicine
service users
165000users
(Target: 3 or more businesses)
Expanding Customer* Asset-type Service Businesses
Creating New Businesses
Ratio of service business sales
10.3%
New businesses created
31
Social Systems, Solutions and Service Business (SSB)
Device & Module Solutions Business (DMB)
Connected energy management devices
40000 units
(Target: 50,000 units)
Sales volume for products contributing to the spread
of new energy and high-speed communications
Products for DC equipment
30million units
Products for high-frequency devices
120million units
Diversity & Inclusion
Enhancing Profit Generating Capability
Investment in human
resources development
JPY 3.0billion
(Target: JPY 6.0 billion)
(Target: >10%)
*Businesses based on combination of products and services utilizing customer assets
(Target: >70 points)
(Target: >47.0%)
VOICE SEI
76P
Gross Profit Margin
42.3%
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Under NEXT 2025, OMRON is addressing two management issues, namely, rebuilding the Industrial Automation Business (IAB) as quickly as possible and restructuring the foundation for
earnings and growth, implementing five management measures to ensure sustainable sales growth with profit, as well as endeavoring to achieve sustainable enhancement of corporate value.
Structural Reform Program NEXT 2025
Management
Issues
Management Measures
Plan (as of February 26)
Progress (as of August 31)
Rapid
rebuilding of
the Industrial
Automation
Business
1) Initiatives to resume
growth of the Industrial
Automation Business
To resume growth of the Industrial Automation Business, its current strategy and plan
will be revamped from the perspectives of the customer-driven approach and
effectiveness. Specifically, we will review resource allocation and accelerate the
implementation of measures during the structural reform period to maximize the
operating income margin of the Industrial Automation Business and establish a growth
foundation to achieve the growth envisaged under SF2030.
Following completion of the analysis of the root causes of the poor performance and
formulation of a structural reform plan, we established 10 task forces to complete the
structural reform and began implementation.
Restructuring
of the
foundation for
earnings and
growth
2) Portfolio optimization
We will strengthen the resilience of each business to changes in the business
environment and optimize each portfolio of businesses, products, and areas to achieve
sustainable growth with profit. At the same time, led by the Data Solution Business HQ,
we will accelerate the creation of the data solution business in the industrial
automation, healthcare, and social systems, solutions and service business domains by
leveraging JMDC Inc.’s capabilities.
We evaluated each business and proceeded to the implementation phase, including
prioritizing investment in growth businesses and areas, pursuing initiatives to make
low-profit businesses more profitable, and considering termination of such businesses.
To achieve synergy with JMDC Inc. in each business company, we are accelerating the
study and implementation of co-creation in the Industrial Automation Business, the
Healthcare Business, and the Social Systems, Solutions and Service Business.
Discussion: OMRON x JMDC toward Evolution
3) Headcount and capacity
optimization
In order to establish a workforce and labor cost structure that will enable us to expand
customer value and achieve profitable growth, we will promote headcount and
capacity optimization globally. Specifically, we will reduce the number of employees
by approximately 2,000, consisting of approximately 1,000 in Japan and 1,000
overseas, to optimize total labor costs. This measure will be implemented in
accordance with local labor laws, rules, and regulations.
Retirement of 1,206 employees in Japan was completed on July 20, 2024. Overseas,
1,055 employees agreed to retire as of June 30, and final adjustments are being made
in accordance with local labor laws and regulations. Before the voluntary retirement
was finalized, we conducted career interviews with all eligible employees, held career
support briefings and provided career counseling opportunities for individuals, and
offered outplacement services by a company specializing in human resources.
4) Fixed cost productivity
improvement
We will pursue maximization of fixed cost productivity throughout the Group.
Specifically, by introducing and thoroughly implementing fixed cost discipline, we
intend to realize a ratio of selling, general and administrative expenses to net sales of
less than 30% over the medium term (less than 28% when excluding the impact of
inclusion of JMDC Inc. within the scope of consolidation; forecast for fiscal 2023 of
32.7%).
We have established a budget for the current fiscal year based on the new fixed cost
discipline and are thoroughly implementing fixed cost management in accordance
with this discipline. In addition, we are implementing new initiatives to improve fixed
cost productivity, such as consolidation of purchasing of indirect materials and
consolidation of sites. As a result of these measures, the progress of fixed cost
reduction against the target for fiscal 2024 is as planned.
5) Introduction and
operation of customer-
driven management
systems
The Company intends to introduce and execute measures to orient management,
business, and headquarters management toward customer-driven thinking and
behavior. Specifically, in addition to measures from a financial perspective, we intend
to adopt and apply consistent human resources policies to control business operations
and change management thinking and behavior from the customer’s perspective.
After setting the customer-driven approach as the company-wide guideline, KPIs to
embody customer-driven thinking and actions have been set in all divisions and
implementation has begun. In addition, we are designing new human resource
policies that will enable management to embody customer-driven thinking and
behavior, and we plan to begin implementing these policies in Japan in October.
CHRO Message
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OMRON INTEGRATED REPORT 2024
16
Initiatives to Resume Growth of IAB
To achieve its business vision of “Enriching the Future for
People, Industries and the Globe by Innovative-Automation,”
IAB is strengthening the business foundation (customer
base/business operations) through Structural Reform
Program NEXT 2025. Specifically, 10 task forces have been
launched as companywide projects under the direct
supervision of the CEO, including “product and technology
strategy,” “product portfolio,” “growth strategy in Europe
and North America,” “strengthening and restructuring of the
customer base,” and “restructuring of supply chain
management (SCM).”
For example, regarding “product and technology strategy”
and “product portfolio,” IAB has begun companywide
actions, including reinforcement of the development
structure, to strengthen the competitiveness of its core
product groups, such as controllers and sensors, which
support IAB’s competitive strengths in control applications
and data application services, and component product
groups in which IAB has a high global market share.
Production bases previously concentrated mainly in China
are now being dispersed to Europe, the Americas, and
other regions. Regarding the “growth strategy in Europe
and North America,” to capture this global trend, we have
begun creation of solutions that accelerate the automation
of manufacturing sites and strengthening of the business
foundation, including sales networks, for provision of
services.
We are mobilizing the Group’s resources to complete each
of these projects through companywide initiatives. Our
target is to increase IAB’s sales in fiscal 2025 and achieve
sales of JPY 400.0 billion and operating income of more
than JPY 50.0 billion in fiscal 2026, even if the ratio of
development expenses to net sales is at 7%, the highest
level in manufacturing industry.
As a scenario for maximizing earnings, we envision a
recovery in market conditions for IAB in fiscal 2025 and
sales growth in the Healthcare Business, the Social Systems,
Solutions and Service Business, and the Data Solution
Business. Leveraging the initiatives during the structural
reform period, we intend to achieve earnings growth
through sustainable growth from fiscal 2026 onward,
centering on IAB where the impact of the structural reform
will be fully evident.
Moreover, we will complete fixed cost efficiency
improvements amounting to JPY 30.0 billion by fiscal 2025.
While significantly raising the baseline of the Group’s
earnings, we plan to invest in businesses that will drive the
Group’s future growth and in the new enterprise resource
planning (ERP)* system that will serve as the foundation for
management and business activities.
In this way, we will address the two management issues
through five measures, aiming for operating income of JPY
70.0 billion in fiscal 2025, when the structural reform period
ends, and of JPY 90.0 billion in fiscal 2026.
Projects for Regaining Growth of IAB
Scenarios for maximizing earnings
23
25
26 (FY)
(Yen)
Operating
income
Approx.
Approx.
JPY34.3
billion
JPY70.0
billion
JPY70.0
billion
JPY90.0
billion
JPY90.0
billion
Approx.
Approx.
Fixed cost
efficiency
improvement
Sales
growth
Sales
growth
Growth
investment
Labor cost
increase
JPY30.0
billion
-Strengthen
growth
businesses
-New ERP
system
-Unit cost
increase, etc.
Companywide
growth rate
approx. 3%*
(*CAGR)
Companywide
growth rate
approx. 6%
Profitability improvement by management measures
Profit increase through growth
※Enterprise Resource Planning
Growth themes
FY2024
FY2025
FY2026
1 Product and technology
strategy
2 Product portfolio
3 Growth strategy in Europe
and North America
4 Strengthening and
restructuring of the
customer base
5 SCM restructuring
Re-strengthen high market
share product groups
Execute sequentially
Develop new product lineup
Rebuild the foundation
for growth
Focus on market capture actions
Establish supply/
demand management system
Collaboration of purchasing/
inventory management/sales
Japan/China/Asia
Europe/Americas
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OMRON INTEGRATED REPORT 2024
17
Net sales: JPY 149.7 billion
Operating income: JPY 18.5 billion
Operating income margin: 12.3%
Net sales: JPY 114.4 billion
Operating income: JPY 3.1 billion
Operating income margin: 2.8%
Net sales: JPY 393.6 billion
Operating income: JPY 21.5 billion
Operating income margin: 5.5%
Industrial Automation
Business (IAB)
Social Systems, Solutions
and Service Business (SSB)
Device & Module Solutions
Business (DMB)
Healthcare Business
(HCB)
Net sales: JPY 141.6 billion
Operating income: JPY 14.0 billion
Operating income margin: 9.9%
Net sales: JPY 17.4 billion
Operating income: JPY 2.2 billion
Operating income margin: 12.6%
JPY818.8billion
Net sales
JPY34.3billion
Operating income
4.2%
Operating income margin
48
%
18
%
18%
14%
2%
IAB
HCB
SSB
DMB
DSB
Data Solution Business (DSB)
* Regional categories are defined as follows:
Americas: U.S., Canada, Brazil Europe: Netherlands, U.K., Germany, France, Italy, Spain Greater China: China, Hong Kong, Taiwan Asia Pacific: Singapore, Korea, India, Australia
* As of March 31, 2024
*The figures for the Data Solution Business include the financial figures of JMDC Inc. from
October 16, 2023, onward, the date on which it became a consolidated subsidiary of the
Company.
OMRON’s Business and Fiscal 2023 Results
Consolidated Sales by Business Segment
Net Sales, Number of Employees, Number of Production Sites, Number of Non-production
Sites in Each Region
Approx.57%
24 sites
448 sites
Approx.59%
Ratio of overseas sales
Production sites
Non-production sites
Ratio of overseas employees
to total employees
Number of employees
28450 employees
JPY171.9billion
7404employees
4site
109site
Net sales
Number of employees
Production sites
Non-production
sites
JPY128.9billion
JPY80.7billion
JPY86.1billion
2241employees
5235employees
1832employees
3site
3site
3site
55site
35site
16site
Net sales
Net sales
Net sales
Number of employees
Number of employees
Number of employees
Production sites
Production sites
Production sites
Non-production
sites
Non-production
sites
Non-production
sites
JPY349.1billion
11738employees
11site
233site
Net sales
Number of employees
Production sites
Non-production
sites
Greater China
Japan
Europe
Asia Pacific
Americas
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OMRON INTEGRATED REPORT 2024
18
The business environment for OMRON in fiscal 2024 will
likely remain uncertain owing to global inflation and
persisting geopolitical risks in Europe, Russia, the Middle
East, and elsewhere.
In the business domains in which OMRON operates, gradual
recovery in demand is expected in the second half of the
year for the Industrial Automation Business and the Device
& Module Solutions Business. Meanwhile, the market for the
Healthcare Business is expected to grow steadily, and the
Social Systems, Solutions and Service Business is also
expected to continue benefitting from a favorable business
environment.
Given these circumstances, OMRON forecasts an increase in
net sales and operating income as a result of restructuring
the foundation for earnings and growth under Structural
Reform Program NEXT 2025. On the other hand, we expect
income before income taxes to decrease since we have
included a one-time cost of approximately JPY 28.0 billion
resulting from a workforce reduction of 2,000 employees in
the forecast.
In fiscal 2024, we will accelerate initiatives to complete
Structural Reform Program NEXT 2025 under the
companywide policy of “All for Creating Customer Value:
Focus all actions on creating value for customers and
restructure the foundation for earnings and growth.” In view
of these initiatives, plans call for net sales of JPY 825.0
billion (up 0.8% year on year), a gross profit margin of 44.7%
(up 2.4 percentage points year on year), and operating
income of JPY 49.0 billion (up 42.7% year on year) for fiscal
2024.
FY2023
FY2024 (Plan)
Change
Net sales
JPY 818.8
JPY 825.0
+0.8%
Gross profit (Gross profit margin)
JPY 346.5
(42.3%)
JPY 368.5
(44.7%)
+6.4%
(+2.4P)
Operating income (Operating income margin)
JPY 34.3
(4.2%)
JPY 49.0
(5.9%)
+42.7%
(+1.7P)
Net Income Before Income Taxes
JPY 35.0
JPY 21.0
-39.9%
Net income attributable to OMRON shareholders
JPY 8.1
JPY 8.5*
+4.9%
Average USD exchange rate (Yen)
JPY 143.9
JPY 145.0
+JPY 1.1
Average EUR exchange rate (Yen)
JPY 156.3
JPY 155.0
-JPY 1.3
Average RMB exchange rate (Yen)
JPY 20.1
JPY 20.0
-JPY 0.1
FY2023
FY2024 (Plan)
Change
FY2023
FY2024 (Plan)
Change
Industrial Automation Business
(IAB)
JPY 393.6
JPY 355.0
-9.8%
JPY 21.5
(5.5%)
JPY 27.5
(7.7%)
+27.9%
(+2.2P)
Healthcare Business (HCB)
JPY 149.7
JPY 161.0
+7.5%
JPY 18.5
(12.3%)
JPY 22.0
(13.7%)
+18.9%
(+1.4P)
Social Systems, Solutions and
Service Business (SSB)
JPY 141.6
JPY 154.5
+9.1%
JPY 14.0
(9.9%)
JPY 17.0
(11.0%)
+21.4%
(+1.1P)
Device & Module Solutions
Business (DMB)
JPY 114.4
JPY 110.0
-3.8%
JPY 3.1
(2.8%)
JPY 4.0
(3.6%)
+29.0%
(+0.8P)
Data Solution Business (DSB)
JPY 17.4
JPY 43.0
+147.1%
JPY 2.2
(12.6%)
JPY 3.0
(7.0%)
+36.4%
(-5.6P)
Eliminations and Corporate
JPY 2.1
JPY 1.5
-28.6%
-JPY 24.2
-JPY 24.5
-1.2%
Risk of performance fluctuations
‐
‐
‐
‐
‐
‐
Total
JPY 818.8
JPY 825.0
+0.8%
JPY 34.3
(4.2%)
JPY 49.0
(5.9%)
+42.7%
(+1.7P)
Net sales
Operating income
Outlook for Fiscal 2024
* Reflects non-operating expenses of approximately 28.0 billion yen as expenses such as special lump-sum
payments associated with "optimizing the number of personnel and capabilities" in structural reforms
(Billions of yen, except exchange rate data and percentages)
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Industrial Automation Busiess (IAB)
Net Sales
We expect investment demand related to semiconductors to recover beginning in the third quarter, centering on Japan and Korea. At the same time, we assume that the
recovery in demand for investment in other industries will be gradual. We believe that in the first half of the year, our distributors will generally reach normalization of inventory
levels that have remained at high to date. Given the circumstances, we project a year-on-year decrease in sales to JPY 355.0 billion in fiscal 2024.
Operating Income
Despite lower net sales compared with the fiscal year under review, we forecast an increase in operating income to JPY 27.5 billion in fiscal 2024 through improvement of
gross profit margin and optimization of fixed costs by steady implementation of structural reform.
Healthcare Business (HCB)
Net Sales
As the number of patients suffering from chronic diseases continues to increase worldwide, we expect rising global demand for blood pressure monitors and other health
devices. In these circumstances, we intend to boost sales through expansion of online channels globally and to capture growing demand in emerging countries. We expect
net sales in fiscal 2024 to increase year on year to JPY 161.0 billion owing to growing sales of ECG monitors in Japan, Europe, the U.S., and China, as well as focused product
development in response to local needs in each area.
Operating Income
We expect operating income to increase year on year to JPY 22.0 billion in fiscal 2024, owing to prudent fixed cost management, improved profit margins resulting from
changes in the sales composition, and cost reductions related to logistics expenses, in addition to the increase in sales.
Social Systems, Solutions and Service Business (SSB)
Net Sales
In view of soaring energy prices and ongoing initiatives to achieve carbon neutrality, we expect demand for renewable energy in the residential and industrial domains of the
Energy Solutions Business to remain firm. The Public Transportation System Business should benefit from customers’ continued robust capital investment. As a result, we
project a year-on-year increase in sales to JPY 154.5 billion in fiscal 2024.
Operating Income
We expect operating income to increase to JPY 17.0 billion in fiscal 2024 owing to sales growth and improved productivity.
Device & Module Solutions Business (DMB)
Net Sales
While a moderate recovery in demand from semiconductor-related industries is in prospect, we expect demand for the consumer industry to remain weak as customers
continue to adjust inventories. We do not expect normalization of inventory levels until the third quarter or later. We expect these developments will result in a year-on-year
decrease in net sales to JPY 110.0 billion in fiscal 2024.
Operating Income
While we forecast a decrease in sales, operating income for fiscal 2024 is expected to increase to JPY 4.0 billion owing to business structure reform that includes price
optimization and fixed cost reductions.
Data Solution Business (DSB)
Net Sales
As regards the JMDC Inc. business, we expect the trend toward increased medical data use, mainly by pharmaceutical companies, to continue. We also expect further growth
in demand for services for insurers and consumers as individuals become more conscious of health and prevention. We expect net sales for fiscal 2024 to increase significantly
to JPY 43.0 billion, reflecting the full-year contribution of JMDC Inc. to this segment.
Operating Income
We expect operating income to increase to JPY 3.0 billion in fiscal 2024 owing to an increase in sales. Our forecasts for this segment also incorporate growth investments to
create new data services.
(This segment includes the financial results of JMDC Inc., as well as the amortization of intangible assets identified in the consolidation of JMDC Inc. and financial figures
related to the Data Solution Business promoted by OMRON.)
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from customers, shareholders, and other stakeholders. In
this context, we designated the period from April 2024 to
September 2025 as a time for structural reform and launched
Structural Reform Program NEXT 2025. Simultaneously,
we decided to withdraw the medium-term management
plan “SF 1st Stage” and focus companywide on NEXT 2025.
Under NEXT 2025, our focus is on “IAB Revival Plan” and
“rebuild a base f for earnings and growth.” As CEO, I am
determined to work tirelessly to complete structural reform.
NEXT2025
To Regain Growth of the Industrial Automation
Business
We are making steady progress with NEXT 2025, with the top
priority being the rapid rebuilding of IAB. Transitioning to
the profitable growth phase after the completion of NEXT
2025, we aim to resume IAB’s ROS of 17%, the fiscal 2022
level, as soon as possible. To achieve this, we have established
10 task forces and launched initiatives, including “technology
& product strategy,” “SCM (supply chain management)
reform” “product portfolio,” and “growth strategy in Europe
and North America.” These task forces are positioned as
companywide projects under the direct oversight of the CEO
and are being promoted with investment of companywide
resources. Let me introduce two specific initiatives.
One key initiative is the “growth & profitability in the North
American market.” To establish a system and structure that
ensures the improvement and sustainability of overall earnings
in the Americas, centering on the North American market, in
May 2024, I appointed a new executive with business
leadership experience in the Americas to spearhead this initiative.
The global trend to restructure supply chains is a business
opportunity for OMRON, and we are strengthening customer
development not only in the Americas but also in Europe and
other areas to seize this opportunity.
Another key initiative is our “technology and product strategy,”
of fiscal 2023, the business environment deteriorated rapidly
from the second quarter onward. As a consequence of our
inability to detect indications of change in the overall trend,
we twice had to make downward revisions to the earnings forecasts.
The direct cause of this deterioration of performance was that
we misjudged the slowdown of investment in the digital
industry and in China, which was the main focus of the Industrial
Automation Business (IAB), as well as the stagnation of distribution
inventories. Deeply reflecting on this point, we, OMRON’s
executive team, thoroughly investigated not only the current
events, but also their root causes. We concluded that the root
cause of the deterioration of our performance is the dilution
of the principle that should govern all that we do, namely,
management and actions driven by the customer’s perspective.
In other words, considerable resources, whether people,
investment, or time, were devoted to inward-looking tasks.
As a result, three negative factors emerged, hindering both
business growth and earnings: “Unbalanced portfolio for
growth”, “rigid fixed cost structure”, and “delay in converting
skills of organization and human resources.” These factors
led to a deterioration in performance. This was not limited to
IAB, but was an issue common to OMRON as a whole.
Therefore, I believed that delaying a drastic solution could
one day put OMRON in an irretrievable situation, even affecting
the businesses that are currently performing well. Against
this backdrop, I made the decision to implement not only
short-term countermeasures but also drastic measures to resolve
the root cause and negative factors from a medium- to long-term
perspective.
Based on this recognition, we, the executive team, designated
“completion of structural reform from the customer-driven
perspective” as a key management task and began developing
a structural reform program aimed at rebuilding a foundation
for earnings and growth. The executive team also shared a
sense of urgency, recognizing that failing to promptly
present a scenario for rebuilding could lead to a loss of trust
Background to the Decision to Execute Structural
Reform
A year has passed since I became CEO. It was a year in which
I recognized my responsibility as CEO for the trouble and concern
experienced by our stakeholders due to the rapid deterioration
of OMRON’s business performance. At the same time, it was
an important year in which I made important decisions to
overcome the difficult business environment and achieve
sustainable growth of OMRON.
Although OMRON got off to a flying start in the first quarter
President and CEO
Junta Tsujinaga
CEO Message
Aiming to Further Enhance
Corporate Value by Completing
Structural Reform
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that is, strengthening the competitiveness of core products.
OMRON’s major strength has always been its wide range of
industrial automation equipment, particularly components
such as controllers, sensors, and safety devices. However, as
the digital society becomes more sophisticated and consumers
continue to pursue high-performance end products, our
customers in manufacturing industry are demanding even
greater sophistication in their production processes. At the
same time, they are grappling with labor shortage at their
manufacturing sites. OMRON’s mission is to address these
challenges and provide solutions at manufacturing sites.
OMRON aims to drive further business growth by prioritizing
investment in development of core products that can lead
to production innovations, addressing management issues
such as the growing sophistication of manufacturing processes
and labor shortage at our customers’ sites. IAB is OMRON’s
core business. I will not let it remain in its current state. I will
ensure IAB’s full recovery.
Return to the Customer-driven Approach
To restructure the foundation for earnings and growth, we are
implementing the following measures: portfolio optimization,
fixed cost productivity improvements, headcount and capacity
optimization, and evolution of management systems.
Once structural reform is completed, we intend to make
sure all employees are customer-oriented, all departments
collaborate to create new value with customers, and employee
and organizational engagement continues to improve through
daily activities. In order to achieve this ideal state, we are
implementing customer-driven management in the first year
of structural reform. Customer-driven management means
concentrating on what creates value for customers to enhance
investment efficiency and working to rebuild performance
emphasizing sales and restructuring of the foundation for
earnings and growth.
Why do we emphasize sales? Because sales represent the
extent of customer expectations regarding the value our
products and services provide. While this may seem obvious,
we thought it was crucial to return to the spirit of the company’s
founding and create greater customer value. So, how will we
work to restructure the foundation for earnings and growth
to improve the top line? OMRON has steadily enhanced its
earnings power by implementing management focused on
the gross profit margin (GP ratio) and return on invested
capital (ROIC) as indicators for value enhancement. As a
result, we achieved record operating income of JPY 100
billion in fiscal 2022. However, looking back over the past
10 years, the top line has not grown significantly partly
owing to the reshuffling of the business portfolio.
I acknowledge that we have not invested sufficient capital in
growth opportunities. In addition, fixed costs have increased
over the past few years owing to soaring raw materials prices
and logistics costs attributable to geopolitical risks and the
COVID-19 pandemic. Combined with the impact of inflation
and the weak yen, expenses and labor costs have surged
rapidly. This fixed cost structure, with its high break-even point,
has put pressure on profit and cash generation. Under this
cost structure, when sales decline, the decrease in profit is
even more pronounced.
To address the high fixed cost structure and workforce
challenges, NEXT 2025 will prioritize sales growth through a
focus on customer-driven management. To achieve this, we
are working on four actions: understanding our customers,
connecting and creating value, eliminating redundancy and
irrationality, and creating a system that enables management,
i.e., directors, executive officers, and key managerial personnel,
to manage from the customer’s perspective. Among these
actions, I would like to elaborate on what we are doing to fulfill
our commitment to connecting and creating value in order
to achieve OMRON’s transition to a fully customer-driven
approach.
To create value from a customer-driven perspective, we have
changed the companywide and division-based key performance
indicators (KPIs) to align them with sales across divisions.
Specifically, we set key goal indicators (KGIs) and KPIs
linking all divisions, including staff divisions, to enable
monitoring of the processes necessary to achieve sales
targets. It is important that the KPIs set by each division are
linked with the behavioral KPIs of individual personnel on-site.
Customer-driven behavior and appropriate management
of such behavior will lead to achievement of financial
performance targets. I believe that by resolutely implementing
such a management approach, each division can create a
unique customer-driven business model. We will introduce
a new system, including an evaluation system, designed to
ensure that directors, executive officers, and key managerial
personnel implement this management without fail. Our aim
is to achieve a staffing and labor cost structure resilient to
rapid changes in the business environment. We will invest in
human resource development to enrich customer value and
achieve profitable growth.
Our policy of using ROIC as an indicator to measure capital
efficiency is unchanged. However, as I mentioned, we have
been overly focused on achieving the ROIC hurdle rate,
prioritizing cost reductions when sales were stagnant, and
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have not invested sufficiently in future growth. We need to
reflect on this. What is essential for OMRON now is to rebuild
its earnings structure while increasing sales through
companywide efforts in customer management. In fiscal
2025 when the structural reform period will end, we intend
to recover operating income to around JPY 70 billion. From
fiscal 2026 onward, plans call for OMRON to enter a phase
focused on expanding earnings through growth, with a target
operating income of approximately JPY 90 billion in fiscal
2026. Going forward, I am committed to putting OMRON
on a growth trajectory so that we can return companywide
ROIC to a level above 10%, exceeding the weighted
average cost of capital (WACC).
CFO Message
CHRO Message
Transformation to Solutions Business is a Growth
Driver
Although we withdrew the medium-term management plan
in order to concentrate on structural reform, the basic strategy
under the long-term vision SF2030 is unchanged.
OMRON will continue to address three social issues, namely,
achievement of carbon neutrality, realization of a digital
society, and extension of healthy life expectancy. These
challenges will be tackled through our business operations
to drive growth. Since the launch of the new long-term
vision in fiscal 2022, each business has made progress with
the initiatives to resolve these three social issues. With a
view to the fundamental resolution of these increasingly
serious and complex social issues, in addition to strengthening
hardware, which is one of our core strengths, we are working
to create a new business model. This is a shift from a business
centering on products to a business based on the combination
of products and services.
OMRON has traditionally grown by providing products. For
instance, IAB offers the industry’s most comprehensive and
diverse product lineup. In the Healthcare Business (HCB),
the main products, namely, blood pressure monitors and ECG
for home use, have the No. 1 market shares globally.
However, as social issues become increasingly serious and
complex, there is a limit to what can be achieved by products
alone. From this perspective, we are actively accelerating the
shift to a business based on the combination of products and
services, i.e., a business that transforms data obtained from
devices at sites of every kind into solutions.
OMRON’s diverse range of products are widely used in
manufacturing, social infrastructure, homes, and everyday
life worldwide. Via these products, we gather a vast amount
of on-site data—such as operating statuses of manufacturing
lines, flows of people at train stations, vehicle movements
on streets, transactions at convenience stores and hotels,
and personal health data such as blood pressure and ECG
readings—and use it. It was essential for OMRON to strengthen
its capabilities and expertise to further advance the use of
this data, developing it into a feasible, scalable standalone
business. The key to resolving this issue is JMDC Inc., which
became a Group company in October 2023.
I am convinced that combination of OMRON’s potential ability
to utilize data with JMDC Inc.’s analytical capabilities and the
volume of data it possesses, including medical data, will
yield unique new OMRON solutions. In December 2023,
we established the Data Solution Business HQ (DSB), a new
organization reporting directly to the CEO, to accelerate the
solution business through collaboration with existing
businesses based on co-creation with JMDC Inc. DSB aims
to foster synergies in the healthcare solutions domain,
particularly within the corporate health solutions business.
DSB has also launched the smart M&S solutions business*
and carbon neutrality solutions business in the industrial
automation and social systems domains, which are gaining
traction as they become established. Among these businesses,
the smart M&S solutions business is the one that is showing
the most positive signs of business growth and profitability.
Approx. JPY 70.0 billion
Approx. JPY 90.0 billion
10% or more
Target ROIC
FY2025
Operating Income
FY2026
Operating Income
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In fiscal 2024, we are targeting sales of about JPY 6 billion in
smart M&S solutions for distribution. By putting OMRON’s
data solution business on track, we target total DSB sales of
JPY 100 billion in fiscal 2027.
DSB Section
Discussion: OMRON x JMDC toward Evolution
* The smart M&S solutions business provides one-stop solution services that address
issues faced by on-site, administrative, and managerial personnel of client companies.
Unleashing the Potential of Employees to Realize
SF2030
Since becoming CEO, I have been making efforts to visit
OMRON sites in Japan and around the world to meet and
talk directly with our employees in order to realize SF2030.
As of August 31, 2024, I had held more than 110 dialogues
with employees, totaling more than 800 people. Using digital
communication tools, I have also increased the frequency of
message distribution and interactive communication with
employees. By hearing directly from employees, I can understand
the actual situations at sites. I also believe that directly
conveying top management’s attitude, message, and
encouragement to employees will increase their motivation
and sense of unity. We are currently promoting initiatives to
find out what each individual wants to do, ascertaining their
will. This involves increasing the frequency of workplace dialogues
in which any employee who wishes to participate can do so
on their own initiative, thereby supporting customer-driven
activities. We are creating an organization with a free and
open atmosphere where each employee’s will is respected
and employees support one another to unleash their collective
willpower. I believe that by ensuring that all employees are
customer-oriented and focused on increasing sales, we can
regain our momentum as an enterprise overflowing with a
venture spirit.
Aiming to Further Enhance Corporate Value
I recognize that the valuations of OMRON shares since last
year reflect the capital market’s critical view of OMRON’s
future growth potential. The only way to regain the trust
and expectations of the capital market is by completing
structural reform with agility and demonstrating the prospect
of growth. Since becoming CEO, I have had numerous
opportunities to engage in dialogue with investors.
Through these conversations—while receiving candid
opinions and suggestions—I have come to realize that
expectations for OMRON are even higher than I had initially
imagined. I am committed to the transformation of OMRON
with agility to meet the expectations of all stakeholders,
including investors. We will also communicate our
transformation in various ways.
I remain devoted to the accomplishment of OMRON’s
fundamental purpose, “to create social value through
business and continue to contribute to a better society.” By
promoting co-creation of new value with our stakeholders,
we will resolve social issues and achieve sustainable, profitable
growth. We are dedicated to maximizing corporate value
and meeting the expectations of our stakeholders. In all
these endeavors, I will appreciate your continued
understanding and support.
September 2024
President and CEO
110 times,
800 people or more
Dialogues with Employees
JPY 100.0 billion
FY2027
DSB’s Net Sales
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low-profitability businesses and promoting allocation of
investment to growth businesses. The purpose of this ROIC
management structure with two elements is to achieve
profitability exceeding the cost of capital and to enhance
corporate value through sustainable growth of sales and
profit (See Figure 1 ).
However, ROIC declined significantly to 1% in fiscal 2023
and is expected to be around 1% in fiscal 2024. This decline
is mainly attributable to (1) a significant decline in gross
profit margin (GP ratio) due to supply chain disruptions
during the COVID-19 pandemic, (2) a significant decrease in
profit in the Industrial Automation Business (IAB) and the
Device & Module Solutions Business (DMB) against the
backdrop of decreased sales, especially in Greater China,
reflecting stagnant capital investment in the semiconductor,
EV, and PV industries and other sectors, and (3) recording of
costs for structural reform. Nevertheless, even in this phase,
the GP ratio is already on a recovery trend thanks to prompt
actions at each frontline using the Down-Top ROIC Tree
(See ). Moreover, optimization of labor costs and
expenses is progressing through headcount optimization
and review of business processes, and recovery of profitability
is in sight.
On the other hand, for sustainable growth of sales and profit,
it is important to evolve the portfolio of products and services
that will make this possible. Specifically, we are currently
strengthening portfolio management from two perspectives.
Firstly, business valuation in anticipation of future business
environments. In recent years, capital investments in the
semiconductor and EV industries have become larger, and
the fluctuation of supply and demand for factory automation
(FA) equipment has increased accordingly. Moreover, the
Chinese market, which has been a driver of global economic
growth, is experiencing slower GDP growth and local
companies are becoming a source of stiffer competition as
they increase their speed of execution and enhance QCD
(Quality, Cost, and Delivery). Conventionally, we identified
Strengthen Portfolio Management in Anticipation
of Future Business Environments
OMRON has been implementing management based on
return on invested capital (ROIC) since 2013. Specifically,
ROIC management consists of the Down-Top ROIC Tree
approach and portfolio management. With the Down-Top
ROIC Tree approach, the effects created by actions at each
frontline are quantified and linked with the components of
ROIC so that all organizations take ownership of the achievement
of the ROIC target. Portfolio management is for improving
Figure 1 OMRON’s ROIC Management
Figure 2 GP Ratio
ROIC management
Down-Top
ROIC Tree
Portfolio
Management
13
20
23
38.5%
42.3%
45.5%
(Record high)
45.4%
FY2024
1Q result
(FY)
(%)
0
45
40
50
35
Senior Managing Executive Officer, CFO and
Senior General Manager, Global Strategy HQ
Seiji Takeda
CFO Message
Achieve Robust Regrowth by
Implementing ROIC management
Figure 2
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to ensure sustainable and stable dividends, while making
appropriate decisions on share buybacks in view of the stock
price and investment situations.
To Reduce the Cost of Capital
So far, I have focused on improving ROIC, but we recognize
that reducing the cost of capital is also an important factor in
enhancing corporate value, and will continue to pursue an
initiative in this regard. The cost of capital is currently at around
8%, higher than in the past, due in part to interest rate increases.
For reducing the cost of capital, of course, establishment of
a stable profit and growth structure remains of primary
importance. However, from the perspective of financial
value, we will also reinforce two initiatives.
Firstly, financial discipline. OMRON’s shareholders' equity
ratio was 58% as of the first quarter of fiscal 2024, and
interest-bearing debt was about JPY 200 billion due to the
financing of about JPY 85.5 billion for the investment in
JMDC Inc. in fiscal 2023. However, net interest-bearing debt
(net debt) after taking into account cash and cash equivalents is
about JPY 40 billion, without any major concerns about
low-profitability and unprofitable businesses based on past
performance and implemented portfolio management to
achieve improvement. However, this approach alone proved
inadequate in the recent business environment, and we regret
that it resulted in a situation that undermined business stability.
Reflecting on this experience, we now conduct valuation of
businesses in anticipation of future business environments in
addition to valuation based on actual performance results. In
particular, regarding IAB’s business environment, restructuring
of global supply chains is accelerating to avoid geopolitical risks,
and we are strengthening business valuation not only in terms
of products and services but also from an area perspective.
Secondly, capital allocation with a focus on high-growth,
high-return businesses. OMRON currently has 64 product
and service businesses. In order to accelerate sales and profit
growth, we will implement more focused capital allocation
than ever before. In particular, IAB, with its wide range of
products, will focus its own resources on products that can
achieve sales and profit outperforming market growth so as
to maximize business performance. Selection of target products
is being finalized and speedy introduction of competitive
products and services will be promoted. Moreover, market
growth is expected for storage batteries and power conditioners
of the Social Systems, Solutions and Service Business (SSB)
and for blood pressure monitors and portable electrocardiographs
(ECG) of the Healthcare Business (HCB).
By investing appropriately in these products and services
that have the potential for sustainable growth far into the
future, we will build a stronger position than ever before.
The same is true for the Data Solution Business (DSB) in this
regard. In this area, we were able to lay a stepping stone through
the acquisition of JMDC Inc. in fiscal 2023. Leveraging JMDC
Inc.’s capabilities, DSB will accelerate value creation not only
in the healthcare domain, but also in the factory automation
and social solutions domains. Restructuring of the portfolio
with an eye to future business environments is the cornerstone
of ROIC management as it ensures sustainable sales and profit
growth. I recognize that completing this initiative is one of
my principal tasks.
Operating Cash Flow to Enter Re-expansion
Phase
Although OMRON’s operating cash flow had been stable at
around JPY 70 billion to JPY 90 billion, it declined
significantly in fiscal 2023 against the backdrop of a decrease
in IAB’s sales and a large increase in inventories (See Figure 3 ).
In fiscal 2024, we expect operating cash flow to remain at a
lower level than in the past because recovery of financial
performance will be limited and one-time costs for structural
reform will be recorded.
However, operating cash flow is expected to move into an
expansion phase again from fiscal 2025 onward. Inventories,
which pressurized cash generation, are expected to normalize
along with a gradual recovery of orders because the
effectiveness of procurement control implemented in fiscal
2023 is becoming apparent. In addition, IAB has begun to
restructure its supply chain management (SCM) system so as
to be able to respond quickly to market volatility. Moreover,
since the reduction of the ratio of selling, general and
administrative expenses and optimization of headcount and
the labor cost structure are progressing as planned, and the
recording of one-time costs for structural reform will be
completed in fiscal 2024, we expect operating cash flow to
recover to a near historical level from fiscal 2025 onward.
In terms of capital allocation, we will accord the highest
priority to investment for structural reform in fiscal 2024, but
from fiscal 2025 onward, we will make solid investment to
support sales and profit growth under the new portfolio plan.
Furthermore, we will continue to invest in IT including
restructuring of SCM systems, so that we can quickly identify
changes in the market and enhance our ability to effectively
respond to such changes. We also recognize the importance
of shareholder returns in enhancing corporate value, and will
maintain a policy of dividends on equity (DOE) of around 3%
Figure 3 Operating Cash Flow
79.0
13
77.1
14
84.2
15
77.9
16
73.7
17
71.2
18
89.8
19
93.8
20
67.4
21
53.5
22
44.9
23
0
30.0
60.0
90.0
(Billions of yen)
(FY)
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the soundness of the current balance sheet, which we consider
to be an appropriate level with sufficient capacity for investment
in growth. Balance sheet evaluation should be performed,
taking into account strategy and the timeline, and management
is conducted under appropriate financial discipline while
grasping future cash flows (See ). We thoroughly
evaluate corporate value from various angles, in particular,
when executing M&A. In verifying the return on investment,
we not only control liabilities based on the EBITDA plan, but
also clarify the impact of risk-weighted assets, such as
goodwill, and set a cap on risk-weighted assets for the
entire balance sheet. By doing so, we maintain a balance
between growth and financial soundness. In addition, OMRON
has long been eliminating cross-shareholdings in
accordance with the corporate governance guidelines. We
will continue to respond appropriately in accordance with
the guidelines.
Secondly, dialogue with capital markets. Although we have
been placing importance on dialogue with capital markets,
I believe that we should further strengthen the dialogue.
I myself have received many thought-provoking opinions
and advice in the course of dialogues with numerous investors
and shareholders since last year. Business valuation and
suggestions from investors’ perspectives are stimulating and
valuable factors that may trigger improvement of the quality
of our strategy and acceleration of its execution. In retrospect,
no dialogues were more fruitful than those in which we
received candid critical comments.
We emphasize dialogue with investors and shareholders also
from the perspective of appropriate stock price formation.
The goal of the structural reform underway is to ensure
sustainable growth, but many initiatives are still in progress
and there may be a time lag between the necessary investment
and returns. This is because we think it is necessary to
formulate an equity story and share it with investors as a
tool to facilitate their understanding and create a situation in
which investors can support us in our efforts to increase
OMRON’s corporate value. To this end, both the Group's
Corporate Planning Department and Investor Relations
Department have been placed directly under the CFO from
the current fiscal year. Under this structure, we will engage in
transparent, consistent, and continuous dialogue and
disclosure of our vision and progress, ensuring linkage to
enhancement of corporate value.
To Our Shareholders
In conclusion, let me mention that structural reform launched
in the current fiscal year is making steady progress, and we
are implementing companywide initiatives to achieve
transformation into a stronger OMRON. As we achieve
progress in strengthening the earnings base, we are
accelerating each of our initiatives with our sights set
on medium- to long-term sustainable growth. My role is
to ensure appropriate risk management and allocation
of management resources to maximize the outcome of each
business’s initiatives. OMRON possesses many tangible and
intangible assets that have been cultivated over the years,
and many of our businesses have growth potential to address
growing markets. We will identify businesses that address
the three social issues defined in our long-term vision SF2030
and are capable of sustainable sales and profit growth, and
make solid investment leading to the next stage of growth
and returns. By reinforcing this cycle, we aim to enhance
corporate value and contribute to our shareholders and
society.
Figure 4 Management to Strengthen Financial Discipline
(3) Surplus capital
(2) Risk buffer
Existing
risk-weighted
assets
ASSETS
LIABILITIES /
NET ASSETS
Shareholders’
equity
Room for additional
risk-weighted assets
Fiscal X
Fiscal X
Fiscal X+1
Fiscal X+2
Outstanding
interest-bearing
debt
Room for
additional
financing
Risk-weighted
asset cap
Cap on interest-bearing debt
Room for growth
investment
Among existing
risk-weighted
assets, readiness
for impairment risk
Minimum
required
shareholders’
equity to ensure
stable funding
Management of Risk-weighted Assets
Management of Total Liabilities
Clarify surplus capital of shareholders’ equity
and set a cap on risk-weighted assets
Set a cap on interest-bearing debt
corresponding to earnings power
(1) Shareholders’
equity required
for maintaining
financial
soundness
Figure 4
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STRATEGY
& BUSINESS
Resolving Social Issues through Our Business
Creating social value and driving OMRON’s sustainable growth by resolving social issues through our business
28
evolving at an ever-faster pace, we assume that responses
to labor shortages in manufacturing industry and structural
transformation of the sector through such inexorable trends
as decarbonization and digitalization will remain a defining
feature of the industrial landscape for the foreseeable
future. In response to the burgeoning needs for FA, IAB
aims to increase sales by steadily resolving customers’
manufacturing issues one by one. In particular, we aim to
achieve regionally balanced sales growth by deploying our
automation technology, which we have established in
response to changes in manufacturing mainly in China and
Asia, to production sites worldwide.
To this end, under NEXT 2025, we will reinforce our
capabilities for resolving customers’ manufacturing issues.
Firstly, we will pursue optimization of our product portfolio,
centering on core products. We will focus companywide
development resources on creation of a highly competitive
product lineup to amplify our growth potential. Secondly, we
will continue to enhance our control applications in response
to the evolution of manufacturing technology, which is
tantamount to structural transformation. Our field engineers
deployed around the world will work with customers at their
sites, resolving issues with them as control applications
continue to evolve. Furthermore, we will refine our services to
effectively resolve issues using our products and control
applications. For example, OMRON invested in SALTYSTER,
Inc.*, whose technology is capable of integrating all types of
data at manufacturing sites at unparalleled speed. Through
co-creation with SALTYSTER, we intend to expand i-BELT
services that utilize on-site data for such purposes as
“predictive maintenance,” “manufacturing that does not
produce defective products,” and “energy-saving production.”
There is an urgent need to address issues arising from
increasing consumer demand for high-quality, sustainable
products and the ongoing changes in manufacturing.
Capitalizing on its industry-leading product lineup and
automation technology, OMRON will create a stream of
innovations that resolve social issues and contribute to the
progress of manufacturing that supports a sustainable society.
Secondly, control applications that are an elegant solution
for advanced control. Our control applications, created
through the combination of OMRON’s product lineup and
software technology, are widely used at manufacturing sites
where advanced production technology is required, such as
in semiconductor manufacturing where unceasing
technological innovation is the norm, as typified by three-
dimensional device structures including chiplets, and in the
manufacture of rechargeable batteries, which are a key
enabler of a decarbonized society. In addition, our
experienced application engineers deployed worldwide
provide field technical services to implement tailored
solutions that meet individual customer needs. In
cooperation with our customers, we will continue making a
concerted effort to resolve new issues at manufacturing sites
by leveraging OMRON’s automation technology.
Thirdly, the provision of services to help resolve issues
related to energy management and human resources
engaged in manufacturing, which are directly related to
customers’ business management. Notable examples are
i-BELT and the Industrial Automation Academy (IA
Academy). As a service that utilizes on-site data while
leveraging the customer’s knowledge, and through
consulting, i-BELT is highly regarded for its ability to facilitate
identification of on-site issues and thorough implementation
of improvement activities. Many of our customers have
incorporated IA Academy into their human resources
development programs. The unique curriculum, which
covers not only conventional training for FA devices
operation but also manufacturing and equipment
management methods, is customizable according to
customer needs.
Growth Strategy to Achieve SF2030
Production sites previously concentrated in China are
rapidly being dispersed to Europe, the U.S., Asia, India, and
elsewhere in light of soaring labor costs, geopolitical risks,
and the trend toward local production for local
consumption. Furthermore, with manufacturing technology
Market Environment
Manufacturing processes are becoming increasingly
sophisticated worldwide and major changes are afoot, such
as the shift from gasoline-powered to hybrid vehicles and
EVs. At the same time, soaring labor costs and labor
shortages due to a shrinking workforce are becoming more
pronounced. Moreover, initiatives to promote
decarbonization of production processes and introduce
energy management are underway in response to customer
needs for more sustainable products and services. In fiscal
2024, as these factors continue to reshape society, recovery
in demand for factory automation (FA) is expected to
commence, gaining traction from the second half of the
year onward. In particular, capital expenditure in the
semiconductor industry is recovering thanks to rapid growth
in global demand for AI, and we expect continued
expansion of investment in the technology sector, especially
in Japan, South Korea, and Taiwan. In addition, we anticipate
a further rise in demand, coupled with investment in
semiconductor production in each country and region.
Attuned to this market environment, we aim to grow our
business by resolving issues at manufacturing sites.
Our Strengths
We have a threefold value proposition that can resolve
issues at our customers’ manufacturing sites. Firstly, the
most extensive product lineup in the industry. We will begin
strengthening our core products, such as various sensors for
monitoring equipment status and collecting other
information, and controllers and robots enabling high-
speed, high-precision control of equipment. Drawing on the
wealth of knowledge that OMRON has cultivated at
manufacturing sites, we will further enhance our product
lineup to contribute to the progress of manufacturing.
Industrial Automation Business
(IAB)
*Investment in SALTYSTER was executed in October 2023.
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Input*
Logic*
Output* + Robotics
40%
46%
14%
Sales Composition by Business Domains
64%
36%
FY2023
Net Sales
JPY 393.6billion
Solutions
Decarbonization of
manufacturing industry
Contribution to evolution
of cutting-edge
technologies, such as
semiconductors and AI
Digital transformation (DX)
of manufacturing industry
Components
Net Sales for Fiscal 2023
Demand for capital investment in manufacturing industry was sluggish globally throughout the year. In particular, we saw a
significant negative impact stemming from postponements or reductions in investments related to rechargeable batteries for EVs
and semiconductors. Inventory at distributors, which had been an issue, remained at high levels, despite a trend toward
drawdowns. As a result, net sales were JPY 393.6 billion, significantly lower year on year.
Operating income for Fiscal 2023
Operating income was JPY 21.5 billion, significantly lower year
on year due to lower sales, changes in the sales composition
by product, write-down of slow-moving inventories, and other
factors affecting gross profit margin negatively.
* Includes safety devices
Sales Composition by Product
Net Sales / Operating income / Operating income Margin
485.7
85.8
17.0%
393.6
355.0
21.5
18.2%
5.5%
7.7%
17.7%
346.4
418.1
58.8
76.3
0
100.0
200.0
300.0
500.0
400.0
0
120.0
40.0
80.0
FY
20
21
22
24
(Forecast)
23
(Billions of yen)
27.5
(Billions of yen)
Net sales
Operating income (right axis)
Operating income margin
INPUT
OUTPUT
OUTCOME
Net sales: JPY 393.6 billion (-19.0% YoY)
Operating income: JPY 21.5 billion (-75.0% YoY)
Number of customers using innovative-Automation: 4,315
companies
Sales of the solutions business as a proportion of total sales of
IAB: 36% (+1% points YoY)
The high-definition, high-speed in-line CT-type automated
X-ray inspection technology for semiconductor chiplets
received the Minister of Education, Culture, Sports, Science
and Technology Award at the 53rd Japan Industrial
Technology Awards. (March 2024)
R&D cost: JPY 25.9 billion (results for FY2023)
Capital expenditure: JPY 7.3 billion (results for FY2023)
Invested in SALTYSTER, Inc., which has high-speed data integration technology applicable
to any product data at manufacturing sites (October 2023)
Launched CT-type automatic X-ray inspection systems that enable one of the highest-
speed inspection in the industry (November 2023)
Strengthened product supply capabilities by implementing SCM reform, including design
changes, enhanced procurement of components, and parallel production at multiple sites
(July 2024)
Proactively pursued strategic alliances to respond to diversifying robotics needs (Lowpad
BV in November 2023, NEURA Robotics GmbH in April 2024)
Contributed to the progress of “manufacturing
that will support a sustainable society” through
the combination of products and services to
resolve essential issues facing society
SDGs 9.2.1
SDGs 8.2.1
SDGs 17.16
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OMRON’s Board Inspection Solutions Supporting
Evolution of Digital Technology
Under SF2030, OMRON aims to contribute to “realization of
a digital society,” where people are free from restrictions
and can pursue individual fulfillment. For example, this will
be a society where the evolution of automation combined
with control devices supports the spread of advanced
technology, allowing everyone to be creative in their own
way. Generative AI and high-speed communication
technologies such as 5G/6G are shaping the digital society
of the near future, as are smartphones and IoT devices that
are now integral to our lives. Semiconductors are
incorporated in these products and technologies,
underpinning technological innovation. The strategic
importance of semiconductors has gained widespread
recognition. Semiconductors, which are at the heart of
myriad products, are always subject to quality issues.
Semiconductor chips have traditionally achieved higher
performance through miniaturization of the wiring width of
high-precision inspection. (See Figure 2 )
Resolving industry’s technological issues with inspection
systems that revolutionize the semiconductor
manufacturing process
By combining OMRON’s proprietary control and image
processing technologies, VT-X950 achieves high-speed,
high-precision inspection of advanced semiconductor
packages. Utilizing state-of-the-art 3D CT technology, the
system captures images with resolution as small as 0.2 μm (1
μm is 1/1000 of 1mm), visualizes the quality of minute
amounts of solder inside semiconductor packages, and
enables automatic judge of good/defective by means of
quantitative inspection. Through utilization tailored to
customers’ specific applications, the VT-X950 will contribute
to higher development speed, yield improvement, and
stabilization of mass-production quality in all phases of
semiconductor manufacturing, from R&D through to mass
production. (See Figure 3 )
The VT-X950’s high-definition, high-speed in-line CT-type
device and circuits, but the technical challenge of
microfabrication technology has increased with the passage
of time, making it increasingly difficult to produce non-
defective products. In the case of advanced semiconductors,
the costs of R&D and production equipment have soared,
pushing manufacturing costs ever higher. Therefore,
improvement of pass yields has become a crucial challenge.
To address such technological issue, a new technology, the
“chiplet” (See Figure 1 ), which involves fitting multiple tiny
semiconductor chips into a single package, is attracting
attention as a means of improving performance in addition
to miniaturization. On the other hand, in contrast to
conventional planar designs (monolithic), 3D mounting
makes chiplets’ structures more complex. This means that
transmission images obtained by 2D X-ray inspection
systems are of limited effectiveness as a basis for
determining whether chiplets are non-defective. A means of
inspection offering greater precision is required. The VT-
X950 high-speed in-line CT-type X-ray automatic inspection
system unveiled in November 2023 enables high-speed,
2D X-ray image (top) and 3D X-ray image (bottom) of the
same solder
VT-X950
A chiplet is a single package incorporating multiple
tiny chips on a substrate, as opposed to a large-scale
integrated circuit on a single chip.
Before: Monolithic
After: Combination of
multiple chips
Improvement
of occurrence
probability*
Pass Yield
improvement
Quality
stabilization
Yield
Accumulation and
analysis of large
amounts of data
Definition of
Good Manufacturing
Practices
Monitoring of
manufacturing in
compliance with
the standards
R&D phase
Early mass-production phase
(Start phase)
Stable mass-production phase
(production increase/expansion)
*Occurrence probability: whether the prototype can be made as expected
SF2030 Topics “Realization of a Digital Society”
Figure 1 Semiconductor Industry’s Evolution and Challenges
Figure 3 Contribution to Every Phase of Semiconductor Manufacturing
Figure 2 VT-X950 CT-type Automatic X-ray Inspection System and X-ray Images
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devices such as gears, motors, and inverters in EVs, has
become the technological mainstream. As more items must
be inspected because of the increasing complexity of the
internal structure, the need for high-resolution 3D inspection
is increasing. The VT-X850 uses a high-power X-ray tube
suitable for large, thick power semiconductor modules, and
improves semiconductor yields through in-line high-speed
inspection that is not burdensome for production lines. (See
Figure 4 )
By applying our proprietary AI technology, inspection
settings have been automated and AI image processing
technology for generating high-definition images that
facilitate determination of good/defective products has
been reinforced. Moreover, the creation of inspection
programs for image processing, which was previously reliant
on the expertise of experienced technicians, has been
automated. This function will help address labor shortages
in the semiconductor industry, which are becoming more
pressing as a result of technological innovation.
Devices indispensable for an advanced digital society offer
higher performance and greater ease of use, but at the
same time, their technical structures have become more
complex, and from a manufacturing perspective, quality
assurance through appearance and functional inspections is
becoming more difficult. Going forward, as technological
innovation propels semiconductor performance to new
heights, advanced inspection technology will remain
essential for stable production and high quality. OMRON
presented these technologies at SEMICON TAIWAN held
from September 4 to September 6, 2024. In Taiwan, a hub of
advanced semiconductor manufacturing, we presented our
innovation-driven value proposition to numerous customers
from the semiconductor industry.
OMRON’s offering is by no means limited to PCBA
inspection systems, but encompasses many other products
and solutions for improving productivity and quality in the
semiconductor industry. By continuing to create solutions
that underpin technological innovation, we aim to support
the digital society, creating a better society and a brighter
future.
automated X-ray inspection technology for semiconductor
chiplets received the Minister of Education, Culture, Sports,
Science and Technology Award at the 53rd Japan Industrial
Technology Awards. Comments of the panel of judges
included the following: “It is a technology necessary for the
advancement of the semiconductor industry and an
important automated inspection technology for the
improvement of semiconductor performance,” and “The
minimum resolution per pixel for CT type X-ray inspection
has been improved from 0.3 μm to 0.2 μm.”
Addition of new models for power semiconductor modules
and for data centers contributes to the spread of advanced
technologies
In addition to the model for advanced semiconductors,
OMRON developed the VT-X850, a model for power
semiconductor modules, to meet the inspection needs of
the automotive industry. With their excellent environmental
credentials, EVs will be a primary means of transportation in
the emerging digital society. Integration (X in 1) of
components that combine multiple functions, such as the
“eAxle,” which is an integrated unit comprising major power
Received the Minister of Education, Culture, Sports, Science and
Technology Award at the Japan Industrial Technology Awards
OMRON’s booth at SEMICON TAIWAN
(Far right)
Kazuhisa Shibuya, Senior General Manager, Inspection Systems Business
Division HQ, Industrial Automation Company, OMRON Corporation
Figure 4 Power Modules and Automotive electrical components
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irregular heartbeat to highlight the risk of AFib.
In April 2024, OMRON made Luscii Healthtech B.V., a Dutch
company that provides remote patient monitoring services,
a wholly owned subsidiary. Luscii offers care at home
programs for over 150 conditions to healthcare institutions,
many of which have proven to be effective. Luscii has a flat
“holacracy organizational structure,” which we will refer to
when considering future organizational reform. In the digital
health domain, we will strengthen our health management
service “OMRON connect,” which is currently distributed in
more than 130 countries and regions worldwide. In Japan,
data linkage of OMRON connect with JMDC Inc.’s lifestyle
modification solution service for corporate health insurance
associations has started.
To quickly identify customer needs in the digital health
domain and accelerate the pace of business, we
consolidated planning and development functions of digital
health services into a single organization, which has started
operation, based in North America. We will continue
evolving our services from a global perspective.
To achieve carbon neutrality, an energy consumption
visualization system and air conditioning and lighting
control systems were installed in the office space and on the
production lines at the Matsusaka Factory in April 2023.
Energy control according to the operating conditions of
each space is implemented through DX.
SF2030 Topics “Achievement of Carbon Neutrality”
In January 2024, we launched Vision Link Meeting, a forum
for the management team and employees to freely
exchange opinions. We will endeavor to foster a culture
geared to creation of customer value to become an
organization capable of acting more quickly and flexibly.
Through these initiatives, HCB will create new preventive
care solutions.
the effectiveness of home ECG recording in early detection
of AFib and prevention of its recurrence. Of 94 patients with
AFib, we detected recurrence of AFib in 31 patients.
Our blood pressure monitors satisfy the safety and accuracy
standards required for medical devices and they are
available in more than 130 countries and regions. We are
advocating deregulation to promote the devices. Provision
of product information on ECGs to general consumers was
previously prohibited in Japan. However, leveraging
relationships with governmental and other organizations
that we have cultivated through our activities to obtain
regulatory approval, OMRON was involved in drafting the
Guidelines for Appropriate Advertising and Labeling of
Cardiac Activity Recording Devices and Programs for
Cardiac Activity Recording Devices during Events. The
introduction of the Guidelines means it is now allowed to
provide information on blood pressure monitors with ECG
and portable ECGs directly to consumers.
Growth Strategy to Achieve SF2030
Inspired by our vision, “Going for ZERO, Preventive Care for
the Health of Society,” we aim to resolve health issues
concerning cardiovascular diseases, respiratory diseases,
and pain management.
In the device business, we will work to further strengthen
sales channels both offline and online, so that customers
can purchase products at their preferred timing and place.
In the new business, we are focusing on promoting ECGs. In
Europe, we visited more than 1,500 cardiologists and
developed some 1,600 sales outlets in a year.
Moreover, we launched a global campaign to raise awareness
of AFib in February 2024 and produced a movie featuring an
AFib sufferer who comments on her experience, commentary
by a cardiologist, and a piece of music expressing the
Market Environment
There are estimated to be 1.28 billion hypertensive patients
and 46 million atrial fibrillation (AFib) patients worldwide. As
these numbers are increasing globally in the context of
accelerating population aging in developed countries and a
growing middle class in developing ones, demand for
healthcare products is destined to grow. We believe growth
potential is high in developing countries such as India and
other nations in Asia, where the penetration rate of blood
pressure monitors is low.
In addition, we believe digital technology and AI will
become increasingly prevalent, and will be introduced not
only for personal health management but also as new
medical infrastructure for treatment and diagnostic support.
Meanwhile, as consumer purchasing behavior shifts online
globally, the market environment is changing faster with the
emergence of new ecosystems as well as the new entrants
from different industries and startups.
Our Strengths
One of our strengths is the trust of medical professionals,
patients, and consumers that we have cultivated through the
market penetration of blood pressure monitors. This is also
reflected in our new initiative, “to develop an at-home
electrocardiogram (ECG) recording culture.” Though it is yet
not widely known that AFib is a risk factor for stroke or that
an ECG can be obtained at home, we are participating in
related academic conferences, raising consumer and media
awareness of the disease and of ECG. We conducted joint
research with Kyoto Prefectural University of Medicine on
Healthcare Business (HCB)
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Respiratory
business
Pain management business
Other (including remote patient monitoring services)
Cardiovascular business
Net Sales for Fiscal 2023
Demand for mainstay blood pressure monitors remained strong, particularly in Europe. In addition, demand for nebulizers
increased significantly in China due to an increase in pneumonia and other respiratory diseases. As a result, sales increased year
on year to JPY 149.7 billion, due in part to the depreciation of the yen.
Operating income for Fiscal 2023
Operating income significantly increased year on year to JPY
18.5 billion due to the increase in sales, as well as cost
reductions for logistics and components.
FY2023
Net Sales
JPY 149.7billion
68%
15%
4%
13%
13.7%
0
20.0
30.0
40.0
10.0
142.1
161.0
16.0
22.0
123.1
132.9
20.6
18.5
11.3%
16.7%
14.0%
149.7
18.5
12.3%
FY
20
21
22
24
(Forecast)
23
(Billions of yen)
(Billions of yen)
0
30.0
60.0
90.0
150.0
120.0
Net sales
Operating income (right axis)
Operating income margin
Blood pressure monitors
Nebulizers
Thermometers
TENS
Body composition
monitors
Other
64%
15% 6 4 47%
Sales Composition by Product
INPUT
OUTPUT
OUTCOME
Net sales: JPY 149.7 billion (+5.3% YoY)
Operating income: JPY 18.5 billion (+15.3%
YoY)
Cumulative global sales of blood pressure
monitors: 22.46 million units (FY2023)
Number of countries where portable ECGs
and blood pressure monitors + ECG are
marketed: 45 countries
R&D cost: JPY 8.3 billion (results for FY2023)
Capital expenditure: JPY 3.9 billion (results for FY2023)
Started data linkage between the OMRON connect smartphone health management app and JMDC Inc.’s Pep Up personal
health record (PHR) service. (April 2023)
Introduced an energy consumption visualization system and air conditioning and lighting control systems in the office
space and on the production lines at the Matsusaka Factory. Implementation of energy control according to the operating
conditions of each space to achieve carbon neutrality (April 2023)
Launched a portable ECG in Japan that can record ECG data useful for physicians’ diagnosis (April 2023)
Began domestic procurement of parts for blood pressure monitors manufactured at the Matsusaka Factory. Aim to reduce
greenhouse gas emissions and coexist with the local community (July 2023)
New factory in Dalian, China, began operation (August 2023)
Launched a global campaign “Listen to Your Heart” to raise awareness of AFib
To advance health and empower
people worldwide to live life to the
fullest by creating eco-systems for
preventive medicine to decrease
the onset of chronic heart disease
events
SDGs 3.4.1
Sales Composition by Business Domains
Net Sales / Operating income / Operating income Margin
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Helping People Fulfill Their Desire to Stay Healthy
through Preventive Care
For “extension of healthy life expectancy,” as one of the
targets of SF2030, OMRON aims to contribute to a society
where people can pursue individual fulfillment by staying
healthy.
Health management at home as preventive care for
serious diseases
OMRON Healthcare, in charge of the healthcare business, is
implementing initiatives to extend healthy life expectancy
centering on cardiovascular diseases, respiratory diseases,
and pain management under the vision “Going for ZERO,
Preventive Care for the Health of Society.”
For cardiovascular diseases, OMRON has been partnering
with healthcare professionals to promote home blood
pressure monitoring for more than 40 years. Today, home
blood pressure monitoring has become standard practice for
hypertension management, and its market is expanding
globally. We will continue to focus on further market
penetration of home blood pressure monitoring in
cooperation with academic societies in various countries. This
year we again extended cooperation for the May
Measurement Month; a global blood pressure screening
awareness campaign held every May in more than 100
athletes, we aim to help more people lead their daily lives
without worrying about pain.
Remote patient monitoring service to support medical
treatment
In April 2024, OMRON Healthcare acquired all issued shares
of Luscii, provider of a remote patient monitoring service in
Europe. We entered a business partnership with Luscii in
2018, linking our devices with Luscii’s treatment support
programs. By making Luscii a wholly owned subsidiary, we
strengthen and accelerate the remote patient monitoring
service business in Europe.
Healthcare support solutions provided by Luscii include care
plans based on biometric data measured at home and care at
home programs to help maintain treatment. This service has
been introduced in about 70 major hospitals, mainly in the
Netherlands and the U.K., and is used to improve the
efficiency of medical care and prevent aggravation.
The greatest strength is that the programs offered by Luscii
cover more than 150 diseases including not only
cardiovascular and respiratory diseases but also COVID-19,
cancer, inflammatory bowel disease, and diabetes. By
integrating the strengths of our devices and know-how with
Luscii’s healthcare support solutions, we will develop remote
patient monitoring services to provide appropriate treatment
to more patients.
Creating new value through preventive care and
extending healthy life expectancy
OMRON Healthcare will continue striving to extend the
healthy life expectancy of people around the world by
providing devices and services that facilitate early detection
of disease and early intervention for treatment, to “prevent
illness,” “prevent aggravation,” and “prevent recurrence of
serious illness.”
countries around the world on the initiative of the
International Society of Hypertension (ISH). To date, OMRON
has donated a cumulative total of more than 20,000 blood
pressure monitors and more than 4 million people have had
their blood pressure measured in this campaign. In addition,
we are working to encourage ECG recording at home for
early detection of AFib, which is one of the causes of stroke.
In February 2024, we launched a new portable ECG device
that can easily record ECG when subjective symptoms such
as chest pain or palpitations are felt at home or when out and
about. By making ECG checks, which are normally performed
at healthcare institutions and during medical checkups, more
accessible, we will help reduce cerebrovascular and
cardiovascular events.
In fiscal 2023, demand for nebulizers for healthcare
institutions increased due to a sharp rise in the number of
patients with respiratory diseases in China, and the sales
marked a record high in the online market. A nebulizer is a
medical device used to deliver medications for asthma, etc.
to the bronchi and lungs in the form of a fine mist. The
number of patients suffering from asthma and other
respiratory diseases continues to increase, especially in China
and other developing countries where air pollution persists.
We are contributing to the treatment of asthma and
prevention of aggravation through the global provision of
nebulizers, which are useful in the treatment of respiratory
diseases.
Regarding pain management to alleviate chronic pain, we are
working to create a new market in the sports recovery
domain for alleviating muscle fatigue and muscle pain after
exercise by applying TENS. Through partnerships with
professional soccer and basketball teams, as well as
universities and high schools with notable clubs, we aim to
expand product recognition in the sports recovery market.
From the treatment of chronic pain to conditioning for
SF2030 Topics “Extension of Healthy Life Expectancy”
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of the infrastructure supporting a digital society.” SSB’s
SF2030 vision is “Design Next Social Structure – Creating
“Social Good“ by Organically Linking People and Society
through Social Automation.” This vision reflects our will to
continue designing “next-generation social systems” by
responding to customer needs from the customer's
perspective, always mindful of the issues confronting the
world, and illuminating a path toward the social systems that
the future requires.
SSB has three targets under SF2030. Firstly, “provision of
control systems that stabilize power generation.” In addition
to the deployment of solar power generation systems and
storage battery systems, which are our current strengths, we
have begun offering power purchase agreement (PPA)
services, for which SSB owns power generation facilities,
which are assets that also serve as control systems to
stabilize power generation, and provide a stable supply of
electricity. We have also begun offering energy
management systems for smart control of electricity.
Secondly, “development of management and service
systems that support efficient use of on-site systems.” We
provide swift and uniform services by utilizing our
nationwide maintenance network and multivendor support
regardless of the manufacturers of the equipment installed
at the customer's premises. In addition, in the distribution
and retail market, we are conducting demonstration tests of
management and services to improve the efficiency of store
operations by analyzing and evaluating various data,
including maintenance data, equipment operation data, and
the store facility environment. We are focusing on these two
targets as medium-to long-term growth drivers of SSB.
Thirdly, “enhancement of operational efficiency of the social
infrastructure business.” In the railway market, we are
promoting “predictive maintenance” to optimize
maintenance based on on-site equipment operation data.
SSB will continue to design next-generation social systems
and help achieve a future full of smiles by creating “social
good.”
In energy solutions, we will widely deploy storage battery
systems in the market while enhancing their functions to
promote the spread of renewable energy. In addition, to
address the soaring cost of electricity procurement due to
soaring oil prices, which is an issue from a market
perspective, we have launched a service that reduces the
cost of electricity procurement by controlling storage
battery systems and recharging and discharging them with
optimal timing during each day. We will address the
challenges of adjusting electricity supply and demand while
enhancing and utilizing storage battery systems.
Moreover, regarding management and service solutions
(M&S), we are implementing continuous improvement in
maintenance services for store equipment. In addition, in
order to develop these services and respond to the needs
for energy-saving management and labor saving, which are
issues from a management perspective in the distribution
and retail market, we are working with OMRON‘s Data
Solution Business HQ (DSB) to create a menu of proposals
for optimizing store operations based on environmental
data, such as store electricity usage, and equipment
maintenance trend analysis.
In this way, we will continue to strengthen the products that
hold a high share in each market, and by creating services
from an essential value perspective that resolve issues
facing the market and management, and furthermore by
combining such services with products, we will apply our
strengths based on such combination in each social
infrastructure market.
Growth Strategy to Achieve SF2030
Toward 2030, we expect society to pursue decarbonization
with a mounting sense of urgency in view of global warming
while also emphasizing labor-saving and manpower-saving
in line with the labor shortages caused by the declining
birthrate and population aging. In these circumstances, SSB
aims to create social values that “contribute to the spread
and efficient use of renewable energy and the sustainability
Market Environment
In fiscal 2024, in view of global warming and continued
investment in upgrading and renewal of existing social
infrastructure facilities, the social infrastructure market is
expected to be firm, led by greater investment in energy
facilities. In the energy market, especially in the residential
and industrial domains, demand for solar power generation
systems and energy storage systems is expected to continue
increasing as the need for consumption of renewable
energy for homes persists, reflecting the trend toward
carbon neutrality and soaring electricity prices.
In the distribution and retail market, we expect demand for
store operations and management to continue over the
medium term, as labor-saving needs persist in view of rising
labor costs and labor shortages.
We aim to grow the business by providing solutions that
help resolve customer issues, while ensuring that we retain
a sure grasp of the market environment.
Our Strengths
SSB is a one-stop provider of product value through
products and systems that resolve on-site issues in each
social infrastructure market, from development to
maintenance. Our products and systems support stable
operation of social infrastructure by responding to various
site environments and operating conditions and we hold a
high share of each market. These are our strengths. Going
forward, while strengthening and utilizing products, we will
create “service” solutions from an “essential value
perspective” that resolve issues facing the market and
management. “Products and services” constitute SSB’s
strength and we intend to reinforce it.
Social Systems, Solutions and
Service Business (SSB)
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Energy solutions
(solar power generation systems,
storage battery systems)
Management and services solutions
(management of maintenance and operation,
data analysis, consulting)
55%
INPUT
OUTPUT
OUTCOME
Net Sales for Fiscal 2023
The storage battery systems and other businesses within the Energy Solutions Business performed well as a result of an increase in
needs for captive consumption of renewable energy and subsidy programs, as well as increased investments in the industrial and
commercial domains as part of accelerated efforts toward carbon neutrality. The Public Transportation System Business saw robust
demand for capital investment amid strong performance among railway companies in response to a recovery in passengers and fare
revisions. As a result, sales increased significantly year on year to JPY 141.6 billion.
Operating income for Fiscal 2023
Operating income increased significantly year on
year to JPY 14.0 billion, mainly due to the increase
in sales
SDGs 11.2.1
SDGs 7.1.2
SDGs 13.2.1
Net sales: JPY 141.6 billion (+32.0% YoY)
Operating income: JPY 14.0 billion (+87.2% YoY)
Connected energy management devices: 80000 units (March
2024)
Cumulative shipped capacity of solar power systems: 12.0
GW (March 2024)
Cumulative shipped capacity of storage battery systems: 1.4
GW (March 2024)
Cumulative total of carbon offset volume certified under
J-Credit Scheme: 56 GW/5647 t-CO2 (March 2024)
Started introduction and operation of solar power generation
systems at OMRON factories in Japan
R&D cost: JPY 4.3 billion (results for FY2023)
Capital expenditure: JPY 5.6 billion (results for FY2023)
Started providing a three-phase system for self-consumption of electricity and sale of
surplus electricity compatible with the new output control regulation (February 2024)
Started providing a centralized energy monitoring service (February 2024)
Started demonstration of a remote recharge/discharge control service using storage
batteries for home use (September 2023)
Launched POWER JUGGLING, a solution to reduce electricity procurement costs (August 2023)
Signed a partnership agreement with a local government to revitalize the forestry industry
(August 2023)
Started providing a three-phase system for full self-consumption of electricity for
commercial solar power generation (April 2023)
Contributed to realization of better societies in
which people worldwide can enjoy safer, more
secure and more comfortable lives through
expanded provision of renewable energy and
people-friendly next-generation systems
42%
12%
24%
8% 7%
1
33
Other (software
development,
etc.)
Energy
Management
and services
Public transportation
system
Traffic and road
management
systems
Payment
systems
Infrastructure
monitoring
Network
protection
Sales Composition by Business Domains
FY2023
Net Sales
JPY 141.6billion
Other
Sales Composition by Product
45%
Net Sales / Operating income / Operating income Margin
0
30.0
60.0
90.0
150.0
120.0
107.3
7.5
14.0
95.7
87.7
5.7
6.5
6.0%
141.6
154.5
7.4%
9.9%
7.0%
11.0%
17.0
(Billions of yen)
0
40.0
30.0
20.0
10.0
FY
20
21
22
24
(Forecast)
23
(Billions of yen)
Net sales
Operating income (right axis)
Operating income margin
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domains that contribute to the achievement of carbon
neutrality and the realization of a digital society as new
pillars for growth, we aim to achieve sales of JPY 50 billion
in these domains, accounting for 30% of DMB’s net sales by
fiscal 2027. The spread of new energy devices, such as solar
power generation systems and EV chargers, is making
advancements to accomplish reduced environmental
impacts, and we are promoting high-capacity relays and
modules to respond to these needs. In response to the
demand for products for device testing due to the spread of
advanced semiconductors for generative AI and high-speed
communications, we will strengthen the provision of high-
frequency relays and modules for testing equipment to
increase sales. We are also engaged in the co-creation of
modules that incorporate IoT communication technology to
realize our customers’ new data businesses, such as weather
IoT sensors that contribute to effective responses to extreme
weather events.
Our second objective is to “re-strengthen our core
businesses.” In addition to the strengths in quality and
technical support that we have cultivated, we will enhance
flexible delivery management in response to demand
fluctuations by transitioning to an AI-based statistical
forecasting model and investing in increased production
based on demand forecasts. With a view to new value
propositions as a step toward re-strengthening our core
businesses, we are working to create new value based on
“Green,” “Digital,” and “Speed.” For example, as a Green
value proposition, we are accelerating initiatives such as the
provision of carbon footprint information of our high-
capacity relay products in order to contribute to the
reduction of CO2 emissions throughout the supply chain.
Finally, our last objective is the reform of the earnings
structure. DMB is also working to establish a strong earnings
structure that can maintain ROIC of 10% or more by
improving production efficiency through consolidation of
commercial logistics, consolidation and elimination of
product item numbers, and introduction of statistical
demand forecasting, in addition to improvement of
productivity through automation of production lines and
digital transformation (DX) of indirect operations.
capable of providing leading companies in a wide range of
industries with optimal solutions corresponding to customer
assets and requirements. Having swiftly identified social
changes and needs, we have been able to develop and
provide products globally and ahead of our competition.
Our customer base is a significant element that supports
DMB. Our second strength is quality and performance
reliability, which we have continued to refine in the course
of transactions with leading companies. We provide
products with stable quality by thoroughly evaluating quality
in all manufacturing processes from development and
design to completion, and by visualizing the quality status
of our production lines worldwide. In terms of product
performance, we are working to provide value that
anticipates trends through product development based on
a backcasting approach to capture the market and customer
needs. This approach has enabled us to earn the trust of our
customers and build long-term partnerships. The third is our
technologies based on “connecting” and “switching.” In
addition to the technology for stable on/off switching, we
possess microfabrication technology that we have cultivated
since our founding as well as the technology for enabling
various functional features packed in a compact-sized
product. With a broad array of technologies, we can create
unique, highly functional devices and modules that differ
from those of specialist manufacturers. To further reinforce
and leverage these strengths in the future, we practice
high-cycle management, aiming to “strengthen our ability to
make proposals and realize them quickly” and “improve our
ability to effectively respond to change through data-driven
decisions.” Specifically, our aim is to shorten the lead time
until new product releases by 50% through concurrent
activities and to quadruple the speed of business control
including procurement, production, and sales. We will
further reinforce these three strengths to ensure that DMB is
always the first choice among customers.
Growth Strategy to Achieve SF2030
Under NEXT 2025, we will strengthen our business portfolio
and earnings structure to achieve SF2030. Our first objective
is the “creation of new pillars for growth.” By focusing on the
Market Environment
Demand for electronic components in fiscal 2024 is patchy,
depending on industries and areas. In the first half of the
fiscal year, demand was somewhat weak due to the
continued impact of inventory adjustments in the market
and by customers. A resolution of this issue is expected in
the second half due to an improvement in demand for
factory automation equipment and building facilities, and in
addition to a recovery in the semiconductor market,
moderate recovery in demand is expected.
In addition, while environmental issues are becoming
increasingly pressing due to the ongoing global warming,
the energy management market is expanding, such as for
solar power generation systems, storage batteries, and EVs,
all of which contribute to the spread of renewable energy. In
particular, the EV charger market is growing, underpinned
by policies such as subsidies and tax incentives to promote
the spread of EVs in various countries, and demand for
electronic components to install in EVs is also increasing. As
for the semiconductor market, growth is expected globally
in the second half of fiscal 2024 amid the spread of data
centers and the expansion of digital transformation (DX)
initiatives among companies that utilize the latest
technologies such as generative AI. Notably, we expect
similar growth in business for semiconductor inspection in
line with expansion of demand, especially for advanced
semiconductors such as those for generative AI.
Thus, demand for electronic components is expected to
grow steadily. DMB will strengthen its approach targeting
rapidly growing applications in industries, capture orders,
and aim for business growth that exceeds the rate of market
growth.
Our Strengths
DMB has three strengths. Firstly, a global sales network
Device & Module Solutions
Business (DMB)
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Net Sales for Fiscal 2023
Demand for components for the consumer industry fell sharply, particularly in the Americas and China. This decrease was largely
due to controlled investment, stagnant production activities, and inventory adjustments among our customers. Demand for
automotive components was sluggish in general, although automobile production volume showed signs of recovery in certain
markets in the second half of the year. As a result, sales were JPY 114.4 billion, significantly lower in terms of year-on-year.
Operating income for Fiscal 2023
Operating income declined significantly year-on-year to JPY
3.1 billion as a result of the decrease in sales and other
factors.
9%
Relays
Switches
Connectors
Sensors & Modules
50%
21%
5
24%
Core domain
Sales Composition by Product
91%
86.0
3.0
121.0
138.9
110.0
114.4
10.1
15.5
3.1
4.0
3.4%
8.3%
11.2%
3.6%
2.8%
(Billions of yen)
(Billions of yen)
0
30.0
60.0
90.0
150.0
120.0
FY
20
21
22
24
(Forecast)
23
0
40.0
30.0
20.0
10.0
Net sales
Operating income (right axis)
Operating income margin
EV charger that is
safe for people to
operate
Low heat
generation and
safe shutdown
of energy
storage systems
Proprietary IoT
modules such as
weather sensors
Growth domain
*Third-party sales only
INPUT
OUTPUT
OUTCOME
SDGs 9.4.1
Net sales: JPY 114.4 billion (-17.6% YoY)
Operating income: JPY 3.1 billion (-79.7% YoY)
Development of technologies and products that contribute to the
achievement of carbon neutrality and the realization of a digital society
Commercialization of Soratena Pro, a new type of IoT weather sensor
that helps mitigate climate change and disaster risks
Commercialization of EV Charging Smart Plug to promote the spread
of EVs
Expansion of clean energy production
- GHG emissions: 48 Kt-CO2 (-25 Kt compared to FY2021)
- Obtainment of third-party certification for carbon footprint based on
ISO14067
R&D cost: JPY 4.9 billion (FY2023 results)
Capital expenditure: JPY 6.1 billion (FY2023 results)
Accelerated creation of new products by strengthening the R&D system
- Reinforced product development system at the Shenzhen factory in
China, and achieving the China National Accreditation Service for
Conformity Assessment (CNAS) certification, an international
laboratory accreditation standard
- Accelerated development by strengthening industry-academia
collaboration
Promotion of sustainability
- Conducted RBA-VAP audits in accordance with the Responsible
Business Alliance (RBA) Code of Conduct at the Malaysia factory
Contribution to the improvement of human life
on Earth and the development of society
through the diffusion of new energy and
high-speed communications
Social value KPI: 30 million units for DC devices,
120 million units for high-frequency devices
(cumulative total for FY2022–FY2023)
Sales Composition by Business Domains
Net Sales / Operating income / Operating income Margin
FY2023
Net Sales
JPY 114.4billion
Solutions for
highfrequency
applications following
the development of
highspeed
and high-capacity
semiconductor devices
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method for its “health & productivity management
assessment” service, showing the potential for wider use as
a service for companies.
*As of August 29, 2024
2) Create a data solution business in the healthcare domain
We are promoting various themes, including the
development of services that combine JMDC Inc.’s medical
data with OMRON Healthcare's vital data, and the launch of
a business through collaboration among JMDC Inc.,
OMRON, iCARE Co., Ltd., which operates the health
management cloud service “Carely.” OMRON Healthcare
and iCARE formed a capital and business alliance in July
2024.
3) Create a data solution business outside the healthcare
domain
We will also accelerate business development in the
industrial automation and social solutions domains by
leveraging JMDC Inc.’s data management capabilities. In the
smart management and service solutions (M&S) business,
which has already been launched, we plan to expand DX
services in wide-ranging fields, starting with retail and
distribution, which are suffering from significant labor
shortages, and then infrastructure monitoring, railways, etc.
With these three growth drivers, DSB aims to achieve data
solution business sales of JPY 100 billion in fiscal 2027.
Health & Productivity Management Alliance® is a registered trademark of OMRON Corporation.
the four existing business companies, on-site data that can
be obtained from such hardware, and the customer base,
which spans a wide range of industries worldwide. On the
other hand, JMDC Inc. has the data management
capabilities to utilize large amounts of different types data
for business purposes, and the solution development
capabilities to convert the data into customer value and
monetize it. DSB’s strengths are the business development
capabilities to create new value by integrating OMRON’s
business assets and JMDC Inc.’s capabilities and the DX
promotion capabilities to transform the business models of
existing businesses.
DSB started with six businesses and will further accelerate
collaboration with the four business companies in order to
transform OMRON’s value creation from businesses
centering on products to data-driven solution businesses
(combination of products and services).
Growth Strategy for SF2030
There are three growth drivers for DSB. The first is to
“accelerate the growth of JMDC Inc.,” the second is to
“create a data solution business in the healthcare domain,”
and the third is to “create a data solution business outside
the healthcare domain.” The growth strategy for each item is
described below.
1) Accelerate the growth of JMDC Inc.
JMDC Inc. has achieved annual growth of almost 30% in
sales and profit to date. DSB will help JMDC Inc. accelerate
its growth by offering OMRON’s business assets required
for JMDC Inc.’s further growth. For example, the Health &
Productivity Management Alliance®, which was established
in June 2023 and has 424 member companies and
organizations*, has adopted JMDC Inc.’s data analysis
Market Environment
The mission of the Data Solution Business HQ (DSB) is to
“Go beyond the boundaries of products. Transform OMRON
and create true customer value.” We will transform the
OMRON Group’s value creation away from manufacturing to
data-driven solutions.
Penetration and diversification of digital devices have led to
a sharp increase in the number of data-driven companies
and data-driven services, regardless of the industry, that
utilize data owned by individuals and companies to achieve
business results.
DSB is eyeing markets in three domains, namely, industrial
automation, healthcare solutions, and social solutions, which
are OMRON’s focus domains. These domains have plenty of
social issues related to such matters as sustainability of the
global environment, the super-aging society, and labor
shortages. DSB sees the three social issues identified in
SF2030 as business opportunities, and through its unique
approach of building an ecosystem based on open
innovation and developing and providing data-driven
solutions, will contribute to the optimizing of social costs,
which are increasing as society matures, and achieve
business growth.
Our Strengths
DSB is the cornerstone of collaboration between JMDC Inc.
and OMRON’s existing businesses. We will lead the business
growth of the entire OMRON Group by integrating the
strengths of OMRON, JMDC Inc., and DSB. OMRON’s
strengths lie in the hardware installed base established by
Data Solution Business (DSB)
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Net Sales for Fiscal 2023
Sales continued to be firm with ongoing growth in the number of health insurance association contracts at JMDC Inc.,
increasing transaction volume with pharmaceutical companies and insurance companies for whom we provide data, and
growing numbers of medical institutions utilizing remote image interpretation services. Sales amounted to JPY 17.4 billion.
Operating income for Fiscal 2023
Operating income was JPY 2.2 billion, remained firm,
supported by sales growth.
SDGs 3.4.1
SDGs 13.2.1
SDGs 8.2.1
Net sales: JPY 17.4 billion (-)
Operating income: JPY 2.2 billion (-)
Number of municipalities introducing Healty ageing solutions service:
4 prefectures, 9 municipalities, 25 community comprehensive support
centers
For Healty ageing solutions, signed a contract as a project partner of
Oita Prefecture for the Grant for the Vision for a Digital Garden City
Nation (Digital Implementation Type TYPES).
Number of internal organizations that have introduced the data
utilization solution business (pengu): More than 70 departments,
including sales, production, and back-office departments
JMDC Inc.’s new business
Corporate health solutions
Healty ageing solutions
Smart management and service
solutions (M&S)
Carbon neutrality solutions
Data utilization solutions
R&D cost: JPY 0.1 billion
(results for FY2023)
Capital expenditure: JPY 1.2 billion
(results for FY2023)
JMDC Inc. made Cancerscan Inc. a subsidiary
(December 2023)
Capital and business alliance with iCARE Co., Ltd.
(July 2024)
Accelerating resolution of the three social issues
addressed by OMRON, namely, achievement of
carbon neutrality, realization of a digital society, and
extension of healthy life expectancy, by focusing the
OMRON Group’s value creation on solutions
FY2023
Net Sales
JPY 17.4billion
INPUT
OUTPUT
OUTCOME
* The figures for the Data Solution Business include the financial figures of JMDC Inc. from October 16, 2023, onward,
the date on which it became a consolidated subsidiary of the Company.
Composition of business domains
1%
99%
Businesses to accelerate growth
JMDC Inc.’s existing business
43.0
17.4
2.2
3.0
7.0%
12.6%
0
10.0
20.0
30.0
50.0
40.0
0
8.0
6.0
4.0
2.0
(Billions of yen)
(Billions of yen)
Net sales
Operating income (right axis)
Operating income margin
FY
24
(Forecast)
23
Net Sales / Operating income / Operating income Margin
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other hand, OMRON’s business is focused on
manufacturing, but we aim to evolve into a company that
offers value through solutions that provide services in
addition to products. This means that we intend to first help
JMDC realize considerable growth, and then link this to the
growth of the OMRON Group. To achieve this, we will take a
“give and give” approach to JMDC. We want it to use our
Group assets freely to achieve a high level of growth that it
would not be able to realize alone. The growth of JMDC is
directly connected to the sales and profit growth of the
OMRON Group. As we gain a better understanding of skills
and capabilities possessed by JMDC, we will evolve and
become able to provide customers with business and value
that differ from what we could offer before. In the medium-
to long-term, we also think it will help OMRON’s corporate
culture to change for the better. Taking a long-term
perspective, I think this collaboration will create a ripple
effect that will have a huge impact on the Group.
Noguchi: Thank you for expecting so much of us. We see
OMRON as an incredibly reliable partner and shareholder.
You respect our autonomy and independence and since
starting the capital/business tie-up, we have built a strong
relationship of trust. At JMDC, we will first work to achieve
firm growth, while also incorporating OMRON’s corporate
culture so we can fully benefit from the positive effects. The
way our mutual perspectives are in alignment is very
reassuring and I look forward to furthering our
collaboration.
Ishihara: I think a big part of why our perspectives align is
that our visions for healthcare are focused on the same area.
Over half a century, OMRON HEALTHCARE has built up a
blood pressure monitor business that has a share of over
50% of the global market. However, in order to realize our
goal of eliminating events of cardiovascular disease (Zero
Event), we need to find a way to encourage changes in the
behavior of patients. We think the key to this is data. JMDC
gathers a wide variety of healthcare data in large volumes
and uses it to prevent the worsening of medical conditions.
It is the strongest and most appropriate partner for realizing
our Zero Events vision and that is why we wanted to work
together.
Noguchi: Our mission is “A healthy and prosperous life for
all people” and we aim to realize this though data and
information and communication technology (ICT). OMRON’s
assets are a good fit for achieving this mission. We want to
get closer to solving these social issues.
How do you plan to grow existing businesses through
the collaboration?
Noguchi: In regard to which of OMRON’s assets we can use
to grow our business, we would like to engage in the
development of new services and devices that combine
OMRON HEALTHCARE’s devices with our data and
solutions. Also, the Health & Productivity Management
Alliance we are currently advancing together will be
extremely important for JMDC going forward in regard to
expanding into the corporate health field. Furthermore,
OMRON also engages in an extremely wide range of
business areas other than healthcare, so we would like to
realize growth by working together on the challenge of
applying JMDC’s data science and data solution capabilities
in these areas. We would also like to use OMRON’s diverse
global footprint to accelerate the global development of
JMDC.
Outcomes of Collaboration to Accelerate
Solutions Business and Expectations for Both
Sides
OMRON and JMDC concluded a capital/business
tie-up agreement in February 2022 and JMDC joined the
OMRON Group in October 2023. Please share your
respective expectations regarding this partnership.
Ishihara: We are truly thankful that JMDC joined the Group.
JMDC is a company that develops solutions using data and
has generated great value in the healthcare field. On the
Senior General Manager,
Data Solution Business HQ and
Senior General Manager,
Innovation Exploring Initiative HQ
Hidetaka Ishihara
President and CEO,
Representative Director,
JMDC Inc.
Ryo Noguchi
Discussion: OMRON x JMDC toward Evolution
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Ishihara: The assets we could use together in the healthcare
field were clear from the very start of the collaboration. What
is becoming clearer as we advance the collaboration into
non-healthcare fields is the interest in healthcare among
non-healthcare customers and the size of the challenge in
regard to data usage. The former is because every industry
is beginning to focus on the health of its people while the
latter is because data use is a key technology in regards to
advancing digital transformation (DX). I feel that the data
usage expertise that JMDC has accumulated in the
healthcare field is a strong asset that can potentially be used
in a wide range of non-healthcare fields.
Business Growth Realized Through the Health &
Productivity Management Alliance
Collaboration between OMRON and JMDC started with
the Health & Productivity Management Alliance. Please
share some examples of how this alliance has created
business growth.
Noguchi: JMDC’s business started with the handling of data
from health insurance associations and then providing
support for its use within those associations. Health
insurance associations still account for a large part of our
business and we currently handle the data of about 19
million people a month for over 400 associations. The next
stage will be to expand our business into the corporate
human resources field. As the number of working-age
people falls due to population decline and the aging of
society, extending the healthy life expectancy of employees
will lead to greater profitability in the future. More
companies are advocating health and productivity
management and the importance of human capital, so we
want to engage the corporate health business field. For
JMDC, entering the corporate human resources field is a
challenge but our activities as part of the Health &
Productivity Management Alliance with OMRON have
increased our opportunities to provide services to
companies. For example, we are receiving enquiries from
companies we have not interacted with before. This is an
important initiative for our business growth, and we have
great expectations.
Ishihara: The alliance started because OMRON did not have
any healthcare business assets that we could offer
companies, but JMDC has solutions that can promote the
health of individuals based on data analysis. Therefore, by
working together, we can approach member companies
with confidence. We truly complement each other.
Evolving 4BC to a Combination of Products and
Services through the DSB
Please tell us about the Data Solution Business HQ
(DSB), which was established in December 2023 as an
organization under the direct supervision of the President
and CEO.
Ishihara: OMRON originally comprised four business
companies (BCs) but we have established the DSB as a fifth.
As it is a BC, it naturally has a commitment to generate sales
and profits. It will work to create its own sales and profits in
the same way as the other four BCs, but it also has another
unique role. This is to drive the evolution of the four BCs
toward a business model that combines “products and
services.” In other words, the DSB has a “vertical” role that
involves the realization of growth though the creation of its
own data solution business and a “horizontal” role that
involves leading the business model transformation of the
other four BCs. These two roles are what makes it unique.
OMRON’s business models have traditionally focused on
manufacturing and selling products, and although we have
always had access to huge volumes of data, we have not
moved beyond the provision of product value. We intend to
dramatically change this situation.
Noguchi: It has an important role.
Ishihara: Since our establishment, the OMRON Principles
have included that “ creating a better society through our
business.” We are facing an “optimization challenge” in
which we have to find ways to balance economic growth
with global environmental conservation, the super-aging of
society, and efforts to overcome labor shortages. There are
limits to the solutions that can be achieved through the
provision of product value alone. Data will be the key to
overcoming this challenge. Specifically, we will use data to
explore optimal solutions, as well as to create solutions
through repeated “Try & Learn.” This will result in value for
customers and turn our business into services. The role of
the DSB will be to drive these initiatives at a high cycle.
During the period of our current long-term vision, SF2030,
we will attain social recognition by evolving to business
models that combine products and services on a Group-
wide basis. This will raise the proportion of total sales
accounted for by the Data Solution Business from about
20% to 30%. That is what we are envisioning. Considering
the above, it is likely that JMDC’s sales and profits will
occupy a significant portion of the Group’s overall results.
We are determined to make the DSB into an organization
that can lead the Group forward by further accelerating the
growth of JMDC and driving the transformation of the
OMRON Group’s business models.
Noguchi: It is an ambitious vision. We will work to realize the
firm growth of JMDC so we can make a contribution.
From the DSB’s perspective, what kind of growth do
you want to see at JMDC?
Ishihara: We want JMDC’s first priority to be the growth of
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43
a forward-looking attitude. They also show a hunger to solve
problems using data. They actively take part in our
discussions regarding any field. I think this sense of
togetherness is really special.
Using Data to Raise Productivity with the Aim of
Solving Social Issues
The DSB has established five business fields where it
will aim to create the next growth businesses. One of these
is the Smart management and service (M&S) solutions.
Please describe the current situation in this field. Also, what
is your evaluation of the current state of the collaboration
with JMDC?
Ishihara: The smart M&S solutions has its basis in the repair
and maintenance business that OMRON FIELD
ENGINEERING Co., Ltd. (OFE) has been engaged in for a
long time. We are currently tackling how to raise
productivity using data, how to create greater value through
management services that go beyond just repairs and
maintenance, and how to deliver this value to customers. It
its own business. It is already recording sales at levels of
over JPY 40.0 billion and its performance in terms of profit
margins is exceptional. If we can grow these to two or three
times the current levels, then the impact of JMDC alone will
be considerable. Additionally, we are combining the assets
of both JMDC and OMRON to create new businesses. For
example, we are currently collaborating over a corporate
health business, and I am confident that this will contribute
to the considerable further growth of JMDC. We want to
lead the creation of a large framework, like the Health &
Productivity Management Alliance, while working together
to strongly cultivate preventive medicine and health
promotion markets. We are also collaborating in the social
systems and industrial automation sectors to advance the
use of data in the DX of social infrastructure and in the
realization of carbon neutrality of manufacturing industry. As
part of this initiative, data science teams from JMDC are
participating in each of OMRON’s businesses to support
business model evolution. It is still early, but we are already
seeing considerable results. After seeing JMDC create value
by demonstrating its data usage capabilities in fields other
than healthcare, I feel reassured that it still has plenty of
growth potential.
Noguchi: Providing support in non-healthcare fields has
also had positive effects on JMDC, including increasing the
size of our data science team. As we engage in a wider
range of fields, we are able to incorporate people with more
acute expertise into the team. The addition of these
personnel has also made our existing engagement in the
healthcare field more dynamic and enhanced our ability to
take on new initiatives. I think this is a very positive result of
the collaboration.
Ishihara: I am glad to hear that. At the start of the
collaboration, we were worried that the data scientists who
joined JMDC to work in healthcare would not be motivated
to engage in initiatives in different areas.
Noguchi: It is true that we have many members whose
ambitions lie in healthcare, but being able to deepen
knowledge and engage in a wider range of initiatives by
participating in OMRON projects is by no means a negative.
Ishihara: I am impressed at how the data scientists take on
the challenges in front of them with a sense of curiosity and
Role of the Data Solution Business (DSB)
Business Growth Projection
Growth of OMRON’s Data Solution Business
using JMDC’s assets*
Growth of OMRON’s Healthcare Business
using JMDC’s assets*
Growth of JMDC’s business through the
Health & Productivity Management Alliance
Growth of JMDC’s existing business
4
3
2
1
Now
FY2027
*Healthcare and data management capabilities
Healthcare
Business
(HCB)
Social
Systems,
Solutions
and Service
Business
(SSB)
Device &
Module
Solutions
Business
(DMB)
Data
Solution
Business
(DSB)
+
JMDC
Lead business model transition from product value to essential value
Horizontal role
Create future growth businesses
Vertical role
Industrial
Automation
Business
(IAB)
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is one of the projects that is progressing extremely
smoothly, and we are already seeing big results. For
example, our past records concerning enquiries for
customers represent a huge volume of data and they
contain knowledge accumulated over many years of
experience, such as “For this kind of case, you should do
this.” Previously, the handling of this operation was just left
to the relevant staff, but now, we have started using this data
comprehensively to raise productivity. It looks like this
initiative will lead to the saving of at least 1000 man-hours
per year at a certain contact center. If we can roll it out at
other locations, we will raise productivity across the entire
OMRON Group and the results will be incredible. At the
same time, we are starting work on the development of
services for raising the net sales and profit margins of
customers through the implementation of digitalization at
their business sites. Four or five data scientists from JMDC
are involved in both of these initiatives. There has been a
great response and we are already getting enquiries from
multiple customers. We want to advance the development
of these services and realize social applications as quickly as
possible.
Noguchi: It’s really amazing. It is also having a positive impact
on our data scientists. It is truly a win-win situation. I think we
are advancing extremely well-made projects together.
Ishihara: It really is win-win. To supplement the areas in
which we do not have capabilities, we have to ask external
partners for help. In this case, we can pay JMDC the
appropriate price for services without any cash outflow from
the Group, and this leads to JMDC investing in new
personnel. That leads to making the data science team
bigger, enabling it to support OMRON in other projects. I
think it is generating a positive spiral.
Please explain how the solutions businesses created by
OMRON and JMDC are differentiated from other
companies.
Ishihara: Even before the OMRON and JMDC collaboration,
OMRON had a significant advantage due to being a
conglomerate carrying out business in a wide range of
fields. This is mainly because data usage is not just limited
to one field. The value provided by solutions needs to cover
multiple fields. For example, the use of data concerning
peoples’ health and lifestyle habits should not be confined
to just the healthcare field. Also, something that happens
often is that we will make a proposal in a certain field, such
as social systems, and the customer will then request a
comprehensive proposal that includes various solutions
from across the OMRON Group, including areas such as
automation and healthcare. If we only pursued data use in a
single field, then we would not see this kind of broadening
of scope. The importance of business that provides solutions
combining products and services is being recognized by
many manufacturing businesses, but there are not so many
companies that can use data to provide solutions that have
social applications in multiple fields. So that is a major point
of differentiation.
Noguchi: At JMDC, we do not have any experience of
manufacturing products, such as devices, but our strong
point is that we possess various internal assets, including
knowledge and expertise, particularly in the healthcare field,
and we know how to monetize these. Another of our major
strengths is the large volumes and variety of healthcare data
we have accumulated. Even if you have various solutions or
plan to create them, nothing can begin without the data.
This is where a lot of healthcare services trip up. We handle
the data of about 19 million people and about seven million
of them use our PHR service. I think there are places where
these capabilities overlap with OMRON’s abilities as a
conglomerate to provide products in a wide range of fields.
There are virtually no other organizations that can offer both
of these businesses, so that is a point of differentiation.
Ishihara: One of the things that I think makes us a good
combination is that at OMRON, with our history of providing
products, we tend to take a product-oriented approach that
starts with how a product will be used, while JMDC, which is
not a manufacturing business, takes a customer-oriented
approach that starts by looking at how a problem can be
solved. The combination of these two differing approaches
provides an excellent stimulus.
Driving the Growth of the Data Solution Business
JMDC’s business results are growing smoothly but
there has been feedback saying that it should be receiving
a higher evaluation of its intrinsic value from the markets.
What are your views on this point? Additionally, what action
do you plan to take?
Noguchi: Our business itself is growing vigorously and there
are strong signs that this growth will continue going forward,
so it is important that the markets receive a correct
understanding of our value. Due to the COVID-19
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pandemic, we have not had many opportunities to speak
with investors directly, so this year we are taking steps such
as going on a tour to provide explanations to investors,
including overseas investors, in person. We feel that we
have not conveyed the current state of the Japanese health
tech market sufficiently to overseas investors. Therefore, we
will strive to enhance information provision so that they can
understand the sound growth potential of our business.
Ishihara: After two and a half years of collaboration with
JMDC, I am only now fully understanding the essence of
JMDC’s business. There is a wide range of stakeholders in
the healthcare industry, including data owners, service
providers and receivers, and parties who bear the expenses,
and regulations also differ between countries. The variety
and volume of the data handled by JMDC is also literally
growing day by day, and the scope of its business model is
broad. This is difficult enough for Japanese investors to
understand so it must be even more challenging for
overseas investors. I think dialogue will be extremely
important to ensuring a correct understanding of JMDC’s
intrinsic value.
Noguchi: JMDC’s asset is the healthcare data itself. We can
find out in detail what kind of ailments patients of different
ages or genders are suffering from and what treatments
they are receiving. This data is essential to refining
judgements. During the COVID-19 pandemic, various
undertakings between pharmaceutical companies took a
DX route, so using data and making it more visual became
extremely important for refining judgements.
Additionally, it cannot be said for certain that
evaluations of OMRON’s corporate value incorporate the
effects of synergies with JMDC. What kind of challenges
and initiatives do OMRON need to take on?
Ishihara: There are limits to the extent that synergies can be
represented quantitatively in business results, so they are
not always appreciated. We need to find ways to generate
visible results as quickly as possible. The smart M&S
solutions is beginning to produce visible results. Steady
progress is being made on the development of new services
that coordinate JMDC’s medical data with OMRON’s
healthcare vitals data. The immediate challenge is to reflect
this achievement in business results so that it can be
converted into a sense that OMRON is growing. Then the
next big challenge is to create ripples that will spread across
the entire Group. If we do not create a situation in which a
noticeably large proportion of OMRON’s net sales are
accounted for by products combined with services, then the
fundamental evolution of our business will not be reflected
in market evaluations. Therefore, we will create a Group-
wide data solutions business model that brings together the
four BCs. I think that will be our greatest challenge.
Outlook: Aiming to Develop Higher Dimension
Solutions After Joining the Group
From JMDC’s perspective, what kind of company is
OMRON? Also, please describe the growth scenarios you
are envisioning as a member of the OMRON Group and
your expectations regarding OMRON.
Noguchi: We see OMRON as a partner we can really rely on.
As we collaborate on shifting from product value to a
combination of products and services, we are creating
win-win situations. While the growth of our own business is
our first priority, we will work to connect this growth to the
growth of the OMRON Group.
Ishihara: From my perspective, JMDC is extremely thorough
in handling information and practicing compliance, possibly
because its business involves handling sensitive information
about people’s health. It is very serious, in a good way.
Furthermore, it is agile at using information to develop
services and it provides customers with value at an
exceptional speed. I think this sense of speed and a culture
of just trying things out first are extremely positive. It
contains many members who engage in business with
sincerity and focus on trying new things, and I think it is on
the same wavelength as the organization the DSB is aiming
to become. I look forward to taking on challenges and
growing together.
Noguchi: OMRON is surprisingly eager to add JMDC’s
characteristics to its own. It has a culture of taking on new
challenges while also working with an understanding that it
is important to produce results. We look forward to
continuing our collaboration.
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INNOVATION
& TECHNOLOGY
Maximizing the Capability to Innovate Driven by Social Needs
Evolving business models, endowing OMRON with the competitiveness required for achieving
sustainable growth, and expanding new business generation efforts
47
in “near-future design,” which is a concrete depiction of the
near-future society. Business, technology, and intellectual
property strategies are then formulated and implemented
based on this framework (See Figure 1 ). Three organizations
are dedicated to technology management.
The first organization is the Innovation Exploring Initiative
HQ (IXI), which is a platform for OMRON’s innovation. The
second is the Technology and Intellectual Property HQ,
responsible for evolving OMRON’s core technologies,
“Sensing & Control + Think,” and for formulating and
implementing strategies for intellectual property and
intangible assets. The third is OMRON SINIC X Corporation
(OSX), which promotes research through open innovation,
guided by near-future design. During the recent years of
rapid change, these three organizations have worked to
establish a process for agile creation of new businesses and
technologies by backcasting from near-future design.
Through the initiatives of IXI and OSX, new businesses and
technologies are beginning to sprout that could help resolve
social issues.
For example, in its initiatives to evolve the business model
from one based on “products” to one based on the
OMRON’s Business Creation Process Capitalizing
on Technology Management Expertise
OMRON positions the SINIC Theory, proposed by our founder
Kazuma Tateishi to predict future developments, as a
management compass. Through innovation driven by social
needs, we have achieved growth by addressing societal
challenges. Under our NEXT 2025 initiative, we will continue
pursuing innovation to tackle the three key issues outlined
in the long-term vision SF2030, launched in fiscal 2022:
“Achievement of Carbon Neutrality,” “Extension of Healthy
Life Expectancy,” and “Realization of a Digital Society.”
However, in order to put OMRON back on a sustainable
growth trajectory in a rapidly deteriorating business
environment, we must now integrate the expertise gained
through the process of establishing “Technology Management”
into business development under NEXT 2025.
Since taking on the role of CTO, I have been focused on the
challenge of establishing technology management.
Technology management emphasizes growth planning from
two perspectives, forecasting and backcasting, both grounded
Representative Director,
Executive Officer Vice President, CTO
Kiichiro Miyata
CTO Message
Complete NEXT 2025 through
Companywide Application of the
Business Creation Process based on
Established Technology
Management to Enhance Corporate
Value
Companywide
perspective
Timeline
Near-future design
Social issues
Technological evolution
Disruptive technology
Business models
Industrial Automation
Healthcare Solution
Social Solution
Device & Module Solutions
Data Solution
Growth planning
based on forecasting
Growth planning
based on backcasting
• New
business
strategy
• Technology
strategy
• IP strategy
SINIC Theory
Figure 1 OMRON’s Technology Management Based on Backcasting and Forecasting
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“combination of products and services,” IXI has launched
new businesses, including services that support the independence
of the elderly and the digital transformation (DX) of
manufacturing sites. The newly established Data Solution
Business HQ (DSB), which is in charge of evolving OMRON’s
business model, is promoting initiatives aimed at further
growth.
While the Technology and Intellectual Property HQ focuses
on developing core technologies to achieve business
growth and reinforcement, OSX has steadily accumulated
research outcomes utilizing cutting-edge AI and robotics.
Currently, OSX is strengthening collaboration with
customers and business divisions to implement these
research outcomes in society. Intellectual property and
intangible assets determine “competitive advantage” and
“sustainability” driven by the business strategy, the business
model, and the technology strategy.
In utilizing intellectual property and intangible assets, we
have adopted ambidextrous IP activities by combining
“Exclusive to Other Type” and “Sharing & Resonating Type
”policies to implement both a closed strategy and an open
strategy with partners (See Figure 2 ). This ambidextrous
approach is effectively employed in building a patent
network for OMRON’s sensing technology and in
implementing the Health & Productivity Management
Alliance. In light of our challenges to date, I believe that
technology management is essential for establishing a
business creation process. This involves formulating concrete
business, technology, and intellectual property strategies by
backcasting from near-future design, involving partners who
can share in the benefits of these strategies together with
OMRON, and firmly linking these elements into a business
model.
Management Issue to be Addressed under NEXT
2025: Reestablish a Growth Strategy from the
Customer’s Perspective
While new businesses and technologies have begun to
emerge based on established technology management, an
issue that has come to light in the current downturn is the
decline in development productivity of existing businesses.
This stems from placing too much emphasis on a strategy
that concentrated our resources on customers and businesses
in specific industries, despite the rapidly changing market
environment and evolving business models. Although
the strategy yielded good business results for targeted
industries and customers, we were unable to grasp the wide
range of customer needs quickly and accurately. As a result,
regrettably, we were unable to introduce products meeting
market requirements.
In addition, because the development process was time-
consuming and cumbersome, development themes took
too long and we lagged behind competitors. In essence,
OMRON’s essential issue was that we placed too much
emphasis on product-out product planning and development
to meet the immediate needs of specific customers,
rather than forecasting from the customer’s perspective
and formulating growth and product strategies accordingly.
Strengthen Collaboration with Business Divisions
and Leverage Technology Management
Capabilities to Support Completion of NEXT 2025
Under NEXT 2025, head office divisions are deeply involved
from the outset, participating in discussions as each business
division formulates its growth strategy based on forecasting.
Growth strategies, product planning, development themes,
*The term “sharing and inclusion type” was used last year, but the name has been changed.
Figure 2 Ambidextrous IP Activities
Execute ambidextrous IP activities, striking the optimal balance for each business model
Product value
perspective
Essential value
perspective
Exclusive to
Other Type
• Emphasis on market share and competitive
exclusivity
• IP is not shared
• Centering on IP rights, including patents
• Creation of IP at development sites
• Emphasis on ecosystem formation and
alliances
• IP is mutually shared
• A wide range of intangible assets, including data
• Creation of IP in business planning and at
customers’ sites
Sharing ＆
Resonating Type*
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etc. are being reviewed from the ground up. By incorporating
the technology management expertise that we have been
cultivating from a backcasting perspective, we will strive for
innovation driven by social needs from the customer’s
perspective. Let me mention some specific initiatives.
Previously, each business division formulated a growth
strategy based on forecasting and collaborated with the
Technology and Intellectual Property HQ to strengthen core
technologies, intellectual property, and intangible assets.
However, under NEXT 2025, instead of leaving growth
strategy planning solely to individual business divisions,
collaboration with the head office divisions, which have
established technology management, is being further
strengthened. So, the entire company is working as one to
build a pipeline that tightly links business and technology.
For example, in the rebuilding of the Industrial Automation
Business under NEXT 2025, the Senior General Manager of
the Technology and Intellectual Property HQ and I are
actively involved in the Product and Technology Strategy task
force, driving the restructuring of the strategy based on the
processes and expertise we have cultivated in the course
of technology management based on backcasting. Co-
creation with partners is also an effective option to
increase the pace of business. Previously, co-creation with
partners was led by individual business divisions for themes
relevant to their areas. Going forward, in order to gain
further results, we will also actively invest the head office
budget and resources to accelerate these efforts.
In terms of technology strategy, the Technology and Intellectual
Property HQ, as the responsible unit, has appointed
technology officers and formulation of a technology strategy
for each business division has started. To avoid falling into
product-driven technological development in each
business-planning, sales & marketing, and engineering work
together to connect the supply chain and the engineering
chain, ensuring that a technology strategy firmly linked to
the business strategy is formulated. The technology strategies
of individual business divisions are then compiled and
integrated into a companywide technology strategy. In the
development of multiple businesses driven by social needs,
which is a characteristic of OMRON, we aim to identify
high-impact technologies that contribute to differentiation
across businesses and concentrate management resources
on R&D expected to have a high return on investment. We have
also initiated reform of the companywide development
structure that consists of three tiers—research, technology
development, and product development—and are aligning
the execution process with the characteristics of our business
model, providing value to customers.
Development of Human Capital for Technology
Management for the New Era is Critical to
Realizing SF2030
We are committed to completing NEXT 2025 by restructuring
the forecasting-based growth strategy, as outlined above,
and accelerating innovation driven by social needs from
the customer’s perspective through both forecasting and
backcasting. In technology management, we have focused
on development of “architects” capable of formulating
business, technology, and intellectual property strategies. In
addition, we will develop “visionary human capital” who can
chart the course of our growth strategy. This is because, to
ensure OMRON’s sustainable growth, it is essential to
have human capital who can design the near future based
on the SINIC Theory, sensitively grasp changes in society,
and create a vision for the entire business creation process
by connecting diverse information and people. These individuals
must be able to understand and interpret the essence of
customer value and technology, bridging the gaps between
society (customers), business, and technology.
In terms of technology strategy, increasing the speed from
research to social implementation requires the capability to
identify the essence of customer issues, recognize the value
of research outcomes, and formulate hypotheses that
challenge conventional wisdom. This is not something that
can be achieved by simply relying on generative AI. To
cultivate human capital with these capabilities, the
educational programs that have traditionally been planned
by each business division for young employees are no
longer sufficient. Instead, we need a companywide,
systematic approach to human capital development with a
clear purpose. This includes rotating young employees
through various departments and giving them the opportunity
to take on high-responsibility tasks, enabling them to gain
experience and build expertise through iterative “trial and
learning.” With this in mind, we have begun management-
level discussions on a program to develop the human capital
who will lead OMRON’s technology management in the
new era.
According to the SINIC Theory advocated by our founder,
society will enter a transitional period by 2025, moving from
the Optimization Society to the Autonomous Society.
OMRON today is also at a turning point in its journey toward
realization of SF2030. As CTO, I am committed to forging
ahead with OMRON’s structural reform to complete NEXT 2025
by further advancing the technology management that we
have been working on and ensuring that each employee
contributes to innovation driven by social needs from the
customer's perspective. Together with our stakeholders, we
will continue to create new businesses and technologies that
will shape the Autonomous Society.
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Achievements in Fiscal 2023
The Innovation Exploring Initiative HQ (IXI) achieved a
strong start in fiscal 2023. Of particular significance was the
establishment of the Data Solution Business HQ (DSB),
OMRON’s fifth business company, originating from IXI.
DSB has two missions. One is to accelerate the growth of
JMDC Inc., which has joined the OMRON Group. The other
is to integrate JMDC Inc.’s data management and solution
development capabilities with the vast amount of on-site
data obtained from OMRON’s devices and components, in
order to evolve OMRON’s business model and create
growth businesses that will help resolve social issues.
Collaboration between JMDC Inc. and OMRON, which have
different business models and corporate cultures, is rooted
in a relationship of trust in which each views the other as the
best partner. IXI played a central role in acting promptly and
decisively to capitalize on OMRON’s unique capabilities,
including establishment of the Health & Productivity
Management Alliance.
Another milestone is the launch of services— the data
utilization solution business and the elderly care solution
business —by two in-house startups that IXI incubated and
whose business hypotheses it validated. In fiscal 2024, the
two businesses were transferred to DSB following its
establishment. The data utilization solutions and the Healty
Ageing Solutions are experiencing accelerating sales
growth, aiming for profitability in fiscal 2025 and fiscal 2026,
respectively.
Evolution of Business Creation Approach
The establishment of DSB has clarified OMRON’s strategy to
create new businesses and transform business models. All
of DSB’s focus businesses are based on themes that IXI
earmarked for promotion, such as data healthcare and
support for achieving carbon neutrality in manufacturing
industry. Viewing DSB’s focus businesses as “stepping
stones,” IXI will concentrate on expanding their peripheral
businesses by implementing timely measures to accelerate
their growth.
In creating peripheral businesses, we will shift our approach
from germinating business seeds based on ideas to
achieving progress through open innovation, such as by
means of M&A&A (the last A being alliance) and co-creation
with startups. We draw up new business concepts from a
Innovation Exploring Initiative HQ (IXI)
medium- to long-term perspective and link them with the
business expansion strategies of DSB and other business
companies to contribute to OMRON’s growth.
Promotion of DX throughout the OMRON Group
Since fiscal 2023, OMRON has been tackling companywide
business innovation using generative AI, positioning IXI as a
Center of Excellence (CoE). In promoting NEXT 2025,
companywide business process reform through DX is
indispensable, but a strong engine is needed to drive
initiatives across the board. By taking maximum advantage
of IXI’s expertise in value verification of new businesses and
business transformation for NEXT 2025, we intend to lead
transformation of the entire OMRON Group.
New Approach for Business Creation
Promote incubation through investment in startups and M&A&A
As a profit center, achieve top-line growth/enhancement of corporate value
B
S
C
A
Phase 0
Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
Creation of
themes
Design of
business models
Value
verification
Business
validation
Business launch
(In-house startup)
Pursuit of business growth covered by
portfolio management
Investment in startups
(collaboration with OMRON VENTURES CO., LTD.)
M&A&A
(Collaboration with Global Strategy HQ)
Business Creation Process
IXI
DSB
Expecting Growth
Investment
Profit Restructuring
Examining Regrowth
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The “Generative AI Utilization Promotion Project (AIZAQ)”
was launched to apply IXI’s expertise in value verification
for new businesses and business transformation across
OMRON. More than 200 people from across OMRON, all
with a strong desire to raise productivity and innovate
the customer value proposition through the use of
generative AI, have joined forces in this project led by IXI.
Participants include not only those with generative AI
expertise who can provide technical support, but also
employees without experience of AI who are eager to
improve the efficiency of their daily work and drive
meaningful change. A broad spectrum of individuals—
ranging from managers to young employees, regardless
of position, age, or department—are actively engaged in
AIZAQ and are practicing trial & learning.
At first, themes were solicited from across the company
wherever generative AI could be applied. Personnel were
assigned to each theme, goals were set and verification
of AI’s utilization began. During the first six months of the
initiative, issues in utilizing generative AI were identified
and concrete results were achieved for some 20 use
cases. For example, one use case involved tabulating and
analyzing customer questionnaires about products. The
desirability of replacing existing tasks with generative AI
was verified, and positive results prompted horizontal
deployment to other divisions. From fiscal 2024, the goal
is to annually develop 50 use cases so as to continually
accumulate and share knowledge throughout the
company, while achieving further progress through
horizontal deployment.
Implanting a Culture of Innovation throughout
OMRON
One of IXI’s missions is to “develop human resources,” that
is, to foster a large number of people who can drive
innovation across OMRON. DSB’s establishment and DX
promotion throughout the OMRON Group, which were
achievements of fiscal 2023, were the fruits of our efforts to
strengthen the human resource portfolio and human
resources development.
IXI has introduced the Employee Experience (EX) Journey, a
systematized approach to human resources development.
The goal is to have IXI members rapidly unleash their full
potential after joining IXI so that they can achieve impactful
results. Additionally, the initiative aims to ensure that
employees seconded to IXI return to their respective
organizations as ambassadors of the culture of innovation.
The “employee experience” encompasses every stage, from
pre-transfer (or pre-joining), onboarding, and the first day to
career development, and even the post-IXI journey.
As a result of the introduction of EX Journey, employees
with diverse backgrounds drawn from inside and outside
the company are able to take on the challenge of creating
new businesses and promoting DX for OMRON as a whole
while leveraging their respective strengths. An increasing
number of employees who have gained experience at IXI
are bringing the culture of innovation back to their
respective organizations after leaving IXI, driving cultural
transformation throughout OMRON. This includes fostering
a heightened sense of urgency by stressing speed and
promoting value enhancement, with ideas for improvement
shared freely, regardless of positions in the corporate
hierarchy.
Toward Further Advancement
IXI underwent a major evolution in fiscal 2023, but its goals
remain the same. As an innovation platform for the entire
OMRON Group and as an experimental organization that
transforms challenges into opportunities for learning, IXI
strives to create new businesses, transcending the
boundaries of business companies, and contribute to the
maximization of OMRON’s corporate value.
The Health & Productivity Management Alliance is a
collaborative framework for companies that share a
vision of “revitalizing Japanese companies and securing
the sustainability of company-run health insurance
societies by promoting employees’ well-being.” At the
initiative of IXI, plans were firmed up and OMRON and
eight other leading managing companies created a
framework for collaboration with ministries, agencies,
and academic institutions, transcending the boundaries
of industries, business sectors, and companies. In just
over a year since its establishment, the Health &
Productivity Management Alliance has expanded to
include 424 companies and organizations*, and has
emerged as a platform where members share pioneering
initiatives. From fiscal 2024,
subcommittee activities will be
emphasized to achieve results through
collaboration among companies in a
more practical manner for further
evolution.
*As of August 29, 2024
Health & Productivity Management Alliance
Column 2: Promoting Generative AI Utilization
Promotion Project
Column 1: Establishment of the Health & Productivity
Management Alliance
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Core Technologies as One of the Key Sources for
Innovation Driven by Social Needs
The Technology and Intellectual Property HQ, OMRON’s
corporate R&D unit, is responsible for strengthening the
competitiveness and growth of each business. By
anticipating social issues that may arise in the near future
and evolving core technologies to resolve them, we are
endeavoring to achieve innovation driven by social needs.
For this purpose, the Technology and Intellectual Property
HQ oversees governance across OMRON of intellectual
property and intangible assets, which are important
corporate management resources, formulating and
implementing intellectual property strategies for R&D and
each business. Thus, our role encompasses OMRON’s
technology management with respect to both
“technologies” and “intellectual property.”
Our core technologies “Sensing & Control + Think” are the
source of OMRON’s creation of customer value through
innovation driven by social needs. In order to address the
three social issues set under SF2030—“achievement of
carbon neutrality,” “realization of a digital society,” and
“extension of healthy life expectancy”—the Technology and
Intellectual Property HQ has been focusing on the core
technology domains of robotics, sensing, power electronics,
and AI and data analysis, while promoting technological
development for social implementation based on “near-
future design.” Specific initiatives are described below.
Robotics
OMRON began verification tests with Chugai
Pharmaceutical Co., Ltd. to realize a next-generation
laboratory automation system that automates a series of
In this way, we have evolved our core technologies while
staying closely connected with both internal and external
customers. However, society continues to undergo profound
change. The replacement of human tasks with, and
collaboration between, generative AI and robots are
advancing at an increasing pace. As a result, challenges at
workplaces across a wide range of industries—not just
manufacturing but also healthcare and food—are becoming
more complex and customer needs are shifting dramatically.
In such an environment, it is critical to develop technologies
that will be a source of timely value for our customers. This
requires a companywide technology strategy closely
aligned with our business strategy, raising development
productivity, and maintaining competitiveness. We need a
technology development process that continually assesses
the evolving direction of customer needs amid rapid
societal changes, identifies the necessary technologies, and
creates value in advance.
In fiscal 2024, we will focus on strengthening technology
governance to further advance robust technology
management.
experiments in drug discovery research. (July 2023)
Technologies, such as robotics to assist/automate drug
discovery experiments conducted by humans and
autonomous driving to enable robots to move freely in the
confined spaces of laboratories, are being verified.
Sensing
A simple means of measuring blood pressure anywhere,
anytime to estimate the degree of hypertension—a key factor
in cardiovascular and cerebrovascular diseases—would meet
a pressing need. To address that need, we are integrating
sensor device design technology and AI technology to
develop innovative blood pressure measurement
technology enabling easy measurement with improved
accuracy. We are presenting our findings at academic
conferences and other events.
Power Electronics
We have developed new power supply technologies,
including design optimization technology based on
computer aided engineering (CAE) and resonant circuit
design technology. These innovations enable both
downsizing and efficiency improvements of the power
supply, which is at the core component of the control panels
that efficiently operate production equipment in factories.
AI and Data Analysis
We have developed causal analysis technology that reduces
facility start-up time by 75% compared with conventional
methods. This was accomplished by adjusting the start-up
process in collaboration with local team members, based on
the analysis of data obtained from production facilities and
quantitative evaluation of causal structures related to quality
characteristics.
In addition to the development of these technologies, the
Technology and Intellectual Property HQ took the lead in
drafting the OMRON AI Policy to promote the ethical use of
AI technology. (June 2024)
Next-generation Lab Automation System
Technology and Intellectual
Property HQ
OMRON AI Policy
1) Preparation for
experiments
Transportation /
Cleanup /
Replenishment
4) Data acquisition/
analysis
2) Experimental
procedures
3) Equipment operation
Centrifugation /
Cell culture
Utilization of existing
equipment
Next-generation lab
automation system
Realization of a flexible and highly human-friendly lab
automation system that is handy for researchers to use
Operation of various
experimental tools
Liquid handling /
Powder weighing
Data acquisition/analysis
Decision on transition /
Continuation of
experiments /
Implementation of
experiments
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Technology Governance Enhances Development
Productivity and Competitiveness and Supports
Technology Management
Technology is at the source of the challenge we have
undertaken, namely, to create innovation driven by social
needs and continuously resolve social issues. Strengthening
the competitiveness of individual businesses is insufficient.
The Technology and Intellectual Property HQ must
spearhead OMRON’s ongoing efforts to create technologies
and achieve intellectual property outcomes. To achieve this,
it is crucial to create technologies that are needed by both
business and society, while firmly linking R&D, technology
development, and product development from the
customer’s perspective. As a companywide organization,
the Technology and Intellectual Property HQ is uniquely
positioned to facilitate collaboration across businesses,
maximizing the impact of development outcomes. Working
together with technological talent from across the company,
the Technology and Intellectual Property HQ is the central
unit driving technology management with the goal of
maximizing OMRON’s corporate value. To further enhance
R&D productivity and sharpen competitiveness, we are
implementing two initiatives to strengthen technology
governance.
Formulating a technology strategy for each business
domain
Closely aligning the business strategy with the technology
strategy, we will formulate a technology strategy for each
business domain and prioritize technologies from a
companywide perspective. This approach will enable us to
execute high-quality development themes based on these
strategies, leading to more efficient contributions to
business and higher development productivity.
Development of indicators to enhance effectiveness of
technology strategies and their companywide
implementation
To monitor the effectiveness and progress of on-site
development productivity and technology strategies, we will
develop indicators to help determine whether our
technological capabilities are necessary and sufficient for
success in terms of “competitiveness.” These indicators will
be integrated into our companywide business operations
system to inform management discussion and decision-
making. Through these initiatives, we are endeavoring to
evolve robust technology management. For instance,
collaboration with the Social Systems, Solutions and Service
Business (SSB) has led to the creation of technology that
delivers customer value through a pipeline reflecting strong
linkage between business strategies, product strategies,
and technology development. An example of this is the
pursuit of carbon neutrality, which requires the reduction of
CO2 emissions from homes through the use of solar power
generation, storage batteries, electric vehicles, plug-in
hybrid vehicles, etc. A vehicle-to-everything (V2X) system,
which enables bidirectional power supply between the
home and vehicle, can greatly contribute to energy
management tailored to household lifestyles. V2X is also
attracting attention as a means of strengthening resilience
against natural disasters, which have occurred frequently in
recent years. With a business strategy focused on
addressing these social issues, SSB has been promoting
product development to realize a highly flexible system that
can be installed in limited spaces and other locations where
installation was previously difficult. Meanwhile, the
Technology and Intellectual Property HQ has been
conducting advanced research and technology
development in the energy solution business domain, and
proposed to SSB the use of gallium nitride (GaN) devices to
realize this V2X system. Although GaN devices had not yet
become commonplace in power conditioners, we forecast
that they would eventually become the de facto industry
standard. GaN devices, which are next-generation
semiconductor power devices formed on gallium nitride
crystals, offer several advantages over conventional silicon-
based power devices. They can handle higher power with
less loss and allow much more compact circuit design.
However, GaN devices are difficult to use because they tend
to generate noise. By developing drive and filter circuits to
suppress the noise, we realized one of the smallest and
lightest power conditioners in the industry at that time. We
continue to develop leading-edge technologies to address
future business challenges. Furthermore, the GaN device
technology we adopted in view of technological evolution
can be horizontally deployed across other business
domains, such as factory automation, to meet customer
needs. We believe that by linking this technology with each
business strategy and incorporating it into our products, we
will be able to exceed customer expectations. The ability to
Strong linkage with business units and vertical linkage within the organization
Industrial Automation Business (IAB)
Business strategy, planning, marketing
R&D
Technology
development
Healthcare Business (HCB)
Business strategy, planning, marketing
R&D
Social Systems, Solutions and Service Business (SSB)
Business strategy, planning, marketing
R&D
Device & Module Solutions Business (DMB)
Business strategy, planning, marketing
R&D
Data Solution Business (DSB)
Business strategy, planning, marketing
R&D
Vertical linkage capitalizing on being a conglomerate
Strong horizontal linkage “Technology Governance”
Technology and Intellectual Property HQ (including OSX)
Technology
development
Technology
development
Technology
development
Technology
development
Product
development
Product
development
Product
development
Product
development
Product
development
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undertake such initiatives is a key advantage of the
Technology and Intellectual Property HQ, a corporate R&D
unit conducting technology development. We believe this is
one of OMRON’s core strengths as a conglomerate able to
leverage manifold capabilities.
Unceasing Creation of Innovative Technologies for
Social Implementation
In a rapidly changing society, to create technologies that
exceed customer expectations, we must continuously
anticipate future technological needs from a medium- to
long-term perspective and accumulate the necessary
technological capabilities. OMRON SINIC X (OSX) is in
charge of this task. OSX is taking on the challenge of
creating innovative technology by employing a “near-future
design” approach from a broad perspective unconstrained
by the frameworks of existing business or technological
development, viewing society and technology from the
“science” perspective of the SINIC Theory. AI came its own
in society in 2023. Typified by generative AI, social
implementation of AI technologies, which had been in the
R&D phase, began and they spread worldwide. In light of
this technological progress, OSX is conducting research on
cutting-edge themes, including robot learning technology,
which utilizes machine learning and reinforcement learning,
and AI technology to increase the efficiency of materials
research within materials science. With a cumulative total of
more than 60 research papers accepted at top-tier
international conferences, OSX has gained recognition both
in Japan and internationally as a unique corporate research
institute and continues to steadily accumulate research
outcomes. In fiscal 2023, to facilitate the social
implementation of this research outcomes, OSX focused on
promoting collaboration, establishing a co-creation
processes from the customer's perspective and seeking
co-creation partners, while actively engaging in technology
communication activities.
For example, through an internal open recruitment system
for concurrent positions, OSX recruited “near-future design
evangelists” who will communicate OSX’s vision of “near-
future design” to the public. These are individuals who
aspire to create pioneering products and services that set
OMRON apart from the competition through collaboration
with cutting-edge researchers. They are also inspired by the
challenge of contributing to business by “communicating”
and “delivering” both within the company and externally.
In fiscal 2023, to enhance the competitiveness of each
business, together with the “evangelists” we sought to
create opportunities for proposing technological outcomes
of OSX and the Technology and Intellectual Property HQ in
collaboration with the product development teams of each
business unit HQ. While interacting with various
departments—including sales, planning, and product
development—we focused on finding intersections where
our technologies could help resolve customer issues. We
also strengthened the dissemination of our results through
the web and social media. Moving beyond simply
announcing the acceptance of papers, we now explain
our technological outcomes in a way that is easy for
non-specialists to understand, aiming to generate interest
so as to facilitate co-creation with external parties. As a
result of these activities, customers consult with our sales
department on the issues they are facing, and these
interactions have evolved into co-creation of solutions.
In-house technical exchange
In business development based on cutting-edge
technologies, there is often a “valley of death” where R&D
outcomes are not commercialized, thwarting their
advancement to the social implementation phase. To
overcome this challenge, it is crucial to generate ideas by
identifying issues from the customer’s viewpoint in a timely
manner. We use an in-house recruitment system to attract
motivated individuals from throughout OMROM who are
eager to link R&D outcomes to business and achieve social
implementation. However, if they are “transferred” to
another organization, they may lose touch with the voice
of the customer, making it difficult to identify the issues.
Therefore, recognizing the need to engage in the
commercialization process while continuing their regular
duties, we actively utilize the internal open recruitment
system for concurrent positions. By fostering a co-creation
process from the customer’s perspective, we aim to spur
business creation.
Case Study: Co-creation Process for Social
Implementation of Research Outcomes
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Evolution of customer-centric IP and intangible
asset activities
In fiscal 2018, the Intellectual Property Center defined its
mission and vision for the creation and delivery of new value
through intellectual property, setting OMRON on a
trajectory of sustainable growth. Since then, it has been
evolving its intellectual property/intangible assets initiatives.
In recognition of these IP and intangible asset activities,
OMRON has been selected as one of the “Top 100 Global
Innovators” by Clarivate, which selects the world’s most
innovative companies and research institutions, for eight
consecutive years.
OMRON’s IP activity policy is to pursue “Ambidextrous IP
Activities” by combining “Exclusive to Other Type” and
While the application of generative AI is rapidly
progressing in the digital realm, particularly for text
creation and image generation, research is also underway
for its use in the real world. For example, generative AI is
beginning to be used to increase the efficiency of materials
development, such as for finding new materials for all-
solid-state batteries with better energy efficiency. OSX is
developing AI technology to improve productivity in
inorganic materials development. Recently, we developed
“Crystalformer”, a Transformer-based neural network to
predict the physical properties of materials from their
crystal structures with high accuracy. The transformer is a
neural network architecture that was originally conceived
for text translation and is now the foundation for large
language models used in recent AI chat technologies. The
transformer uses its main module, called the self-attention
mechanism, to capture the meaning of words in context
while estimating relationships between them. In our work,
we point out the similarity between Transformer’s self-
attention mechanism and the interatomic potential
summations used in the energy calculation algorithms for
crystal structure simulations. By taking advantage of this
similarity, Crystalformer performs physically inspired
calculations for interatomic interactions, which enable the
accurate estimation of states of atoms in crystal structures.
We believe this technology will significantly enhance
development productivity and contribute to new
discoveries and applications in materials science and
nanotechnology. This research is conducted as part of the
“Materials Exploration Platform; Expanding Search Space
by high-throughput technology” (Project Leader: Mr.
Keisuke Nagato, The University of Tokyo) which is a full-
scale R&D project in the “Common Platform Technology,
Facilities, and Equipment” mission area of the Japan
Science and Technology Agency’s JST-Mirai Program. The
research is being promoted through open innovation in
collaboration
with various
research
institutes and
researchers.
Research Showcase: Crystalformer
“Sharing & Resonating Type” in an optimal balance. In
Exclusive to Other Type, IP is used only by the company in
principle for the purpose of increasing sales and market
shares of the company’s products, whereas in Sharing &
Resonating Type, necessary IP is mutually shared while
emphasizing alliances with partners.
In particular, in Sharing & Resonating Type IP activities, we
cover not only individual IP rights, which have been the
focus of our activities so far but also intangible assets. We
are working to manage IP and intangible assets with a view
to maximizing customer value. As the first step, for
businesses that utilize data, such as the Health & Productivity
Management Alliance, members of the Intellectual Property
Center participate in projects from the phase of business
conception onward and establish IP strategies closely linked
IP Strategy Development Process
Daily vital data
Medical big data
Expertise
in handling big data
Intellectual property/
intangible assets
Ownership and
disclosure policy
Main measures
Multifaceted consideration of exclusivity, sharing, confidentiality, and disclosure of
IP and intangible assets, based on customer value
Obtaining patents, protecting know-how, concluding licensing agreements, etc.
IP right
Intangible assets
Patent rights
Utility model
right
Design right
Trademark
Copyright
Data
Brand
Design
Content
Know-how
Value chain
Trust/
reputation
Supply chain
Customer
network
Human
resources
Handling of IP and intangible assets based on IP strategy
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promote “identifying customer needs,” “creating a story to
win in business,” and “improving return on investment in
business.” Such IP information analysis activities are
conducted by a dedicated team directly under the
Intellectual Property Center, and are implemented from
upstream of the business process to enhance the quality of
management, business, and technology strategies.
Moreover, the Intellectual Property Center consolidates the
technologies and knowledge of each business unit as IP/
intangible assets and deploys them companywide. For this
purpose, we are preparing to transition the structure of the
Intellectual Property Center from a structure based on
business to one based on IP function, thereby eliminating
the barriers between businesses and enabling
companywide management of IP/intangible assets.
In the future, the Intellectual Property Center will centrally
manage the technologies and knowledge held by each
business of OMRON, aiming for their efficient companywide
utilization.
Furthermore, we are emphasizing the use of AI to accelerate
customer-centric IP activities. For example, we aim to
dramatically improve operational efficiency by proactively
utilizing generative AI to generate ideas that it was
previously thought could only be conceived by humans. We
also aim to further improve the quality of hypothesis testing
in IP landscaping and achieve high-cycle management. To
achieve these aims, we are implementing systematic and
continuous education programs designed to refresh the
mindsets and enhance the skillsets of all members of the
Intellectual Property Center. Through these customer-centric
IP and intangible asset activities, the Intellectual Property
Center endeavors to improve the efficiency of investment in
technological development from the perspective of IP/
intangible assets and contribute to creation of the value
propositions of businesses.
We will continue to be the source of a stream of
technologies that exceed customers’ expectations,
illuminating a path to the future through innovation driven
by social needs.
OMRON Intellectual Property Center Mission
We deliver unique value for people
around the world by leveraging our core
assets of intellectual property.
We develop and deepen appealing ideas.
We deliver peace of mind and confidence to
customers.
We enhance our presence to our
competitors offensively and defensively.
OMRON Intellectual Property Center Vision
We bring the IP specialists together from
diverse fields and continue to create
innovation.
We defy stereotypes.
We create a new paradigm of connections.
We strive to increase the trust from the
management team.
with business strategies, including the handling of IP and
intangible assets that are essential to the business.
Going forward, the IP strategy establishment process
cultivated through involvement in data utilization businesses
will be horizontally deployed to other businesses of the
OMRON Group. Improvement of the efficiency of
companywide utilization of IP and intangible assets will
become increasingly important for obtaining the maximum
advantage from investment in terms of business
competitiveness. All employees need to recognize the IP
and intangible assets that exist within the OMRON Group
and be able to utilize them. The Intellectual Property Center
is categorizing the in-house technologies accumulated for
each business based on the functions necessary to realize
customer value, while also working on systematic
visualization, linking the technologies with human resources
by utilizing information such as inventor information related
to patents. Through these activities, we aim to improve the
efficiency of utilization of IP and intangible assets. In order
to further promote these IP and intangible asset activities,
we are considering KPIs for IP activities linked to business
success from the perspective of “advanced technology
development efficiency,” that is, how efficiently R&D
investments are converted into competitive technologies;
the perspective of “social implementation rate,” that is, to
what extent the IP and intangible assets created are linked
to OMRON’s business growth and business advantages;
and the perspective of “human resources capability,” that is,
to what extent human resources capabilities are improved
as a result of development activities.
Customer-centric IP and intangible asset activities
We apply “IP landscaping,” which uses IP information to
analyze customer and business environments, in marketing
and other business decision-making processes. For
example, in the phases of formulation of business
hypotheses and establishment of development themes, we
are efficiently running a cycle of hypothesis testing to
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PEOPLE
Generating Diverse Talent Taking on the Challenge of Value Creation
Evolving human resources management to bring out the capabilities and skills of OMRON’s diverse talent,
who will be the source of OMRON’s sustainable growth
58
with rapidly changing business conditions, nor to respond
to them pre-emptively. Put another way, our eight human
resource policies have been progressing steadily, but we
must reflect seriously on the fact that this progress has not
yet led to an adequate improvement in human creativity.
I see three major issues in this regard.
The first is that our staffing and labor cost structure is not
resistant to dramatic changes in the business environment.
To date, OMRON has invested in developing a human capital
portfolio consistent with its business strategy.
However, we did not take adequate steps to actively
transform the human capital portfolio in line with the
changing environment, or to assess return on investment in
the portfolio in a timely and appropriate manner.
This resulted in a high ratio of selling, general and
administrative expenses to net sales, which was one of the
reasons for the major breakdown of profit structure in the
recent performance fluctuation. From this standpoint, we
are aware of the need to move quickly to build a staffing
implementing our human capital strategy globally with
a long-term outlook, in order to enhance corporate value
through sustained business growth. I see the transformation
of society as we move toward 2030 as a major opportunity
to create new markets and business activities. At the same
time, I realize that these are uncertain, unpredictable times,
with dramatic changes in our business environment.
Based on this awareness, I have been promoting a shift in our
organizational capabilities, so we can generate customer value
on an ongoing basis as we adapt to changing business conditions.
Under the medium-term management plan (SF 1st Stage)
that began in fiscal 2022, we positioned employees as the
driving force for creation of new value, and established
“human creativity” as a quantitative indicator of the extent of
new value created as we invest in human capital. We have
specifically focused on eight policies considered most
effective in improving human creativity.
Nonetheless, business performance up to fiscal 2023 clearly
demonstrates that OMRON has not been able to keep pace
OMRON’s human capital strategic vision under SF2030 is:
“Inspired by the corporate philosophy of ‘contributing to a
better society,’ the company and its employees will always
choose each other and continue growing together.”
Pursuing this human capital strategic vision, we are
Director, Senior Managing Executive Officer
CHRO and Senior General Manager, Global Human
Resources and Administration HQ
Masahiko Tomita
CHRO Message
Creating an Environment where the
Company and Employees Empathize
with the OMRON Principles, Always
Choose Each Other, and Continue
Growing Together
Eight Human Resource Policies
Initiatives to Accelerate Diversity & Inclusion
FY2023 Performance Indicators and Targets
FY2023 Results
Recruitment sufficiency rate
Fulfilled as planned
80% or more
Ratio of women in managerial roles globally:
17.4% or more
Ratio of women in managerial roles globally:
19.1%
80% or more
Progressing as planned
Approx. 1.4 billion yen
Achieved as planned
Completed as planned
Invest in individuals keen to grow
Implement and expand diverse career,
employment status and work style options
Global hiring of specialist human resources to
lead value creation
Cultivate a workplace environment that supports
personal growth and motivated individuals
Promote career advancement for women by
developing next-generation female leaders
Promote localization of globally important
positions
Initiatives and programs to share achievements
of resolution of social issues
Establish job-based HR system with defined roles,
responsibilities, and specialties
Promoting resolution of issues in “operational
efficiency” and “performance management”
Investment in human resource development:
Over 2 billion yen
360-degree evaluation
Related item scores
-Evolution of TOGA
-Expansion of external partners
-Participants/live viewers/post-event viewers: 116% of previous year’s figure
-420% expansion in partners in wider society
-Introduction/operation of non-managerial staff wages/evaluation system
-Certification of 100 or more specialists
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59
and labor cost structure that is resistant to dramatic changes
in business conditions.
Secondly, the shift to organizational capabilities essential to
accomplish the SF2030 vision was markedly inadequate in
terms of both speed and impact. Specifically, we have been
unable thus far to develop adequate human resources to
advance the solution businesses that are crucial to attaining
high revenue growth by solving the three social issues
identified in SF2030. Naturally, we have been investing in
capacity development to hone individual employees’
specialties to support transformation of organizational
capabilities, as well as investing in human resource
development to enable the acquisition of new specialties.
However, on the abovementioned indicator of human
creativity, the rise in labor costs has not yet been surpassed
by a rise in value added. This leaves me no choice but to
conclude that at present, we are not doing enough. What
OMRON needs now is the “capacity to create new customer
value” and the “capacity to deliver value reliably to
customers.” Moving forward, we are committed to
accelerating the transformation in organizational capabilities
by renewing our training structures centered on the above
capacities, with a strong focus on our customers.
The third issue is that we have been unable to concentrate
our efforts on creating value for our customers. Thus far we
have been working on recruitment of specialist personnel to
lead value creation and the development of an environment
that supports diverse working styles. However, I feel there is
still room for improvement in terms of giving free rein to the
abilities and high level of motivation of employees with
diverse value outlooks, comprehending customer needs at
team level, and continuing to deliver value to customers. We
must view changes in the current business environment as
an opportunity to cultivate customer-driven management,
where diverse human resources connect to develop and
lead teams that create value.
In order to adapt to the changing environment and generate
customer value on an ongoing basis under NEXT 2025,
based on the learnings I have described above, I will focus
on customer-driven management and accelerate the
transformation of organizational capabilities. Let me explain
the concrete measures we will be pursuing.
Initiatives Under NEXT 2025
(1) What We Will Keep Doing
Human capital management in pursuit of sustained growth
for both the company and its employees
I believe that the purpose of human capital strategy is to
make management strategy and business strategy into
reality. Striving to solve social issues through our business is
something that each and every one our employees does.
This is why we established a new relationship between the
company and employees in the SF2030 human capital
strategic vision, focusing on always choosing each other and
continuing to grow together. There will be no change in this
approach.
I believe that to generate new value on an ongoing basis at
the same time as adapting to changes in the business
environment, it will be essential for OMRON to bring
together a variety of specialized individuals keen to solve
social issues, and enable them to continue deploying their
abilities in the course of tackling new challenges. This idea
informs OMRON’s distinctive definition of Diversity and
Inclusion (D&I), which is another thing we will not be
changing. Based on this human capital strategic vision and
concept of D&I, we will continue investing in human capital
and increasing human creativity.
(2) What We Will Change
Transformation of organizational capabilities through
reconstruction of the HR portfolio
We recently pursued a rationalization at a scale of 2,000
people across Japan and globally. The reason we did
so was to rebuild the HR portfolio to make it capable of
withstanding dramatic changes in the business environment.
Moving forward, we will work to ensure that each and every
employee can develop the abilities needed for OMRON to
continue growing. Specifically, this will involve capacity
development to enable each employee to acquire a
specialty for the creation of new customer value and to
demonstrate high levels of performance. Among our
existing initiatives for “leader development and promotion,”
19
20
21
22
23
19
0
10
30
(%)
(FY)
(FY)
20
21
22
23
2.23
27.7%
1.87
32.7%
Selling,
general and
administrative
expenses ratio
Human
creativity
Value added
Labor cost
0
1
2
3
As of February 2024
As of February 2024
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“enabling diverse and versatile talent to play active roles,”
and “hands-on training for the acquisition of new value
creation abilities,” we will be accelerating the latter type of
initiatives especially. For example, as a form of capacity
development contributing to the realization of high-productivity
corporate management, we will be expanding training
programs to support the uptake and full utilization of
digital technologies and generative AI in the workplace.
We will also pursue external recruitment of individuals
possessing experience and knowledge beyond OMRON.
The development and enhancement of employees’ abilities
are the cornerstone of sustained growth not only at individual
level but also for the organization and company as a whole.
In addition to the training already conducted in each business
area, we will also be developing company-wide systems to
enable a full range of basic capabilities to be acquired at an
early stage, provide opportunities to deploy those
capabilities to the full, and thereafter allow each employee
to develop their own capabilities autonomously and grow
continually. The involvement and support of managers with
responsibility for their team members’ development is
also important in order to enhance the abilities of diverse
employees and enable them to play active roles and grow
in the workplace. What is crucial here is dialogue in
which managers and team members exchange
opinions frankly. We will be creating a suite of diverse
opportunities for learning and dialogue to encourage
employees to grow and mechanisms for encouraging them
to act.
Strengthening Customer-driven Management
I also believe it is extremely important for managerial
personnel (executive officers and senior managers) to
possess the managerial abilities to mobilize diverse talents
and facilitate the creation of new customer value. For this
purpose, with a view to creating value for customers, from
this fiscal this year we are working on strengthening
managerial abilities in both “performance management“ to
link all parts of the organization and produce results, and
“people management” to mobilize diverse team members’
talents and appetite to contribute proactively (See ).
The aim of these initiatives is to strengthen management’s
capacity to drive the development of an organization
capable of high-cycle provision of value to its customers.
With a view to cultivating leaders capable of speeding up
our responsiveness to change, leading organizational
linkage, and mobilizing the talents of diverse individuals,
this fiscal year we will be introducing a system to assess the
abovementioned two types of managerial ability and assign
managerial personnel appropriately in light thereof.
In the area of performance management, we have set
company-wide and departmental KGIs and KPIs linked to
cross-departmental sales (See ), with an emphasis
on reliable implementation and management while
manifesting results as a team. In people management, we
have defined the skills required of managerial staff as
“persuasive storytelling,” “flat communication,” and
“individual empowerment,” and are considering the
adoption of new evaluation criteria and skills enhancement
training. We will be developing mechanisms to maximize
diverse employees’ talents and appetite to contribute
proactively, as we seek to create value for our customers.
Attracting
customers
CVR
(Conversion Rate)
ONLINE
OFFLINE
KGI
Sales
Sales per store
Product planning
KPI
KPI
KPI
KPI
KPI
Human resources
KPI
IT
KPI
Intellectual property
KPI
Development
KPI
Manufacturing
KPI
Quality control
KPI
*SC/EC : Supply Chain/Engineering Chain
SC/EC*
Marketing
Staffing
No. of stores
stocking products
New Managerial Evaluation Principles
Performance
Management
People
Management
Continue eliciting
results from the team
Mobilize diverse team
members’ talents and
motivation, encourage
growth
Figure 1
Figure 2 Example: Healthcare Business
Diversity
Inclusion
&
Image of Required
Human Resources
Attract diverse people
who will take on the
challenge of the creation
of a better society
Unleash the passion and
ability of each individual,
create innovation by
bringing our diverse
personalities together
and share the fruits of
our labor
. Individuals passionate about solving social issues
. Individuals who continue to hone their specialties to realize
their ambitions
. Individuals who care about the team as a whole and who
are self-starters that demonstrate leadership
Concept of Diversity & Inclusion
Figure 2
Figure 1
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OMRON’s Distinctive Approach to D&I
We aim to be a corporate group that encourages a diverse
range of people with many different ways of thinking can
play active roles, unleashing their abilities and individual
traits regardless of factors such as nationality, religion,
marital status, gender, sexual orientation, gender identity,
gender expression, and disability. As noted earlier, the
distinctive D&I initiatives that OMRON has pursued thus far
will be continued through this period of structural reform.
This is because it is the diversity of the people who work at
OMRON that makes it possible for us to generate innovation
based on the OMRON Principles and realize solutions to
social issues through our business.
(1) Women’s Empowerment
Promoting career advancement for women by
strengthening development of next-generation female
leaders
At OMRON, we regard women’s career advancement as a
key management strategy, and we are pursuing initiatives to
increase the percentage of women in management roles
globally. This percentage was 16.6% in fiscal 2022, but rose
to 19.1% in fiscal 2023, demonstrating that the initiatives
pursued thus far are yielding concrete results. However,
there is still a shortage of women as both current incumbents
and successor candidates for most important positions
leading management and business across the Group.
To address this issue, in fiscal 2023 we launched the Women
Leaders Circle for female managers. The Women Leaders
Circle aims to identify and foster women with the potential
to take up key positions in the Group in future, and to create
a community of women leaders. To promote a career
advancement mindset among participants, a program was
offered in which participants engage in dialogue with
women leaders within and outside OMRON on themes
such as “carving out your own career and leadership style,”
”what OMRON can do to empower women further,” and
“overcoming your own biases.” Comments from the 19
women from 8 countries who participated in the program in
fiscal 2023 included: “I was able to form my own leadership
vision,” “I moved closer to a management perspective,
linking my own advancement to the advancement of all
women working at OMRON,” and “I realized that my own
worries were actually healthy concerns.” The program thus
fostered participants’ motivation to aim for higher positions.
Some of the participants were also cultivated as successor
candidates for key positions leading management and
business. We will be continuing our initiatives to support
women’s advancement and to form and nurture
communities for this purpose.
(2) Empowerment of People with Disabilities
Ongoing career advancement of people with disabilities
As part of OMRON’s efforts to empower people with
disabilities, we have defined an “empowerment cycle for all
employees with disabilities.” This cycle involves four types
of activities: (1) understanding the employment of people
with disabilities: promoting understanding in all
departments of OMRON’s approach to employing people
with disabilities; (2) finding jobs required for our business:
defining jobs down to the level of specific duties in order to
enhance the fields of activity; (3) talent matching: improving
the precision of matching; (4) creating a well-suited
environment: strengthening both hard and soft
infrastructure development. By implementing this cycle, we
are aiming to promote the employment of people with
disabilities on an ongoing basis, and to realize a working
environment in which both individuals and the company
can grow.
From internships to employment
We conduct internships for people with disabilities
interested in working at OMRON, with the aim of matching
individuals’ skills to the jobs they may perform after joining
OMRON, and ascertaining one another’s potentials. These
internships have enabled both prospective employees and
the workplaces that host them to develop a common
understanding of capabilities, skills, and characteristics
(environments required), enabling more concrete
preparations to be made for welcoming new employees to
the workplace. As a result, more people have been able to
achieve a smooth transition to work.
Building systems to support secure work and deployment
of capabilities
For more than 50 years, OMRON has been developing
environments that allow people with disabilities to work
with peace of mind. Currently we are proactively building
such an environment not only for employees with physical
disabilities but also those with a range of other disabilities
(including mental and developmental). Specifically, we are
establishing consultation desk staffed by specialists where
employees with disabilities, their supervisors and co-workers
can seek advice, enabling them to work together to resolve
day-to-day issues and fully demonstrate their capabilities.
These specialists are also developing more secure working
environments by collaborating with workplaces and
healthcare professionals, informed by routine feedback
from employees.
As a result of these initiatives, the ratio of employees with
disabilities at OMRON has reached 3.5% in fiscal 2024, well
above the ratio of 2.5% stipulated in a statutory amendment
this fiscal year in Japan. OMRON will continue to pursue the
active engagement of employees with disabilities through
activities under the “empowerment cycle for employees
with disabilities” in individual workplaces.
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ENVIRONMENT
Achieving Decarbonization and Lower Environmental Impact
By viewing climate change from the two aspects of opportunities and risks, practicing corporate social responsibility and
building further competitive advantage
63
OMRON’s Approach to the Environment
OMRON believes that creating an environmentally
sustainable society corresponds to the OMRON Principle of
“contributing to a better society,” and is proactively working
to address global issues such as climate change and
resource recycling. In particular, we view “reducing
greenhouse gas (GHG) emissions,” “transitioning to a
circular economy,” and “coexisting with nature” as important
environmental issues to be addressed. By ensuring
effectiveness and establishing frameworks, we are
committed to contributing to the creation of a sustainable
society and enhancing corporate value.
OMRON Environmental Policy
OMRON revised the OMRON Environmental Policy on
March 1, 2022 as important guidelines to promote the
material sustainability issues of SF2030, which are “resolving
social issues through our business” and “achieving
decarbonization and lower environmental impact,” and to
achieve the targets. Under this policy, we have defined the
key environmental issues OMRON should address and
action guidelines and will promote decarbonization and
lower environmental impact. Going forward, OMRON will
address environmental issues throughout its value chain in
accordance with this policy and will meet the expectations
of its stakeholders, thereby enhancing its corporate value.
Environmental Promotion System
OMRON management and executives work together to
address environmental issues, with the Board of Directors
fulfilling its responsibility for supervision and oversight. As
part of our governance system, the president and CEO
delegates authority to the individual executive division
heads, who are responsible for pursuing environmental
issues such as climate change and creation of circular
economies. Additionally, the president and CEO reports to
the Board of Directors on progress status and important
matters, while the Board makes decisions and carries out
oversight of executive matters.
Furthermore, as part of efforts to strengthen sustainability
governance, which includes environmental initiatives, a
director in charge of the environment and a Sustainability
Executive were appointed in fiscal 2023. In addition, a
Sustainability Committee chaired by the Sustainability
Executive (which meets every quarter, in principle) was
established to deliberate on environmental measures across
the Group and ensure compliance with environmental laws.
OMRON Environmental Objectives
OMRON has established the OMRON Carbon Zero target,
for zero Scope 1 and 2 GHG emissions by 2050. Achieving
decarbonization and lower environmental impact was also
set as a material sustainability issue, and in addition to the
SF2030 sustainability targets (fiscal 2024 targets), six fiscal
2024 targets were also established for five categories, with
monitoring of progress. Our Scope 1, 2, and 3 GHG
emission targets are certified by the Science Based Targets
initiative (SBTi) as 1.5℃ or 2.0℃ pathway targets.
Achieving Decarbonization and Lower Environmental Impact
*1 Certified under SBT Initiative in May 2022.
In May 2024, the SF2030 (FY2024) target was revised upward from a 53% reduction in the
absolute amount to a 68% reduction in the absolute amount vs. FY2016.
*2 GHG emissions from OMRON’s electricity use (scope 2) at 13 production sites and 63
non-production sites (headquarters, R&D, and sales)
*3 Volume of CO2 emissions reduction contributed by society’s use of the OMRON Group’s
energy generation and savings products and services
*4 Recycling of waste: 98% or higher
OMRON Carbon Zero Medium- and Long-term Environmental Targets
Zero GHG emissions (scope 1 and 2) by 2050
Material
sustainability
issues under
SF2030
SF2030 (FY2030)
goals
SF 1st Stage (FY2024)
goals
Achieving
decarbonization
and lower
environmental
impact
The state of building
further competitive
advantage while solving
social issues through
reducing greenhouse
gas (GHG) emissions in
the value chain and
establishing a resource
recycling model
Scope 1 and 2:
65% cut*1 vs. FY2016
Scope 3:
18% cut*1 vs. FY2016
Scope 1 and 2: 68% cut vs.
FY2016
Achieve Carbon Zero at all
76 sites in Japan*2
Scope 3, Category 11:
Implement energy-saving
designs for new products
Implementing business
model transformation,
environmentally friendly
design, collection and
recycling, and sustainable
procurement in response
to transition to a circular
economy
Issues
FY2024 targets
FY2023 results
Evaluation
Reduction of
reenhouse gas
emissions
Achieved 68% reduction
in absolute amount vs.
FY2016 result*
Achieved 68% reduction
in absolute amount vs.
FY2016 result
Exceeded
plan
Environmental
contribution*3 > CO2
emissions from
production sites
Environmental
contribution (1,158
thousand ton-CO2) >
CO2 emissions from
production sites
(75 thousand ton-CO2)
As
planned
Proper waste
management
and production
Maintain zero
emissions*4 at all global
production sites
23 sites
(100% progress)
As
planned
Compliance
with
environmental
laws
Perform environmental
legal assessments at all
global production sites
24 sites
(100% progress)
As
planned
Effective usage
of water
resources
Reduce water usage at all
global production sites
by 20% vs. FY 2015 result
Down 48%
Exceeded
plan
Facilitating
environmental
management
Acquire and maintain ISO
14001 certification at all
global production sites
24 sites
(100% progress)
As
planned
The OMRON Environmental Policy
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Key Environmental Initiatives under SF2030
OMRON aims to solve social issues through the reduction of
GHG emissions in its value chain and the establishment of a
resource recycling model by 2030, as well as to achieve a
state in which further competitive advantages are built.
Reduction of GHG Emissions
(Scope 1 and Scope 2: Emissions from the OMRON Group)
To reduce Scope 1 and Scope 2 emissions, we will promote
thorough energy conservation and use of renewable energy
to transition to clean electricity. Moreover, by utilizing the
renewable electricity-derived “J-Credit Scheme
*1” provided
by our own energy solutions business, and “self-
consignment
*2,” we aim to achieve 100% renewable energy
at our sites in Japan by fiscal 2024.
Reduction of GHG Emissions
(Scope 3, Category 11: Use of Sold Products)
With regard to Scope 3, we will promote power-saving
design, downsizing and weight reduction of new products,
and replacement with low-power-consumption products in
each business to prioritize reductions in Scope 3, Category
11, which accounts for approximately 70% of OMRON’s
GHG emissions.
Transitioning to a Circular Economy
In order to solve the problems of resource depletion and
environmental destruction, we will work to transition to a
circular economy through such initiatives as “transformation
of business models,” “extension of product life,” “expansion
of collection and recycling,” “procurement of recyclable raw
materials,” and “maximization of recycling rates.” Specifically,
for “procurement of recyclable raw materials,” we are
reducing plastic waste in the production process and
replacing containers (outer packaging) for products with
paper packaging materials. For “expansion of collection and
recycling,” we are promoting in-process recycling, collection
and recycling of OMRON products in cooperation with
partners and customers and reviewing the production
process and improving the recycling rate of resin waste
materials generated in the production process.
Environmental Evaluation Framework
Through our environmental evaluation framework, OMRON
minimizes negative environmental impacts throughout the
product life cycle to reaffirm our commitment to
environmental protection, thus contributing to both
environmental issue resolution and sustainable business
growth. Within this framework, we classify products that take
their environmental impact into account as “Environmentally
Conscious Products” and those with a clear contribution to
environmental protection throughout their life cycle as
“Environmentally Contribution Products.”
In line with this approach, we have drawn up our own
guidelines for calculating the carbon footprint of a product
(CFP) in accordance with relevant global standards.
Environmentally Contribution Products
Environmentally contribution products refer to OMRON
products that help customers address their environmental
issues, either through the products themselves or associated
services. OMRON uses LCA to assess products with high
environmental performance and visualize the added value
of these products in a reliable and transparent manner.
Environmentally Conscious Products
Environmentally conscious products refer to OMRON
products that reduce or mitigate negative environmental
impacts and material issues to be addressed during the life
cycle of said products. These products must pass the
product environmental assessment in the product planning
and design stages. As such, all new OMRON products are
environmentally conscious.
In the Device & Module Solutions Business, CFPs (Carbon
Footprint of Products) have been calculated in accordance
with the guidelines for the G9KB series of high-capacity
power relays used in new energy equipment, such as power
conditioners and energy storage systems. Starting in May
2024, we began providing CFP data of this product series,
certified by a third-party organization in accordance with
ISO 14067
*3, to customers upon request.
In our ongoing effort to support a decarbonized society, we
will continue offering CFP data for this product series. We
will also expand the range of models included, while further
advancing experiments to monitor GHG emissions across
the supply chain.
*1 J-Credit Scheme: Under this scheme, the Japanese government certifies a company’s
environmental value (the effect of not emitting CO2).
*2 Self-consignment: A power supply system that allows businesses that own their own
power generation facilities to transmit and supply electricity generated by those facilities
to their own factories and offices in remote places via the power grids of general power
transmission and distribution business operators and use the electricity.
*3 ISO 14067: A standard on climate change that specifies the requirements and guidelines
for quantifying CFPs
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Major FY2023 Initiatives
Initiatives to Reduce GHG Emissions
We are reducing emissions steadily every year to achieve
our environmental targets, exercising energy conservation
and using cleaner electricity from renewable energy
sources. In fiscal 2023, we continued with capital investment
into replacing existing equipment with more efficient,
energy-saving equipment, operational optimization based
on energy saving diagnostics, and further expansion of solar
power generation equipment. Mainly due to the expansion
of carbon-zero sites in Japan by utilizing J-Credits and the
lowering of production output, as well as the better-than-
expected outcomes of energy-saving and energy
generation efforts, we achieved a 68% reduction in the
absolute amount of GHG emissions in Scope 1 and 2
(compared with fiscal 2016). Accordingly, we have revised
upward our targets for fiscal 2024 from a 53% reduction in
the absolute amount of emissions to a 68% reduction in the
absolute amount of emissions (compared with fiscal 2016).
We also achieved a 32% reduction in the absolute amount
of GHG emissions in Scope 3 (Cat. 11) (compared with fiscal
2016).
Initiatives to Transition to a Circular Economy
With the aim of realizing a “circular society,” we are working
to reduce waste at all our production sites across the globe.
In more concrete terms, we are reducing waste production
by minimizing resource usage and promoting efficient use
of resources, expanding reuse and recycling efforts, and
cutting down on hazardous waste emissions. In fiscal 2023,
23 OMRON Group production sites maintained or achieved
zero emissions (11 in Japan and 12 out of Japan).
Furthermore, we follow strict waste-sorting practices,
ensuring that waste from production sites is categorized
and prepared for recycling before being handed over to
recycling services. This process helps reduce landfill waste
and promotes more efficient resource use.
For example, at the production sites of the Device & Module
Solutions Business, they successfully reduced plastic waste
produced when molding components by improving
production equipment or changing metal molds. This also
allowed them to utilize recycled materials while curbing
energy consumption.
Also, by increasing the recycling rate of molded resin, it
became possible to significantly reduce plastic waste.
Likewise, improvements in logistics and reductions in the
weight of containers and packaging materials led to a 9%
reduction in container material usage and a 17% reduction
in packaging material usage (both compared with fiscal
2022).
In fiscal 2024, we continue to focus on logistical
improvements and reductions in weight.
GHG Emission Targets and Results
FY2016
(Standard Year)
300
250
200
150
100
50
0
FY2022
Results
FY2023
Results
FY2030
Targets
FY2050
Targets
FY2016
(Standard Year)
12,000
Kt-CO2
Kt-CO2
10,000
8,000
6,000
4,000
2,000
0
FY2022
Results
FY2030
Targets
Scope3
Scope1・2
250
79
87
-62%
-68%
-18%
-65%
Zero
9,102
FY2023
Results
11,966
6,205
7,463
-32%
+31%
93
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Disclosure in Line with TCFD Recommendations
Responses to Climate Change
With numerous major disasters occurring worldwide due to
extreme weather events, OMRON considers climate change
to be one of the most important issues we need to address.
Guided by SF2030, we are committed to creating a carbon-
neutral society, one of the contemporary issues in our
society.
After endorsing the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD) in February
2019, we are promoting information disclosure in
accordance with the TCFD framework in a bid to enhance
the engagement with our shareholders, investors, and other
stakeholders with regard to the OMRON Group’s initiatives
for climate change.
Governance
Role of the Board of Directors / Monitoring System
The OMRON Corporate Governance Policy clearly stipulates
that the Board of Directors shall determine and disclose the
Group’s sustainability policy, material sustainability issues, and
targets, including initiatives to address climate-related risks
based on the TCFD and other frameworks. In accordance
with TCFD recommendations and in connection to SF2030
and the medium-term management plan, the Executive
Council and the Sustainable Committee discuss risks,
business opportunities, targets, and specific measures related
to climate change for each business, as identified by scenario
analyses, make decisions, manage progress, and conduct
monitoring on a regular basis, and consider corrective
measures, as necessary. The Board of Directors receives, on a
regular basis, reports on what has been discussed and
decided by the Executive Council and deliberates on and
supervises the matters. Evaluations concerning the GHG
emissions reduction target and evaluations based on
sustainability indicators (Dow Jones Sustainability Indices) by
third parties are included among the evaluation indicators for
the medium- to long-term, performance-linked compensation
for inside Directors and Executive Officers for the period from
fiscal 2021 to fiscal 2024.
Strategy
Short-, Medium-, and Long-term Climate-related Risks and
Opportunities and Responses
In SF2030, we have defined “achieving decarbonization and
lower environmental impact” as a material sustainability
issue. Viewing climate change from two aspects,
opportunities and risks, we are committed to fulfilling our
corporate social responsibility and further building our
competitive advantage. In order to prevent the expansion of
the serious impacts of climate change on ecosystems and
human society, we will work to reduce GHG emissions
throughout its value chain through “products and services
that contribute to carbon neutrality,” “evolved business
models that combine products and services,” “co-creation
with our partners,” “improved energy efficiency,” and
“expanded use of renewable energy.”
Amid these initiatives, the OMRON Group analyzed risks
and opportunities based on two scenarios as announced by
the Intergovernmental Panel on Climate Change (IPCC), the
International Energy Agency (IEA), and others: one
assuming a rise in global average temperature of 4℃ or
more, and the other assuming that the increase in global
average temperature is kept to below 2℃ (1.5℃ in some
cases) as agreed under the Paris Agreement. We reaffirmed
that we must act to solve climate change issues.
Specifically, in the field of industrial automation, we will
develop innovative-Automation to establish manufacturing
sites that support a sustainable future of job satisfaction and
harmony with the environment, and will aim for automation
that increases productivity and energy efficiency. In the field
of social solutions, OMRON has already contributed to the
spread of solar power generators and storage batteries.
Moving forward, we will contribute to the further spread of
renewable energy by eliminating instable generation
through advanced energy control technologies.
Additionally, in the field of device and module solutions, we
will accelerate the development and supply of devices and
modules in response to the growing interest in improving
environmental performance and reducing the carbon
footprints of products. OMRON connects with society in a
variety of ways, and will contribute to the realization of a
carbon-neutral society on multiple fronts.
In fiscal 2022, OMRON became the first Japanese
manufacturer to join the EP100, and declared its
commitment to doubling “energy productivity,” which is the
ratio of sales per gigawatt-hour (GWh), at all production
sites of the Industrial Automation Business and the
Healthcare Business by 2040 compared to 2016. At the
Matsusaka Factory, which is a production base for blood
pressure monitors and thermometers in Japan, the Industrial
Automation Business and the Healthcare Business are
working together to create a system to double production
while reducing energy consumption.
SF2030 Topics “Achievement of Carbon Neutrality”
Company-wide Sales Targets and Progress in Contributing
to Carbon Neutrality through our Businesses
In fiscal 2023, company-wide sales contributing to carbon
neutrality (Green Revenue) amounted to JPY 102.4 billion.
Given the revision to performance forecasts, we have
revised our earlier target for fiscal 2024 to JPY 116.0 billion
(The original target for SF 1st Stage was JPY 130.0 billion).
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Risk Management
Processes for Assessing, Identifying, and Managing Risk
OMRON conducts scenario analysis for each business to
identify a comprehensive set of “transition risks” and “physical
risks” related to climate change. We then visualize the “time
horizon” and “amount of impact on business and finances” of
each of the extracted climate-related risks for each adopted
scenario, and evaluate the degree of impact on business and
finances. Based on the assessment, we identify climate-
related risks that are significant to the OMRON Group,
incorporating these results into company-wide risk
management as integrated business risk. Important matters
related to risk identification and formulation of
countermeasures are reported to the Board of Directors.
In fiscal 2023, we confirmed that the scenario analysis
outcomes for IAB, HCB, DMB, and SSB remained unchanged.
Additionally, we verified that the Structural Reform Program
NEXT 2025 will not alter the results of scenario analysis for
each business. For the Data Solutions Business (DSB), which
was established in December 2023, we will incorporate it into
the scope of scenario analysis and plan to conduct this
analysis in conjunction with the next medium-term
management plan (SF 2nd Stage).
Status of Integration into Group-wide Risk Management
Recognizing the importance of establishing a system to
manage risks on a Group-wide basis, OMRON is
implementing integrated risk management under a common
framework throughout the Group. We identify and assess
climate-related risks as significant risks for the Group and
monitor risk management by aligning these risks with the
risks identified by scenario analysis.
Indicators and Targets
Indicators for Climate-related Risks and Opportunities
We have established indicators for Scope 1, 2, and 3
*1 GHG
emissions and for renewable energy as a percentage of
electricity used in our business activities. We use these
indicators to manage risks and business opportunities.
Targets and Results of GHG Emissions (Scope 1, 2, and 3)
OMRON believes that creating an environmentally sustainable
society corresponds to the OMRON Principle of “contributing
to a better society,” and set the OMRON Carbon Zero target
in July 2018, aiming to reduce GHG emissions in Scope 1 and
2 to zero by 2050.
For Scope 1 and 2 and Scope 3, Category 11, we have set
2030 targets, each of which has been certified by the SBTi as
1.5℃ and 2.0℃ pathway targets, respectively*. In an effort to
achieve these targets, OMRON aims to achieve Carbon Zero
for Scope 2 at our sites in Japan by fiscal 2024, utilizing the
renewable electricity-derived J-Credit Scheme provided by
our energy solutions business and self-consignment, while
continuing efforts to improve energy efficiency.
Scenario Analysis Steps
✓ Government policy, laws and regulations
✓ Changes in markets
✓ Changes in technology
✓ Reputational risks
Transition risks
✓ Acute
✓ Chronic
Physical risks
✓ Products, Services,
and Markets
Opportunities
Step 1
✓ IPCC/RCP8.5
✓ IEA/STEPS
4°C scenario
✓ IPCC/RCP2.6
✓ IEA/SDS (partially IEA/NZE)
1.5/2°C scenario
✓ Investment costs
✓ Business costs
✓ Business stoppages due to natural disasters, etc.
✓ Profitability
✓ Value chain
Business impacts
✓ Changes in business models
✓ Changes in portfolio
✓ Investment in capacity/technologies
Response measures
Identify
corporate
risks and
opportunities
Step 2
Select
scenario and
define
worldview
Step 4
Investigated
response
measures
Step 3
Evaluate
impact on
business
Sustainability Management Division collected opinions from outside
experts, set up projects with each business company, and
implemented TCFD scenario analysis
Medium- and long-term risks posed by climate change were
identified and sorted as transition or physical risks
For transition risks, opportunities for medium- to long-term growth
were identified in categories of policy, laws and regulations; markets;
technology; and reputation (customer and investor repetition)
For physical risks, risk analysis was also carried out for production
sites, incorporating objective viewpoints from outside analysts
●
●
●
●
Selected and analyzed scenarios based on whether progress is
(1.5/2°C scenario) or is not (4°C scenario) made on public
climate change measures
For the selected scenario, used objective outside data to define
worldview (such as changes in customer demand, etc. for
OMRON’s operations and businesses due to policy, legal,
regulatory, market, technology and other trends)
The Sustainability Office and individual business companies
discussed medium- and long-term countermeasures and
business strategies based on the above worldview, ascertaining
medium- and long-term trends in the business environment
●
●
●
Envisioned a 2030 scenario based on the
identified opportunities/risks and defined
worldview, and calculated financial impact
Classified financial impacts based on
thresholds, calculating profitability to identify
areas of response and levels of priority for
medium- and long-term management plans
●
●
Incorporated identified risks into
integrated risk management under a
common group framework for
consistency and began monitoring
throughout entire value chain
Reflected identified opportunities in
medium- and long-term management
plans and business strategies
●
●
・ Promote energy
conservation/renewable
energy
・ Strengthen resiliency
through BCPs
・ Development of new
products and services,
etc.
*The 2030 targets for Scope 1 and 2, as well as Scope 3, will be reviewed in 2027 in
accordance with the SBTi standards
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Overview of the OMRON Group’s climate-related risks and opportunities and responses
*The impact is defined as a positive or negative impact on operating income. Impact is defined as the response to the identified risk/opportunity.
Evaluated Business and Financial Impacts of Climate Change
Assumed period: Period covered by SF2030 (through fiscal 2030)
Adopted scenarios:
- 4℃ Scenario: IPCC/RCP8.5, IEA/STEPS
- 1.5/2℃ Scenario: IPCC/RCP2.6, IEA/SDS (portions of IEA/NZE)
Time horizon: Short-term: less than 3 years; Medium-term: 3 to 10 years, Long-term; 10 to 30 years
Scenario analysis targets: Industrial Automation Business, Healthcare Business,
Social Systems, Solutions and Service Business, and Device & Module Solutions Business
Definition of business and financial impact (large, medium, and small)
* We analyzed physical risks using hazard maps and AQUEDUCT for 15 major production centers, mainly
in Japan and China. Although it is clear that two centers would be exposed to risk in the event of a once-
in-a-century disaster, the annual impact, taking into account the replication period, is extremely small for
both the 1.5/2°C and 4°C scenarios. Therefore, we rated the impact as small.
Large
We expect ongoing regulations, policies, etc. on climate change at our customers, markets, etc., to have an impact in the
future, resulting in an estimated impact on operating income of JPY 10.0 billion or more per year.
Medium
A change in response to climate change is already ongoing among customers and markets. We expect ongoing impacts to
continue. However, we expect responses to change over the medium to long term, depending on whether consumers are
accepting and on judgments related to return on investment. As a result, we expect the impact on operating income to be
between JPY 3.0 billion and JPY 10.0 billion per year.
Small
An awareness change against climate change is already ongoing among our customers, markets, etc. However, we expect
the medium- to long-term impact to be limited. As a result, we estimate the impact on our operating income to be less
than JPY 3.0 billion per year.
Type of
Risk
Time
horizon
Risk Overview
Business and
financial impact
Response to risks
1.5°C/
2°C
4°C
Transition
Government policy
and regulations
Medium term
- Increase in business
costs (introduction of
carbon tax, emissions
trading, circular
economy regulations,
etc.) as a result of
complying with climate
change regulations
Small
Small
- Systematically promoting energy
conservation and renewable
energy (introduction of high-
efficiency air conditioning systems,
expansion of in-house renewable
energy generation, procurement of
J-Credits from the social systems
business, etc.)
Markets and
technology
Short to medium
term
- Increased competition
in areas related to
decarbonization,
such as improving
the environmental
performance of
products and reducing
the carbon footprint of
products
Small
Small
- Developing products and services
to solve environmental issues, such
as reduction of GHG emissions and
compliance with circular economy
regulations
Reputation
Short to medium term
- Changes in reputation
due to inability to meet
customer needs
- Changes in investor
evaluation due to
poor performance
attributable to
inability to capture
the needs associated
with the resolution of
environmental issues
Small
Small
- Attracting ESG investment and
enhancing the added value of
our products through proactive
response to climate change and the
circular economy
Physical
Acute
Short term
- Suspension of
production facilities and
procurement of parts
and materials at sites
and partner factories
due to increased severity
of natural disasters
(flooding, torrential rain,
water shortages, etc.)
Small*
Small*
- Strengthening resilience by
reestablishing business continuity
plans (BCPs) of OMRON sites
- Securing multiple procurement
sources, particularly semiconductors,
continuing the switch to materials
with low procurement risk by design
changes, formulating a supply chain
strategy for greater resilience from a
medium- to long-term perspective
Type of
pportunities
Time
horizon
Overview of opportunities
Business and
financial impact
Response to risks
1.5°C/
2°C
4°C
Products, services, and markets
Industrial Automation
Business
Short to medium
term
Increased opportunities to provide factory automation equipment in the following business fields:
[By field]
- Digital devices: Increased demand for semiconductors to support the spread of environmentally friendly
vehicles and EVs
- Environmental mobility: Increased demand for EV-related components such as rechargeable batteries and
for EVs
- Food and daily necessities: Increased demand for environmentally friendly packaging materials such as
plastic-free packaging materials to realize a decarbonized society
- Growing need for decarbonization of production processes
Large
Medium
- Providing innovative-Automation
solutions to the needs associated
with production method changes,
new capital expenditure, and
enhanced energy productivity at
production sites
Healthcare
Business
Short to
medium term
Increased demand for environmental performance due to the expansion of ethical consumption
Small
Small
- Capturing consumer demand
by enhancing environmental
performance (carbon reduction,
circular economy, etc.)
Social Systems, Solutions and
Service Business
Short term
Increased needs for renewable energy creation and energy management in response to decarbonization,
rising electricity prices, and disaster countermeasures
[Common]
- Acceleration of the models toward private energy creation, storage, and use, due to the expansion of the
renewable energy, energy storage, and energy management markets
- Expanded demand for solar power generation systems and power conditioners as their installation is made
obligatory or given preferential treatment by municipal ordinances
- Expanded demand for bi-directional charging systems and energy supply-demand control systems for EVs
in response to increased natural disasters and soaring electricity prices
[By field]
- Households (housing): Increased demand for private power generation and storage battery systems due to
preferential measures by municipal governments and the need for more robust measures against natural
disasters
- Business/industry: Increased demand for solar power systems and energy supply-demand control systems
due to accelerated decarbonization
Medium
Small
- Expanding sales of PV inverters
and storage batteries further in
the energy management markets
that utilize solar and other
renewable energy sources
- Securing V2X and other new
technologies in the energy
management market
Device & Module Solutions
Business
Short to medium term
Increased opportunities to provide electronic and mechanical components because of the following:
[Common]
- Increased interest in enhancing the environmental performance of products and reducing their carbon
footprint
[By field]
- Home appliances: Increased demand for air conditioning systems due to rising average temperatures and
increased demand for air conditioners with inverters due to the need to strengthen measures to reduce
GHG emissions associated with air conditioning systems
- Power tools: Accelerated shift to electric tools due to the need to strengthen measures to reduce GHG
emissions associated with product use, leading to increased demand for DC current interruption
- FA: Increased demand for new FA equipment installment and replacement as a result of increased demand
for new products (EVs, next-generation power semiconductors, recycled plastics, alternative foods, etc.)
and the progress of decarbonization of production processes
Small
Small
- Accelerating development
and provision of electronic
components that contribute
to energy saving of customer
products and reduction of the
carbon footprint of manufacturing
processes, including customer
production processes
- Timely monitoring of market
trends to capture opportunities
associated with changes in
demand and design of products
for decarbonization
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Achievement of Carbon Neutral Production
through Cross-Business Initiatives
For the “achievement of carbon neutrality,” which is being
tackled under SF2030, OMRON aims to realize a society that
balances safe, secure, and convenient lifestyles with
environmental preservation. For instance, we envision a
future where the widespread use of renewable energy
enables households to live harmoniously with nature,
generating, storing, and utilizing electricity as part of their
daily routine. To bring this vision to life, we develop and
deliver to the public power conditioners and energy storage
systems for solar power generation systems. OMRON’s
contributions extend beyond the promotion of renewable
energy; we are also focused on sustainable manufacturing
initiatives, including calculating PCF for each product and
verifying GHG emissions across the supply chain.
In order to realize sustainable manufacturing, it is important
not only to reduce GHG emissions but also to enhance
productivity and keep increasing economic value. OMRON
believes that realizing both the “achievement of carbon
neutrality” and “Increasing productivity” is the social issue
whose solution we should contribute to. Based on this idea,
the OMRON Group became the first Japanese manufacturer
to join the EP100, pledging to double “energy productivity,”
which is the ratio of sales per gigawatt-hour (GWh), at all
production sites of the Industrial Automation Business and
the Healthcare Business by 2040 compared to 2016.
Accordingly, we are working on initiatives that prioritize
“energy productivity,” that is, increasing productivity to
boost production volume while reducing energy
consumption. Presented below is a case study of the
Matsusaka Factory of the Healthcare Business (HCB), which
exemplifies this approach. (See Figure 1 ).
A Project to Increase Energy Productivity through
Collaboration among Businesses
At the Matsusaka Factory, which is a production base for
blood pressure monitors and thermometers in Japan, they
have chosen three keywords of “Reduce,” “Create,” and
“Absorb” as they work toward the realization of carbon
neutrality. They aim to "reduce" CO2 emissions by lowering
energy consumption, "create" clean energy that does not
produce CO2, and "absorb" CO2 that remains to be reduced
to achieve net-zero emissions. (See Figure 2 ) The principal
focus is on reducing CO2 emissions, where IAB and HCB are
collaborating to increase energy productivity.
Providing Insights to Employees to Encourage
Improvement through “Visualization”
We at the Matsusaka Factory began by visualizing energy
consumption using i-BELT Data Management Platform
(i-DMP), a data utilization platform implemented by IAB. As
illustrated in Figure 1, i-DMP displays factors that lower
energy productivity in a simple, easy-to-understand format.
This is because even if a large amount of information is
visualized, it does not necessarily work positively. If it is hard
for front-line workers to identify significant information
within the big data, it could prevent them from making
improvements instead. With i-DMP offering clear, simple
data points, all team members are aware of the need to
reduce energy consumption while improving productivity.
This awareness helps identify the next issues to tackle,
effectively motivating employees who are charged with the
mission to increase energy productivity. What follows is a
story of how this visualization approach bore fruit.
Indicators
Energy
productivity
Elements, vectors
Net sales
Value added
Energy
consumption
Increasing
productivity
SF2030 Topics “Achievement of Carbon Neutrality”
Figure 1 Increasing Energy Productivity Solves Manufacturers’ Dilemma
Figure 2 Three Keywords at the Matsusaka Factory
−CO2
Energy consumption
Clean energy
Residual CO2
Increasing energy
productivity
+ Realize a circular
society where
communities and
businesses collaborate
Reduce
+CO2
+CO2
+CO2
Generate
Absorb
+ Maximize
efficiency
in renewable
energy use
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the energy consumed at the Matsusaka Factory is used for
air conditioning, and air conditioning energy used over the
space for the assembly line was 2.5 megawatts per year. By
amassing improvement know-how cultivated at each factory,
the Factory successfully reduced the space required for the
assembly line by 30%, as well as the energy consumed for
air conditioning and lighting in the surplus space by an
equivalent amount. The shorter distance between processes
also reduced operator motion, increasing production
efficiency by 30%. Together with the reduction in air
conditioning energy, energy productivity increased by 85%
overall, and CFP at the assembly line was reduced by 45.9%.
(See Figure 4 )
Logistics Reform to Achieve Higher Energy Productivity and
Lower Waste Production
Our drive to make improvements did not stop at the
production line but led to logistics reform as well. To begin
with, we replaced out-of-Japan suppliers with Japanese
ones and then switched to component suppliers in their
vicinity to shorten the distance of transportation. This shift is
estimated to cut GHG emissions related to component
procurement by 3.4 tons. At the same time, the Matsusaka
Factory achieved waste reduction by using “returnable
boxes.” When imported, components arrived in durable
cardboard boxes with thick buffer materials, resulting in 90
tons of waste annually. In switching to nearby suppliers, the
Factory started using returnable boxes for transportation
that directly go back and forth between the Factory and
suppliers, which is only possible when sourcing from within
the vicinity. The direct delivery cut unloading space, time
and retained parts inventory, led higher energy productivity,
and reduced waste of approximately 30 tons so far.
Going forward, we will accelerate initiatives to focus on
Combining Insights-driven Improvement and IAB’s
Advanced Control Technology to Reduce GHG Emissions at
Each Process by Half
On the board mounting line, which involves soldering,
energy is constantly consumed to maintain high
temperatures, even when equipment is idle. Improvements
had been made before, but further progress was realized
after visualizing the production status of each equipment
alongside energy consumption over time. Through
discussions and analysis based on actual data, front-line
members realized there was still room for improvement.
This insight led to a behavior change in at the Factory, that
is, improving the way of feeding the boards to the line, thus
optimizing downtime use and enhancing production
efficiency. Ultimately, productivity increased by 40% through
reduced downtime and enhanced uptime. There was
another issue to address concerning the equipment itself:
each time it was turned off, it required 60 to 90 minutes to
return to stable, high-temperature operation, adding extra
downtime instead. So, we asked IAB to share their
technology and know-how and introduced a control system
that predicts the time taken to restore based on seasonal
variation and production data. While the system is still being
verified, it is expected to reduce energy consumption by
approximately 20%. This improvement is projected to
increase energy productivity by 75% and reduce CFP by
42.9%. (See Figure 3 )
We also applied the platform to our blood pressure monitor
assembly line for improvement. Blood pressure monitors
are assembled both automatically and manually. At our
automated line, processes such as soldering inspection and
transportation were optimized using automation techniques
proven effective at the Ayabe and Kusatsu Factories,
increasing productivity by 30%. Meanwhile, one-quarter of
energy productivity improvements by utilizing field data
while expanding clean energy initiatives. Moreover, we aim
to share this know-how with global manufacturing
customers, fostering sustainable manufacturing practices
worldwide. OMRON will remain committed to realizing a
society that balances safe, secure, and convenient lifestyles
with environmental preservation.
Energy productivity
Effects
Energy
consumption
Production
volume
x1.4
x0.8
Energy
productivity
x1.75
GHG
emissions
per board
(at the relevant process)
42.9%
Reduced by
Energy productivity
Effects
Energy
productivity
x1.85
GHG
emissions
per board
(at the relevant process)
45.9%
Reduced by
Energy
consumption
Production
volume
x1.3
x0.7
OMRON’s Innovation in Energy Productivity from the Manufacturing Site
Figure 3 Improvement Effects at the Board Mounting Line
Figure 4 Improvement Effects at the Blood Pressure Monitor Assembly Line
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Initiatives for Coexisting with Nature
(Preserving Biodiversity)
Revision of the OMRON Biodiversity Policy
Our everyday lives, economy, and well-being are built on
biodiversity, which forms the foundation of life. Yet,
biodiversity is facing a serious decline. Recognizing the
conservation and restoration of biodiversity as a key
challenge, OMRON established its Biodiversity Policy in
2010 and has been working on “Coexisting with Nature,”
which is an important environmental issue to address as
declared in the OMRON Environmental Policy.
To further strengthen this initiative, we endorsed the
concept of the Kunming-Montreal Global Biodiversity
Framework, adopted in December 2022, which aims to
achieve coexistence with nature and a nature-positive world,
and revised the OMRON Biodiversity Policy in July 2024. In
making the revision, we referred to key resources such as
the disclosure recommendations and guidance by the Task
Force on Nature-related Financial Disclosures (TNFD), a
framework for disclosing risks and opportunities related to
natural capital. Going forward, guided by the OMRON
Biodiversity Policy, the OMRON Group is dedicated to
biodiversity conservation, viewing it as part of both business
risk management and a growth opportunity. By doing so,
OMRON is committed to contributing to generating social
and economic value and achieving a nature-positive future.
OMRON Biodiversity Policy
What We Do
Commencing the Initiative for TNFD Recommended Disclosures
Since the second half of fiscal 2023, OMRON has been an active participant in the TNFD Forum, getting ready for disclosures as
per TNFD recommendations. In fiscal 2024, we applied the LEAP approach to locate the state of nature around our production
sites and evaluate our dependencies and impacts on natural capital. Based on the findings of “Locate (Interface with nature) and
Evaluate (Dependencies & impacts), we will assess key risks and opportunities and disclose them accordingly.
L: Interface with nature
In this phase, we assessed our production sites in terms of ecosystem integrity, importance of biodiversity, physical water risks,
and soil contamination in order to identify priority locations.
Locate: Interface with nature
Evaluate: Dependencies & impacts
What to assess
24 production sites
Industrial Automation Business, Device & Module Solutions Business
Scope of
assessment
- Assessment of activity locations
- Identification of priority locations
- Confirmation of industrial classification by business based on sales and other information
- Assessment of sector-level dependencies and impacts
- Careful review of assessment results based on the actual site status
- Identification of high-priority dependency assets and impact drivers
Outputs
- Assessment findings of activity locations
- List of priority locations
- Assessment results of dependencies and impacts
- Identification of high-priority dependency assets and drivers
Evaluation items
Evaluation tools
Evaluation indicators
Sites (with High risks or higher)
(1) Importance of
biodiversity
IBAT *1
IUCN Red List, Protected Areas(National,
Natura2000 Regional Seas, World Heritage,
Ramsar, MAB, Emerald Network), KBA
Japan (Aichi, Tottori, Oita, Saga, Kumamoto, Kyoto, Shiga,
Mie), Italy (Lonato), the Netherlands ('s-Hertogenbosch),
Indonesia (Bekasi), Malaysia (Petaling Jaya), China
(Shenzhen), the U.S. (Pleasanton, Renton), Brazil (Sao
Paulo), Vietnam (Thu Dau Mot)
Biodiversity
Risk Filter *2
Protected/Conserved Areas,
KBA, Other Important Delineated Areas,
Range Rarity
(2) Ecosystem integrity
Biodiversity
Risk Filter
Ecosystem Condition
None
(3) Physical water risks
(water stress, flood
risks, water quality)
Aqueduct
Water Risk
Atlas *3
Baseline water stress
China (Dalian, Shanghai), Indonesia (Bekasi)
Riverine flood risk, Coastal flood risk
Japan (Aichi, Mie, Kumamoto), China (Dalian, Shanghai),
Vietnam (Thu Dau Mot), Indonesia (Bekasi), the U.S.
(Pleasanton)
Water Risk Filter *4
Surface Water Quality Index
Italy (Frosinone, Lonato), the Netherlands
('s-Hertogenbosch), China (Dalian, Shanghai), Brazil (Sao
Paulo)
(4) Soil contamination
None
Investigation/analysis by OMRON
None
*1 IBAT: Integrated Biodiversity Assessment Tool developed by the UN Environment Programme (UNEP). For the purposes of this report, the number of species within 50km of the site is
measured.
*2 Biodiversity Risk Filter: Developed by the World Wide Fund for Nature (WWF), this tool helps assess biodiversity-related risks and opportunities across the value chain
*3 Aqueduct Water Risk Atlas: Provided by the World Resources Institute (WRI), this tool helps identify and assess water risks around the world.
*4 Water Risk Filter: Co-developed by WWF and the German financial institution DEG, this tool helps identify and assess risks associated with the water environment.
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What We Do
Business
Industrial
classification
Direct physical input
Production process
Mitigating direct impacts
Protection from disruption
Animal-
based
energy
Fibers
and other
materials
Genetic
materials Groundwater Surface
water
Maintains
nursery
habitats
Pollination Soil
quality
Ventilation Water flow
maintenance
Water
quality
Bio-
remediation
Dilution by
atmosphere
and
ecosystems
Filtration
Mediation
of sensory
impacts
Buffering
and
attenuation
of mass
flows
Climate
regulation
Pest
control
Disease
control
Flood and
storm
protection
Mass
stabilization
and erosion
control
Industrial
Automation
Electronic devices/
equipment
ー
ー
ー
Medium
Medium
ー
ー
ー
ー
ー
ー
ー
Low
ー
ー
ー
ー
ー
ー
ー
ー
Electronic
components/facilities
ー
ー
ー
Medium
Medium
ー
ー
ー
ー
ー
ー
ー
Low
ー
ー
ー
ー
ー
ー
ー
ー
Device & Module
Solutions
Electronic devices/
equipment
ー
ー
ー
Medium
Medium
ー
ー
ー
ー
ー
ー
ー
Low
ー
ー
ー
ー
ー
ー
ー
ー
Business
Industrial
classification
Change in use of land, water, and oceans
Resource development
Climate change
Pollution
Others
(1) Terrestrial
ecosystem use
(2) Freshwater
ecosystem use
(3) Marine
ecosystem use
(4) Water use
(5) Other
resource use
(6) GHG emissions
(7) Non-GHG air
pollutants
(8) Water pollutants
(9) Soil pollutants
(10) Solid waste
(11) Disturbances
Industrial
Automation
Electronic devices/
equipment
ー
ー
ー
ー
ー
ー
ー
High
High
Medium
Medium
Electronic
components/facilities
ー
ー
ー
ー
ー
ー
ー
High
High
Medium
Medium
Device & Module
Solutions
Electronic devices/
equipment
ー
ー
ー
ー
ー
ー
ー
High
High
Medium
Medium
Table (1) Evaluation results (Dependencies)
Table (2) Evaluation Results (Impacts)
E: Dependencies & impacts
With businesses spanning Industrial Automation, Device & Module Solutions, Healthcare, and Social Systems, Solutions and Service, OMRON is involved in various manufacturing sectors. In fiscal
2023, we prioritized assessing the Industrial Automation Business and the Device & Module Solutions Business based on business scale and site number. We then identified target sectors according
to the sales composition ratios of products representing these two businesses, and evaluated their dependencies and impacts using ENCORE*. The analysis found that scores for water-related
(groundwater and surface water), pollution-related (water pollutants, soil pollutants, and solid waste), and others (noise, light) categories were rated Medium or above. (See Table 1 and 2). Based on
this analysis, we concluded that the key high-priority dependencies/impacts are related to groundwater and surface water only.
[Water-related]
At OMRON’s production sites, most water withdrawals come from third party suppliers and are primarily used for domestic purposes. As such, we assume that our direct dependencies on groundwater
and surface are actually smaller than what ENCORE says. However, considering that "using water resource effectively" is part of the "Coexisting with nature," which is one of the key environmental
issues laid out in the OMRON Environmental Policy, we have determined that addressing dependencies on groundwater and surface water remains a high priority.
[Pollution-related]
At all our production sites, OMRON conducts Phase 1 surveys (initial surveys including written surveys, interviews, and on-site reviews) to carry out qualitative risk analysis. At some sites, we conduct
Phase 2 surveys (soil and groundwater research) to analyze potential risks. Based on these analyses, we have found no evidence of soil contamination at any of our production sites or their surrounding
areas, allowing us to conclude that the risk of soil contamination is minimal. Furthermore, OMRON mainly performs assembly at its production process and rarely uses liquid chemical substances. As
such, we assume that our impact on soil, groundwater, and solid waste pollution is smaller than what ENCORE says.
[Others]
Likewise, based on our site environmental performance data, we believe that the impacts of noise and light pollution are smaller than indicated by ENCORE.
* ENCORE: Exploring Natural Capital Opportunities, Risks and Exposure. Developed by the UNEP World Conservation Monitoring Centre, this tool assesses risks associated with biodiversity.
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HUMAN RIGHTS
Respecting Human Rights in the Value Chain
As part of our corporate social responsibility, exerting our influence for the respect of human
rights for workers in the value chain and at OMRON
74
OMRON’s Approach to Human Rights
As declared in the OMRON Principles, Our Values include
Respect for All. Respect for All is more than a basic respect
for diversity, personality, and individuality. Respect for All is
the core value underlying all our activities in pursuit of living
lives and performing jobs of purpose and promise. We act
with integrity, creating stronger relationships of trust with
individuals and society. This goes to the core of our
existence as a company.
OMRON Human Rights Policy
The Guiding Principles on Business and Human Rights
(UNGPs) adopted by the United Nations in 2011 made it
clear that every business enterprise has a responsibility to
respect human rights. The scope of this responsibility is not
limited to our company alone, but society demands that it
expand to the entire value chain. Given this, we chose
“Respecting Human Rights in the Value Chain” as one of the
material sustainability issues and established the OMRON
Human Rights Policy on March 1, 2022 to address this
material issue. In recent years, in particular, human rights
initiatives in accordance with the UNGPs have mandated
progressively greater regulatory obligations on companies
across the globe, and we have had a growing number of
inquiries from customers about the status of such initiatives.
Legal compliance and fulfillment of those obligations are
thus becoming increasingly important from the perspective
of business continuity. OMRON is committed to ensuring
that its management practices and actions align with those
of the international community and strives to reduce human
rights violation risks throughout its value chain.
Human Rights Promotion Structure
As illustrated in the overview of human rights initiatives
Figure 1 below, OMRON is working to build a system in
which management and front-line employees work together
to fulfill their responsibility to respect human rights globally.
Under the responsibility of the Sustainability Executive, to
whom the President & CEO delegates authority, the Global
Corporate Communications & Engagement HQ leads the
promotion of these initiatives. The Senior General Manager
of the Global Human Resources and Administration HQ
oversees the company’s human rights efforts, while the
Senior General Manager of the Global Procurement, Quality
and Logistics HQ supervises supply chain responsibilities.
Each business company president directs their own business
strategies, the Senior General Manager of the Technology
and Intellectual Property HQ ensures the ethical use of AI
and other technologies, and the Senior General Manager of
the Global Risk Management and Legal HQ maintains
remediation and grievance mechanisms. Matters that are
important to the company’s commitment to human rights
are reported to the Board of Directors, who monitors and
supervises these matters. As in the case of appointing a
director in charge of environmental matters, a director
responsible for human rights was appointed in fiscal 2023.
The Sustainability Committee, chaired by the Sustainability
Executive, discusses and deliberates on human rights
initiatives that apply across the Group.
Figure 1 Overview of OMRON’s Initiative for the Respect of Human Rights
Formulation of Human Rights Policy
Human Rights Due Diligence
Stakeholder Engagement
· Identifying priority human rights
issues
· Assessing the entire value chain
from a global perspective
· Mechanism to prevent and mitigate
human rights violation risks
· Formulation and implementation of
medium-term initiatives
· Disclosure of results and processes
· Review and updating of plans
· Grasping of the status of responses
throughout the value chain
· Oversight and supervision by the
Board of Directors
Establishment of Human Rights Remediation
and Grievance Mechanisms
(1) Assess human rights impact
(2) Integrate into OMRON’ s
management
(3) Monitoring
(4) Information disclosure
OMRON Human Rights Policy
Respecting Human Rights in the Value Chain
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Key Human Rights Initiatives under SF2030
To achieve the goals laid out in SF2030, we have set goals
for up to 2024 and aim to establish a global human rights
governance system.
SF2030 Goals
In line with the UN Guiding Principles on Business and
Human Rights, the state of exerting our influence for the
respect of human rights for workers not only at OMRON, but
also in the value chain, and establishing a culture and
system that does not permit or cause human rights
violations.
Goals to be Achieved by 2024
Execution of human rights due diligence in accordance
with the UNGPs
By conducting human rights impact assessments across the
entire value chain, we will identify “salient human rights
issues” and create the conditions for implementing a cycle
of human rights due diligence.
Establishment of a Human Rights Remediation and
Grievance Mechanism Appropriate to Each Country and
Region
We are establishing a human rights remediation and
grievance mechanism appropriate to each country and
region so that we can implement remedies through due
process if we cause or recognize factors contributing to
adverse human rights impacts.
Progress has been made toward these goals in creating a
cycle of risk research, assessment, and remediation
for due diligence on suppliers and OMRON. We have also
built an AI ethics governance system, one of our key human
rights initiatives, to mitigate the impact of our products and
services in the downstream portion of the value chain. We
have also expanded the remediation and grievance
mechanism to accept consultations and grievances from a
broader range of stakeholders.
In January 2024, we joined the Responsible Business
Alliance (RBA), an international industry coalition dedicated
to realizing a responsible supply chain. OMRON has already
referred to the RBA’s Code of Conduct. Going forward, we
will expedite the application of these principles to both
OMRON’s internal efforts and those of the broader supply
chain. As outlined above, OMRON aims to improve the
efficiency of the cycle that has already been established.
Human Rights Impact Assessments
In fiscal 2022, OMRON conducted a group-wide human
rights impact assessment based on the UNGPs. In
conducting this assessment, we evaluated and identified
human rights violation risks that we may cause or contribute
to through our business activities in our value chain. Of the
19 priority issues thus identified, seven were prioritized
based on risk severity and relevance to the business. Each
responsible department is now addressing these salient
human rights issues, as shown in Figure 2 below.
Relevance to Business Activities (Attribution, Impact, and Current Management Status)
Risk Severity
(Scale, Scope, Remediability, and Likelihood)
Low
High
Low
High
Issues needed to be addressed
Salient Human Rights Issues
Fraud, bribery, and corruption
Risks in conflict-affected
and high-risk areas
DE&I
Grievance mechanism and
access to remedy
Privacy and
information security
Privacy and
information security
Right to life and safety
Right to life and safety
Ethical use of technology
Ethical use of technology
Product quality and safety
Product quality and safety
Access to healthcare
Access to healthcare
Rights to collective bargaining
and freedom of association
Rights to collective bargaining
and freedom of association
Non-discrimination and equal opportunity
Non-discrimination and equal opportunity
Forced labor
Forced labor
Working
conditions
Working
conditions
Occupational health and safety
Occupational health and safety
Environmental impact
Conflict minerals
Conflict minerals
Child labor
Child labor
Forced, slavery, bonded labor
Forced, slavery, bonded labor
Labor standards
Labor standards
Employees
Supply chain
Products and services
Entire value chain
Issue Categories
Details of the Steps in Human Rights Impact Assessments
Figure 2 Overview of OMRON’s Initiative for the Respect of Human Rights
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Initiatives in the Supply Chain
In the supply chain, OMRON works with suppliers to prevent
human rights issues from occurring and periodically surveys
them.
In more concrete terms, we send them a self-assessment to
verify the conformity to the OMRON Group Sustainable
Procurement Guidelines, which include respect for human
rights and labor practices, and request improvement, if
needed. These guidelines were prepared in compliance with
the RBA Code of Conduct. Critical suppliers, who are
designated as such based on the transaction volume and
importance, are assessed annually, while other suppliers (all
suppliers) are assessed at least once every three years, as
detailed Figure 3 below. In fiscal 2023, 60 critical suppliers
and 575 all suppliers completed self-assessments. Meeting
RBA requirements is a shared goal for critical suppliers.
Based on the results of human rights impact assessments
conducted in fiscal 2022, we have designated suppliers with
production bases in China and Malaysia for intensive
improvements through fiscal 2024. In fiscal 2023, we asked
the following suppliers to conduct a detailed self-assessment
on human rights.
- China: Suppliers in labor-intensive industries
- Malaysia: Suppliers who employ foreign workers from
neighboring countries
After careful examination of the responses to the
self-assessment, we sent our employees to high-risk
suppliers (China: 2 companies, Malaysia: 3 companies) to
assess the situation. Their on-site visits revealed cases where
“personnel who are trained to offer first aid to injured or sick
workers are unavailable” (China) or “employment contracts
for foreign workers are not translated in their mother
tongue” (Malaysia). These suppliers have agreed on an
improvement plan based on our feedback provided in
person and are currently implementing corrective action
plans. For lower-risk suppliers (China: 16 companies,
Malaysia: 1 company), we briefed them on their evaluation
results individually and agreed on areas of improvement.
They are currently working on improvements according to
agreed plans. In fiscal 2024, while monitoring the progress
in these correction plans, we are expanding the scope of
the assessment by asking suppliers in China and Malaysia,
to whom we have yet to send the survey, to answer a
detailed survey as others have. The cycle of human rights
due diligence will continue through ongoing assessments
of both critical and all suppliers.
Initiatives at OMRON Sites
At OMRON, we are primarily working on “occupational
health and safety” and “employees’ working conditions
(including forced labor),” two of the salient issues identified
in human rights impact assessments. To monitor the status
and degree of achievement of human rights initiatives at
each site, OMRON uses the RBA Self-Assessment
Questionnaire (SAQ) annually. In fiscal 2023, we conducted
the SAQ at 25 OMRON Group production sites in Japan,
China, the Asia-Pacific, Europe, and the Americas to analyze
and mitigate human rights violation risks. To address salient
issues individually, we focused on analyzing and correcting
occupational health and safety concerns, including work-
Critical
suppliers
All suppliers
- Verify the conformity with the RBA Code of Conduct (assessment with third-party standards) and
implement improvement
- Conduct a survey (RBA Corporate Level SAQ) for critical suppliers once a year
- Verify the conformity with the Sustainable Procurement Guidelines and implement improvement
- Conduct a survey for all suppliers at least once every three years
(2) (3)
(1)
Fiscal 2023 Results
60 suppliers
575 suppliers
China: 69 suppliers
(25 critical suppliers)
Malaysia: 51 suppliers
(3 critical suppliers)
(3) Self-assessment by all
suppliers
- Conduct more detailed assessments to determine the existence of risks identified in the value
chain, take corrective action against latent risks, and implement redress for risks that have emerged
- Conduct detailed human rights assessments at least once every three years for suppliers with
production sites in high-risk countries who have been identified as such based on risk analysis
results
(2) Detailed self-assessment
for suppliers in countries
with high human rights
risks / high-risk attributes
(1) Self-assessment by
critical suppliers
Figure 3 Classified Sustainability Assessment for Suppliers
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compliance. The Malaysia factory is correcting issues found
in the audit, including management of on-site contractors,
employment conditions, and evacuation equipment. For
future initiatives, OMRON will continue to prioritize
addressing human rights issues and sites with high-priority
concerns while establishing a monitoring system and
sharing knowledge across regions to reduce human rights
violation risks throughout the entire Group.
Initiatives for Products and Services
OMRON has identified “ethical use of technology” as a
salient issue. Accordingly, in our human rights policy, we
have made the following statement: “OMRON will take
account of potential impact for human rights caused by
technologies such as AI, robotics and IoT, and will take
advantage of them appropriately to avoid problems,
including but not limited to cause of accident,
discrimination and invasion of privacy.”
Of all these technologies, AI is evolving rapidly, leading to
the emergence of associated risks worldwide. Animated
discussions are underway to seek an optimal balance
between its utilization and regulation, as the G7, OECD, and
the UN are calling on countries to devise safe and
appropriate frameworks for its use.
OMRON provides AI-powered products and services, with
their number expected to grow. In response, we formulated
the OMRON AI Policy in June 2024 to establish an AI
governance system. Under this policy (see Figure 4 , Page
78), we aim to promote the safe and secure use of AI while
minimizing the risk of accidents and human rights violations.
Meanwhile, the AI Governance Committee (see Figure 5 ,
Page 78) began operations in March 2024 with the aim of
supporting the appropriate use of AI and reducing
associated risks pursuant to the OMRON AI Policy. We are
also working on building a governance system and process
in compliance with government guidelines for AI operators
to collect information and provide guidance. Going forward,
this committee will focus on legal compliance, formulating
and revising guidelines, and addressing specific inquiries
from various departments from within the Group regarding
AI usage. Through these initiatives, we will reinforce our AI
governance, preventing human rights violations from
occurring through the products and services we deliver.
Establishment of a human rights remediation and
grievance mechanism appropriate to each country
and region
For OMRON Group employees (including temporary
workers), a whistleblower system is in place in each region
for them to use. The system, open to all employees within
the OMRON Group, enables them to report human rights
concerns such as discrimination, harassment, legal
violations, breaches of laws/regulations and internal rules,
or unethical behavior, and to seek advice on their concerns.
Such reports may be made anonymously unless prohibited
by the laws and regulations of the respective countries.
In fiscal 2023, a total of 106 reports were received globally
via the whistleblower system. OMRON considers this a sign
of organizational health.
In fiscal 2023, we made the system open to suppliers in our
supply chains across all regions, enabling them to report
questionable behavior or seek advice via the system.
Confidentiality is strictly maintained, and whistleblowers are
protected from any retaliation. OMRON verifies reports
impartially and takes appropriate measures. Please visit our
corporate website for more information on the operating
status of the whistleblower system.
In addition, the OMRON Group became a full member of
related accidents at each site. We will continue monitoring
and addressing work-related accidents in fiscal 2024,
especially in key regions and sites. For improving working
conditions, a labor management system that adheres to the
RBA Code of Conduct has been introduced and
implemented globally. Given that production sites in China,
those in Malaysia where an on-site contractors employ
migrant workers, and those in Japan where trainees on the
Technical Intern Training Program (TITP) are employed by
on-site contractors pose a high risk for forced labor, we
secured the agreement of on-site contractors to follow the
OMRON Group Supplier Code of Conduct. Procedures to
prevent, detect, and address forced labor and child labor
were also formalized. In addition, in fiscal 2024, OMRON is
reviewing five sites in Japan where TITP trainees are
employed by on-site contractors to check for any forced
labor cases, based on data gathered on the number and
nationality of the trainees. To address the risk of long
working hours, we monitored selected production sites in
China, Malaysia, and Japan, where such a risk is considered
high. In fiscal 2024, our principal focus will be on building a
global monitoring system to track these issues.
In addition to these initiatives designed to reduce human
rights violation risks, production sites in China (Dalian City),
Vietnam, and Malaysia underwent third-party audits based
on RBA standards, specifically the RBA Validated
Assessment Program (VAP). Based on the audit findings,
improvements were made to the working environment,
occupational health and safety, and other areas. For
instance, in fiscal 2023, the Vietnamese factory that had
undergone the VAP introduced adequate personal
protective equipment for its workers as recommended in
the audit. The Dalian factory, which achieved Platinum status
in the VAP, continues monthly reviews of compliance with
specific standards to maintain and enhance RBA
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Education on Human Rights
In order to promote honest and fair business activities,
OMRON designates October of each year as Corporate
Ethics Month. We distribute top management messages to
directors and employees including subsidiaries in Japan and
outside Japan (in 14 languages) and organize workplace
training sessions. Under the theme of “Business and Human
Rights,” the fiscal 2023 human rights training session featured
self-paced e-learning designed to raise awareness of the
OMRON Human Rights Policy and human rights issues in line
with relevant international standards. Mutual discussion
sessions were also held to emphasize the “importance of
protecting human rights as a key element of business.” As
many as 98.9% of OMRON employees and on-site
contractors workers took the session globally, which helped
them better understand the necessity of respecting human
rights. Additionally, for managers and those who raise
awareness and lead efforts to encourage respect for human
rights, specialized training sessions were provided to deepen
the Japan Center for Engagement and Remedy on Business
and Human Rights (JaCER) in fiscal 2022. JaCER offers the
Engagement and Remedy Platform, a non-judicial grievance
platform in compliance with the UNGPs, which OMRON
began operating in fiscal 2023. Through this platform, we
receive grievances from all stakeholders, including local
communities, customers, and secondary and subsequent
suppliers with whom we have no direct business
relationship.
These initiatives taken up to fiscal 2023 have allowed us to
steadily expand systems for receiving consultations and
grievances from a broader range of stakeholders. Going
forward, we will focus on strengthening the application of
the systems thus expanded, monitoring the status of
consultations and grievances and improving the
effectiveness of the redress mechanisms.
OMRON AI Policy (Preamble)
OMRON will take advantage of AI in a proper way to contribute to a better society. AI is a technology for
implementing intelligent features including but not limited to reasoning and estimation. OMRON has
established this OMRON AI Policy to ensure that the company takes advantage of AI with proper risk
management and avoids serious problems, such as accidents or violations of human rights. The scope of this
policy includes AI systems developed by OMRON, as well as those that OMRON may use. OMRON will
continually review and update this policy.
As respect for humanity is one of OMRON’s most important guiding principles, OMRON will continue its
challenge to solve social issues by taking advantage of AI with proper care, in alignment with the international
standards of human rights and the rules of human society. This policy has two parts. The first part outlines
OMRON’s commitment to the responsible use of AI, and the second part describes OMRON’s approach to AI
governance.
their understanding of international guidelines like the
UNGPs and the RBA Code of Conduct. Furthermore, we held
study sessions under the themes of “Increasing Responsibility
to Respect Human Rights and the Expected Role of the Board
of Directors” for Directors and Audit & Supervisory Board
Members and “Growing Human Rights Concerns and Their
Impact on Business“ for Executive Officers.
Regarding procurement, the OMRON Group Management
Policy includes a commitment to "integrated, sustainable
procurement" that ensures legal compliance and
environmental considerations, which also involves efforts to
prevent forced labor. To ensure the successful
implementation of this policy, we have set up the OMRON
Group Rules for Procurement, disseminated through
individual informational meetings for purchasing managers
and staff at business divisions and other occasions.
For suppliers, we prepared training materials to facilitate their
understanding of sustainable procurement, encouraging
them to take e-learning opportunities. In fiscal 2023, a total of
481 suppliers around the world took the sessions.
The Operating Status of the Whistleblower System
OMRON AI Policy
*The full text is on the OMRON website.
Figure 4 OMRON AI Policy
Figure 5 Overview of the AI Governance
Main Roles
Participating Divisions/Companies
1. Gather and analyze risk factors
2. Formulate, revise, and spread guidelines
3. Develop and raise awareness of educational
content
4. Respond to consultation on risks associated with
AI-enabled operations and product development
5. Cooperate with the Corporate Ethics and Risk
Management Committee
6. Establish the global governance system
7. Determine guidelines on legal compliance in
each country and prepare necessary action
- Technology and Intellectual Property HQ (Secretariat,
Technology, Intellectual Property)
- Global Business Process and IT Innovation HQ (IT
Security)
- Global Risk Management and Legal HQ (Laws/
Regulations, Protection of Confidential Information,
Protection of Personal Information)
- Global Corporate Communications & Engagement
HQ (Social Receptivity, Human Rights)
- Each business company (Technology, Intellectual
Property, Protection of Personal Information)
*In parentheses: Areas of responsibility
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GOVERNANCE
80
performance trend or business environment forecasts. At
off-site meetings, issues at the draft stage are discussed,
prior to submission to the Board of Directors, and Executive
members receive advice from Outside Directors on
operational issues. The frequency and density of
communication and information distribution within the
management team have been increased by creating
opportunities outside Board of Directors meetings to
deepen cooperation between Outside Directors and
Executives. Now, Business Company Presidents and Heads
of Head Office Divisions actively seek advice from Outside
Directors on the changes and challenges they face. My
impression is that communication among the management
team has been further enhanced.
In my first year as Chair of the Board of Directors, I learned
that enhancement of the effectiveness of the Board of
Directors is in large measure dependent on factors besides
the actual discussion at Board of Directors meetings. I have
seen a definite improvement in the effectiveness of the
Board of Directors meetings as a result of more
opportunities for the members of the Board of Directors
and executives to engage in open and substantive
discussions, such as freewheeling discussions at off-site
meetings.
In last year’s integrated report, you highlighted your
commitment to continuing to evolve governance from
diverse perspectives.
What has that evolution entailed so far?
The Corporate Governance Committee has evolved. The
composition of the Committee was reviewed in order to
strengthen its function as an advisory body that discusses
and deliberates for the “purpose of enhancing corporate
One year has passed since you assumed office as
Chairman of OMRON and Chair of the Board of Directors.
How would you summarize the past 12 months?
OMRON started fiscal 2023 with a fresh executive structure
and a new CEO, as well as a new CFO and newly appointed
heads of all Business Companies (BC heads). The new
executive team has been resolutely advancing toward
realization of the SF2030 vision, including making JMDC
Inc. a Group company and achieving steady progress in
establishing the Data Solution Business. On the other hand,
OMRON has been underperforming financially. The Board
of Directors considers this to be a matter of the utmost
gravity.
When I was CEO, I worked to enhance OMRON’s ability to
effectively respond to change. However, OMRON was not
yet fully equipped with the ability to deal effectively with
drastic change in the business environment. The Board of
Directors also recognizes that the framework and approach
were insufficient to accurately detect changes in the
business environment, centering on the emergence of
China risk, at an early stage enabling timely action. It is
particularly regrettable that we were unable to avoid the
second downward revision of the performance forecast. The
Board of Directors has been working since fiscal 2023 to
improve the situation to prevent recurrence.
What improvements have been made based on the
review?
Specifically, we have established a new meeting body called
the “off-site meeting” as a forum for Outside Directors to
have frank discussions with Business Company Presidents
and Heads of Head Office Divisions at normal times, not
only when the Board of Directors senses changes in the
Chairman of the Board
Chair of the Board of Directors
Member of the CEO Selection Advisory Committee
Vice Chairman of the Corporate Governance Committee
Yoshihito Yamada
Interview with the Chairman of the Board
Our directors and executive team
will work together to complete
structural reforms to ensure
OMRON’s sustainable growth,
determined to get OMRON back on
a growth trajectory and further
enhance corporate value.
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governance over the medium to long term.” Previously, the
Committee was composed solely of Outside Directors and
Outside Audit & Supervisory Board Members, but from fiscal
2023, the Committee also includes two non-executive inside
Directors, including myself.
The aim of this change is to continuously evolve corporate
governance, a key responsibility of the Board of Directors.
This is because discussion based on experience and
information of inside Directors, who are familiar with the
business environment and what is happening inside
OMRON, crossed with the external perspectives of Outside
Directors, is beneficial from the viewpoint of effectiveness.
However, it is important that the participating inside
Directors are in a non-executive capacity, because the
purpose is to strengthen the governance function. The
participation of non-executive inside Directors enables
in-depth discussion in line with the actual circumstances in
the field and the reality of the business.
OMRON has embarked on drastic structural reform.
What was discussed at Board of Directors meetings?
It is important that the executive team viewed the issues
highlighted as medium- to long-term issues, not from a
short-term perspective, and took action. Therefore, in
response to the executive team’s decision, the Board of
Directors carefully deliberated on this initiative from a
medium- to long-term perspective, representing
shareholders and all other stakeholders. Under Structural
Reform Program NEXT 2025, our focus is on rebuilding the
Industrial Automation Business (IAB) as quickly as possible
and restructuring the foundation for earnings and growth.
Specifically, having earmarked April 2024 through
September 2025 as a period for concentrating on structural
reform companywide, we are implementing five
management measures. In particular, for IAB, the Head
Office and the business division are jointly running 10 task
forces, and the Board of Directors is monitoring their
progress.
The Board of Directors has also begun discussing medium-
to long-term growth strategies to follow structural reform.
Although we set aside the medium-term management plan
in order to focus on the completion of NEXT 2025, we have
not lowered the flag that we raised under the long-term
vision SF2030. There are two things we need to work on to
realize this vision. One is to reinforce existing businesses,
and the other is to establish a new business model.
Reinforcing existing businesses means rebuilding IAB. We
are currently working to improve IAB’s competitiveness by
strengthening product appeal and proposal capabilities.
Regarding the area portfolio, our aim is to expand the
customer base in Europe, the Americas, Asia, and Japan in
order to achieve balanced overall global growth, shifting
from the overdependence on China. As for the Healthcare
Business, we seek growth globally centering on channel
expansion in Asia and India.
Regarding establishment of a new business model, we are
also working to shift our business model to one based on
the “combination of products and services” utilizing data in
order to realize SF2030. One of the results of this initiative
was that OMRON made JMDC Inc. a Group company.
OMRON’s strength lies in products (devices) incorporating
OMRON’s core technologies, “Sensing & Control + Think.”
Pursuing a customer-driven approach, each business is
further strengthening the products it has been offering in its
respective domains. By adding JMDC Inc.’s technology and
solution development expertise to data obtained from
products used in these various domains, it will be possible
to create a new data solution business that is not limited to
the healthcare field. For example, in the Social Systems,
Solutions and Service Business, in collaboration with JMDC
Inc., OMRON has already launched a solutions business in
the current fiscal year that utilizes electricity usage data and
data on customers’ purchases obtained from convenience
stores, retail stores, and restaurants to support their energy
saving.
The Board of Directors will support the executive team not
only in promoting NEXT 2025 but also in reinforcement of
existing businesses and establishing a new business model
for future growth.
Finally, please send a message to your stakeholders.
I am confident that the new executive team led by CEO
Tsujinaga will complete structural reform and lead OMRON
to a V-shaped recovery. We, the Board of Directors, as
representatives of shareholders and all other stakeholders,
will closely monitor and supervise progress, while at the
same time taking calculated risks and supporting the
challenges of the executive team. And as Chair of the Board
of Directors, I will continue to do my utmost to enhance the
effectiveness of the Board of Directors and OMRON’s
corporate value over the medium to long term.
I greatly appreciate our stakeholders’ continued
understanding and support.
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Leading Outside Director
Chairman of the CEO Selection
Advisory Committee
Chairman of the Corporate
Governance Committee
Member of the Personnel
Advisory Committee
Member of the Compensation
Advisory Committee
Takehiro Kamigama
Outside Director
Chairman of the Personnel
Advisory Committee
Member of the CEO Selection
Advisory Committee
Member of the Compensation
Advisory Committee
Member of the Corporate
Governance Committee
Izumi Kobayashi
Outside Director
Chairman of the Compensation
Advisory Committee
Member of the CEO Selection
Advisory Committee
Member of the Personnel
Advisory Committee
Member of the Corporate
Governance Committee
Yoshihisa Suzuki
business in North America, we could have diversified the
risk, but we never took the discussions far enough to
implement concrete measures. Surface-level discussions
ultimately don’t accomplish anything. This lowered forecast
has been a valuable lesson for us.
Kobayashi: The portfolio should also be analyzed from
multiple perspectives, including business domains and
regions. There’s no such thing as permanence in business.
This has served as a reminder that we must all stay mindful
of the inherent risks that come with overconcentration.
Suzuki: We also need to consider the fact that there were
two lowered forecasts. This indicates that the issues were
not identified after the first lowered forecast. In
management, being unable to identify issues is extremely
dangerous. So why were we unable to identify them in this
case? Since the supply chain was involved, re-evaluating our
business model and processes will likely be a topic for
discussion moving forward. On the other hand, we should
acknowledge President Tsujinaga’s decision to cut 2,000
jobs during a difficult time in his first year. There may have
been other decisions that could have been made earlier,
but identifying the right time to act requires management
instinct that comes only with experience. I hope the
executive team can develop that kind of instinct through this
experience.
The Board of Directors’ Responsibilities and
Reflections on Failing to Detect Changes in the
Business Environment
How do the Outside Directors view the significant
underperformance against the initial plan for FY23? Please
share your reflections as members of the board and
thoughts on areas for improvement.
Kamigama: Honestly, when I received the report, I was
shocked by how far things had suddenly deteriorated. It’s
my deep regret that, had we analyzed the indicators more
effectively, we could have caught it sooner. The board
should have been more proactive and engaged in deeper
discussions about the factors that ultimately led to the delay
in responding to the changes in conditions.
Kobayashi: Looking back, one major point of reflection is
that we didn’t take action to address the overly concentrated
portfolio. The primary factor behind the underperformance
on this occasion was the economic slowdown in China, but
the management team had been concerned about our
dependence on China for some time. At that point, we were
in a position to insist on the development of an action plan
to adjust our strategy. Portfolio imbalances are always going
to occur, but we should have conducted a thorough risk
analysis based on multiple scenarios. I have to say that
OMRON is currently weak when it comes to building a
portfolio that prepares for worst-case scenarios.
Suzuki: I had also stressed the risks of relying on China since
I became an Outside Director, but I regret not pushing for
concrete action sooner. For example, if we had expanded
Interview with the Outside Directors: One Year into the New Management Structure—What Kind of Governance Can Overcome Challenges?
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Deepened Communication under a New
Management Team
What are your views of the current executive team led
by President Tsujinaga, who has been navigating through
such a challenging business environment?
Kamigama: OMRON has always been known for its open
internal communication, but I feel it has improved even
further. President Tsujinaga frequently visits employees on
the field and speaks to everyone without favoritism.
Communication between the board and the executive team
has also improved. In particular, in FY23, new opportunities
such as “off-site meetings” were introduced for the
management team to have more casual discussions outside
of the regular board meetings. Through such initiatives, we
have been able to have open and candid exchanges with
the new Business Companies heads (BC heads) over the
past year.
I feel that sharing concerns and topics for discussion has
become much smoother. It is as though President Tsujinaga’s
personality is beginning to shine through in a positive way.
Kobayashi: The challenges faced by the BC heads become
much clearer when we have open and candid conversations.
In particular, in building future business models, they are
likely to face many challenges precisely because of their
fresh perspectives. If they communicate those challenges
directly to us, as Outside Directors, we can offer more
tailored advice and support. The fact that we now have an
environment where we can openly share concerns about
challenges is a big step forward.
Suzuki: Stakeholders had high expectations for President
Tsujinaga when he took up his post, given his contributions
to the growth of our core business, the Industrial
Automation Business (IAB). However, after taking office, he
faced the significant challenge of having to revise the
earnings forecast downward twice. The challenge now is
how to navigate this difficult situation, and the new
management team, which brings together young talent, is
actively exchanging ideas. The transition to a new
management structure in FY23 was aimed at bringing in a
new generation and driving OMRON’s further growth with
young talent. As such, the management team’s calm and
diligent approach in determining our next steps is
commendable.
Further Enhancing the Board of Directors’
Effectiveness and Sharing Concerns about
Challenges Internally and Externally
What changes have you observed at board meeting
discussions?
Kamigama: Looking back, I feel that the executive team's
reports at board meetings in the past were rather formal
and standardized, often simply stating: “There are no
particular issues.” Now, they come to us not only with
requests for proposals on topics but also to share their
challenges and concerns about reports, creating an
atmosphere where we can engage in constructive, in-depth
discussions.
Kobayashi: We’ve always had open exchanges of opinion,
but there were times in the past when “perfect” answers had
been prepared in advance, or when presentations were so
polished that it was hard to see what the core issues were.
Suzuki: Before the change in leadership, the board
meetings had a structured, orderly atmosphere, much like a
well-coordinated formation flight. The Chairman of the
Board of Directors has now shifted from Mr. Tateishi to Mr.
Yamada, along with President Tsujinaga, Mr. Yukumoto, and
Mr. Tomita being newly appointed as Directors. With so
many changes to the board members, it is only natural that
there has been a change in atmosphere as well. The first
year was a period for President Tsujinaga and the BC heads
to develop their own style from the ground up, and I am
looking forward to seeing how the board further evolves
moving forward. Now, at a time when it’s more important
than ever for Outside Directors to voice their honest
opinions, I believe communication with President Tsujinaga,
who is a great listener, will continue to grow even further.
Kobayashi: Corporate governance should be adaptable to
changes in both society and the company. What makes
OMRON's current governance system so strong is that
inside Directors openly report internal challenges, offering
Outside Directors and Outside Audit & Supervisory Board
Members new perspectives. New non-executive Directors
like Mr. Yukumoto ask very direct questions during board
meetings, and this atmosphere is quite unique compared to
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Suzuki: Innovative initiatives like Management based on the
OMRON Principles and ROIC management, which OMRON
has championed, are now at a stage where they need to be
re-evaluated and evolved in response to changing times.
Even if the governance were perfect, the fact is that earnings
declined in FY23. We must keep updating our management
practices in general, including governance, to keep pace
with the rapid changes in the world.
Kobayashi: It’s time to move away from governance aimed
solely at achieving a perfect score in compliance with the
Corporate Governance Code. The primary purpose of
corporate governance should be to enhance profitability
and growth. We have now been acutely reminded of this
fact. Perhaps OMRON, as a company that excels in
governance, ought to be communicating this mindset to the
wider world.
Accomplishing NEXT 2025 and Rebuilding the
Cycle for Enhancing Corporate Value
Under an evolved governance system, we will tackle
the challenge of completing ongoing structural reforms
while also pursuing medium- to long-term growth. How
should the Board of Directors respond to this challenge?
Could you say a few words about your plans moving
forward?
Kamigama: The top priority for the board is to closely
monitor the process of achieving a V-shaped recovery for
the IAB. We will establish appropriate KPIs and create an
environment where Outside Directors can regularly monitor
the product and area portfolios. Of course, simply
monitoring will not be enough. If performance does not
improve, we must push strongly for corrective action.
other companies. It allows us, as Outside Directors, to
understand internal matters, receive feedback, and ask
questions from an independent standpoint. This can be
seen as an effective system where internal and external
parties complement each other’s roles.
With the Continued Evolution of the Corporate
Governance Committee, Discussions on our
Medium- to Long-Term Vision have Now Begun
Amid significant changes to the Board of Directors, the
structure of the Corporate Governance Committee was also
revised in FY23. What was the purpose behind this change?
Kamigama: The Corporate Governance Committee is
responsible for discussing measures to continuously
strengthen governance and enhance management
transparency and fairness from a medium- to long-term
perspective. In FY23, a non-executive inside Director was
added to the committee. The main goal is to strengthen
discussions on future governance by considering societal
changes and our business vision moving forward.
Kobayashi: Up until then, the primary role of the Corporate
Governance Committee had been to evaluate the
effectiveness of the Board of Directors, led by Outside
Directors and Outside Audit & Supervisory Board Members.
However, to shift the committee’s focus toward discussions
on future governance, it is important to have people who
understand the internal dynamics and changes in the
business. Bringing in a non-executive inside Director was a
natural progression.
Suzuki: When I first became an Outside Director, I saw
OMRON as a company that excels in governance. However,
there were certain functions whose roles and initiatives
hadn't changed for years, and the Corporate Governance
Committee was one of them. It was the recommendation
from the Outside Audit & Supervisory Board Members that
“conducting regular effectiveness evaluations alone is
insufficient and this should be reviewed” which made me
realize OMRON itself had entered a phase where
restructuring its governance system was necessary.
What kinds of discussions are happening among
Corporate Governance Committee Members?
Kamigama: Lately, there have been active discussions about
revising OMRON’s traditional governance system, which
aims to achieve a perfect score in every area. For example, it
was suggested within the committee that, even if not
everything is perfect and there are gaps in certain areas, as
long as corporate value increases, we should pursue a
governance approach that leverages OMRON’s unique
strengths. The reason is that if we don’t focus on initiatives
that capitalize on OMRON’s distinctive strengths, we risk
running short on resources.
Fiscal 2024 Advisory Committee
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Data Solution Business Enabling Sustainable
Growth in Collaboration with JMDC Inc.
Through its partnership with JMDC Inc., OMRON is
steering itself toward transforming into a data solutions
business. Could you share your thoughts on creating new
business value beyond the structural reforms?
Kobayashi: A key responsibility of Outside Directors is to
support the executive team in taking calculated risks. But
those risks must be manageable. We need to thoroughly
examine the strategy behind the risks that the executive
team is planning to take. If the underlying assumptions, such
as market trends or geopolitical risks, are misjudged, the
outcomes will inevitably be wrong, and we may end up
taking risks that we should not. It's our role as Outside
Directors to objectively assess the validity of the overall
strategy.
Kamigama: The transformation from product value to
essential value (the combination of products and services)
that we're pursuing with JMDC Inc. has been attempted in
various industries, but not all have succeeded. That is
Customers who leave do not come back so easily, so we
need to thoroughly analyze our businesses in China, North
America, Europe, Japan, and new markets to identify areas
with growth potential. Each region presents both risks and
opportunities, which is precisely why we also wish to
strengthen our monitoring efforts.
Suzuki: Portfolio optimization is a key pillar of NEXT 2025,
our structural reform program. In addition, we need to focus
on optimizing both the size and capabilities of our
workforce.
Kamigama: In particular, optimizing organizational
capabilities following our workforce reductions will be a top
priority. We need to boost productivity through the use of AI
and secure talent more efficiently. What’s important is not
the number of people, but rather a system that focuses on
mid-career recruitment of individuals with truly essential
skills.
Kobayashi: If the goal of optimizing organizational
capabilities is clear, this company-wide structural reform
should work effectively. For example, as we transform the
business structure, we may need to acquire new skills,
particularly in the digital space. In an extreme case, if the
structural reforms involved adjusting the workforce
composition and headcount to maintain the capacity to
develop or recruit such talent externally, I would find that
reasonable. The organization must evolve to fully leverage
new talent and nurture our businesses. It is only with such a
broad, strategic plan in place that structural reforms can
truly have meaning. What will be crucial moving forward is
fostering an organizational culture that fully utilizes the
abilities of new external talent and drives the enhancement
of corporate value.
What are the key considerations when outlining a
growth strategy that looks beyond the structural reforms?
Kamigama: What benefits will emerge once the reforms are
completed, and what new paths for growth will open up?
The key is for the executive team to be identifying that from
this stage onward. If we misjudge that, we could reach the
end of the structural reforms only to realize that we took the
wrong path. To avoid that, it is important to have a growth
strategy where, even if the path is hazy at first, the outlook
becomes clearer as the structural reforms progress.
Kobayashi: If we do not have the ambition to reach the top
of the mountain, the way there will never reveal itself. Once
you start climbing, you might find the path blocked by a
landslide. In that case, it is important to adjust course
flexibly. But if you lose sight of the summit, you will not be
able to move forward any further. The important thing is for
the management team to have a shared vision of what
OMRON should look like as a company once the structural
reforms are complete.
Suzuki: It is important not only to have a shared
understanding of the challenges and the path forward but
also the execution ability to see it through. From the start of
his term, President Tsujinaga was emphasizing that
OMRON's growth requires stronger execution. Mr.
Yamanishi, as the BC President that directs the IAB, has also
outlined a plan to start things over again with a customer-
oriented approach. The key will be to not only set the
direction but also to strengthen the execution ability to see
it through.
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Ishihara has formed. We have both the immediate goal of
completing the current structural reforms as well as the
transformation of our business model, which is focused on
medium- to long-term growth. A balance needs to be struck
to ensure messaging from the top does not favor one goal
over the other.
Kobayashi: It is a matter of the timeline. While our
immediate focus is on re-strengthening the IAB and
rebuilding our revenue and growth base, JMDC Inc.’s
capabilities will be crucial for enhancing OMRON's
corporate value over the next 10 years. That is the kind of
message that needs to be communicated. Ultimately,
prioritization is key. While there are countless tasks at hand,
our resources are limited, so we need to change the way we
think and act. Continuing with the old mindset will inevitably
lead to inefficiencies. By eliminating unnecessary effort,
even through small things like simplifying written material
for the Board of Directors, we can reduce waste. We are now
in a phase where each and every one of us needs to adopt
that mindset. If our cultural reform proceeds in this way, new
value can be created.
Kamigama: JMDC Inc.’s entrepreneurial spirit is having a
positive influence on OMRON. It would be interesting to
create an environment going forward where OMRON can
actually learn from JMDC Inc. by leveraging the differences
in our cultures.
Suzuki: Synergies like that are created when opposites
collide. Extending our current path will not lead to
significant change. OMRON’s culture needs to evolve. If the
culture changes, I believe the potential for growth will
increase dramatically.
Kamigama: A data utilization mindset within the Group is
essential, starting with streamlining business operations. For
example, when it comes to expanding overseas operations,
if we continue to just send personnel from Japan each time
and try to build from scratch, we will not be able to compete
with local providers. A business model that leverages
databases to operate remotely at pace would likely be in
demand in markets like Europe and the U.S. as well.
Kobayashi: For example, our Medium-term Management
Plan (SF 1st Stage) talks about “data-driven enterprise
operations through DX.” If Mr. Ishihara, who is Senior
General Manager of Data Solution Business HQ, can take
the lead and begin initiating action internally now, it could
accelerate the entire Group's progress in this area. Data is
meaningless if it is not used. We need to create an
environment where everyone in our Group can utilize the
various data that exist internally. I would like to see Mr.
Ishihara's team, which can leverage the resources of JMDC
Inc., take the lead in this.
Suzuki: It is also important for President Tsujinaga to send a
message from the top to encourage the new team that Mr.
because it requires a strong customer base and solid
business infrastructure. However, I believe that OMRON and
JMDC Inc., by leveraging their respective expertise, can
make this transition more quickly than others in terms of
taking on the challenge of creating value through data
utilization. The vast amounts of on-site data accumulated by
the Healthcare Business, as well as the Social Systems,
Solutions and Service Business, should prove powerful in
this new venture. That said, since it will take time to generate
a profit, we, as Outside Directors, will need to monitor the
progress closely.
Suzuki: Even JMDC Inc., whose core business is data, has
struggled to commercialize and monetize it as a solution,
despite their ability to collect and process it. Since OMRON is
also entering this challenging field, it is only natural that
growth will take time, and we will need strong commitment
and execution to move the business forward at a steady pace.
Could you share your expectations for OMRON's new
initiatives and future following the addition of JMDC Inc. to
the Group?
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that only someone like President Tsujinaga, who values the
opinions of others, can demonstrate.
Suzuki: I am confident that President Tsujinaga will transform
OMRON as a whole into a stronger, more profitable
company. He often talks about “reviving the entrepreneurial
spirit from the company’s founding days,” but I believe
OMRON will also need a strong, warrior-like mindset going
forward. I would like to see us take a stronger, more
aggressive approach to maximizing profits. President
Tsujinaga is well-equipped with the leadership skills gained
during his time at the IAB, and I am confident he will
continue to leverage those skills to deliver even greater
results.
Kamigama: It is important to deepen the capital market's
understanding of the future potential of our collaboration
with JMDC Inc. I would also like us to strengthen our IR
activities as well. If the new corporate value OMRON gains
by incorporating JMDC Inc. into the Group is properly
recognized by investors, it should allow us to take risks with
greater confidence.
Kobayashi: That would have a positive effect on OMRON’s
share price as well. Recently, we’ve gradually begun to see
more media coverage highlighting JMDC Inc.’s competitive
edge in the health tech industry. I hope we can capitalize on
this positive momentum and further intensify our IR
activities.
Kamigama: While it is important to remember that both
companies are independently listed, I think it would be
beneficial for OMRON’s and JMDC Inc.’s experienced IR
teams to work together. I would also like to see enhanced
information sharing within the Board of Directors.
In Challenging Times, Leaders Need to Lead and
Listen to People
What qualities do you think will be required of President
Tsujinaga's leadership going forward?
Kamigama: What is great about President Tsujinaga is that
he really listens to people. He is also leading by example
with his customer-oriented approach. He puts a lot of effort
into communicating with staff. He knows that by going
directly to people rather than relying on intermediaries, he
can hear frank and honest feedback. I hope he continues to
take this approach, directly identifying areas where OMRON
can improve and using that insight to guide his
management decisions.
Kobayashi: By engaging in ongoing dialogue with a wide
range of internal and external stakeholders, President
Tsujinaga is enhancing his abilities as CEO, thoughtfully
reflecting on the core of the business and working to convey
that insight to those around him. I believe this is a strength
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on board, we hope to enhance the quality of audit activities.
At the meetings of OMRON's Audit & Supervisory
Board, what is the format for your discussions?
Hosoi: At the meetings, the independence of Outside Audit
& Supervisory Board Members constitutes an "Outer Eye,"
while the information-gathering power of the full-time Audit
& Supervisory Board Members constitutes an "Inner Eye."
We aim to create synergies between the two and produce
results by multiplying the two together rather than simply
adding one to the other. Although we all come from different
backgrounds, we work together as one to achieve the
shared objective of maintaining and enhancing corporate
value. To come up with best ideas within a limited time, it is
important that everyone is moving in the same direction. In
this way, we combine our respective perspectives and
operate with a solid foundation.
Kunihiro: When I look around at other companies in Japan, I
feel that their full-time audit & supervisory board members
tend to avoid proactively speaking up at the meetings of the
board of directors. So one thing that makes OMRON
distinctive is the way the full-time Audit & Supervisory Board
Members also actively express their opinions. In addition, at
each meeting of the Audit & Supervisory Board, we also
have time for free discussion. This aims to ensure thorough
discussion that is not limited to a specific theme. The topics
of discussion are management issues for which there are no
clear-cut answers. The subjects are raised mainly by the
full-time Audit & Supervisory Board Members, and the issues
brought up at the Audit & Supervisory Board meetings are
shared by the Outside Audit & Supervisory Board Members
at the meetings of the Board of Directors. To create this
cycle, thorough information-gathering skills are vital. Since
the Outside Audit & Supervisory Board Members have
Full-time Audit & Supervisory Board Members
Contributing to the Enhancement of Corporate
Value by Leveraging Their Information-Gathering
Capabilities to Deep-Dive into Fundamental Issues
In addition to the outside Audit & Supervisory Board
Members, this discussion also features two full-time Audit &
Supervisory Board Members. Please remind us of the roles
of the full-time Audit & Supervisory Board Members at
OMRON.
Tamaki: The Corporate Governance Code stipulates that
"effectiveness should be enhanced by organically combining
the strong independence provided by outside audit &
supervisory board members with the advanced information
gathering capabilities possessed by full-time audit &
supervisory board members.” As the full-time Audit &
Supervisory Board Members at OMRON, we have always
abide by those words. Gathering internal information and
sharing it with the Outside Audit & Supervisory Board
Members to enhance the effectiveness of governance is a
key role for the full-time Audit & Supervisory Board
Members. Last year's dialogue between two Outside Audit &
Supervisory Board Members focused on the demonstration
of independence, but this time we would like to give you a
complete picture of the audits conducted by OMRON's
Audit & Supervisory Board Members, including the work of
the full-time Audit & Supervisory Board Members.
Hosoi: We, the four Audit & Supervisory Board Members are
constantly striving to increase OMRON's corporate value
through the achievement of sustainable growth. However,
auditing activities cannot be carried out fully by just the four
of us or our staff. By transparently and effectively
communicating the activities of the Audit & Supervisory
Board to external stakeholders and taking various opinions
Full-time Audit &
Supervisory Board
Member
Shuji Tamaki
Full-time Audit &
Supervisory Board
Member
Toshio Hosoi
Outside Audit &
Supervisory Board Member
Corporate Governance
Committee Member
Tadashi Kunihiro
Outside Audit &
Supervisory Board Member
Corporate Governance
Committee Member
Hiroshi Miura
Dialogue between Audit & Supervisory Board Members: "Audit 3.0" to Strengthen Resilience in the Face of Headwinds
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limited time at the Company and the information they can
obtain is limited, the ability to identify issues is a prerequisite
for the full-time Audit & Supervisory Board Members.
Evolution to "Audit 3.0" to Enhance Corporate
Value
In last year's dialogue, there was talk about the Audit &
Supervisory Board's position in leading "Audit 3.0." In what
form is Audit 3.0 functioning right now?
Kunihiro: At OMRON, the Audit & Supervisory Board has
established its own principles of conduct for Audit &
Supervisory Board Members*. At the top of the document
are these words: "We not only conduct compliance audits
(Audit 1.0) and point out deficiencies; but also conduct
risk-based, internal control audits (Audit 2.0) and state our
views; and conduct management issue audits (Audit 3.0)
and provide advice." In other words, the Audit & Supervisory
Board is also committed to raising questions about the
sound development of OMRON's business and the
enhancement of its corporate value. At many companies in
Japan, there tends to be an unspoken rule that "audit &
supervisory board members should keep quiet when it
comes to matters of corporate management," but at
OMRON it is the opposite, we are also expected to state our
views. A unique feature of OMRON is that we're required to
adopt a proactive stance that goes beyond just pointing out
deficiencies. For example, Directors have asked us to be
more forthright in expressing opinions on management
issues.
Tamaki: However, there is something about “Audit 3.0” that
mustn't be misunderstood. This is that as a result of evolving
from 1.0 to 2.0 and then 3.0, we're constantly tackling three
audit areas, not just Audit 3.0. We're covering all the areas
from 1.0 to 3.0. In a nutshell, the purpose of “Audit 1.0” is to
point out deficiencies and discover issues. So it is what's
described as a compliance audit. But we do not stop there.
Next, we have “Audit 2.0”, where we endeavor to prevent
recurrences and pinpoint risks. For example, we might
consider the possibility that the same problem is also
occurring in other departments. However, fundamental
management issues, such as insufficient personnel or
budgets, may be lurking in the background to that issue.
And this is where “Audit 3.0” comes in. Because it's
integrated with Audit 1.0 and 2.0, we're able to clearly state
our opinions to the management team.
Kunihiro: If there is a difference between Audit &
Supervisory Board Members and Directors, it is in the way
they deal with issues. While Directors are responsible for
driving the business forward, the Audit & Supervisory Board
Members must focus on what the issues with that approach
to business might be. What can we do as Audit &
Supervisory Board Members to increase OMRON's
corporate value? Our mission is to seek and present optimal
solutions, without shying away from discovering issues. And
of course, we must not slack off with Audit 1.0 or 2.0.
Tamaki: Looking at it from another angle, I think that
precisely because we are conscious of Audit 3.0, and probe
management issues such as the adequacy of resources on
the frontline, the meanings of deficiencies and risks in the
corporate management context become clearer. If a lack of
resources is the cause of deficiencies and risks, and you try
to prevent recurrences without addressing the underlying
issue, sooner or later the same thing will happen again. I
believe that only when Audit 1.0–3.0 are implemented as a
set can true governance be achieved.
How would you rate the progress made so far with
“Audit 3.0”?
Hosoi: Comparing the progress we have made so far to
climbing a mountain, I would say we have reached the third
station. So while it's still nothing to write home about, we
have been making steady advances with our activities. The
aim of Audit 3.0 is to examine the health condition of the
company, and take steps to prevent it from getting sick and
strengthen its constitution. The company's financial
performance in FY23 left a lot to be desired, but we, the
Audit & Supervisory Board Members identified two
challenges as we discussed its health condition. One is to
build a foundation for ensuring that the new restructuring-
related measures take root, and the other is to transform
OMRON's corporate culture, which has been handed down
over many years. To tackle these challenges, the Audit &
Supervisory Board has been working with the management
team since FY23, providing back-up for reform. In the sense
that we have been able to advance our Audit 3.0 activities, I
view this as a big step.
Kunihiro: To bring management issues to light, it is also
essential to learn from other companies. There is no single
form of governance. Diversity is now crucial. Objectively
grasping OMRON's flaws is another important role of Audit
& Supervisory Board Members.
* For details of the Principles of Conduct for Audit & Supervisory Board Members, please see
the OMRON website.
Corporate Governance Framework
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Hosoi: I feel that to evolve Audit 3.0, it is critical to learn from
other companies. In FY23, we actively exchanged opinions
with CEOs and audit & supervisory board members from
eight companies. This exposed us to a variety of
perspectives and ideas, and it was a valuable opportunity to
reaffirm our own strengths and challenges. To continue to
evolve further, I would like to learn from the examples of
other companies and look ahead to a new way forward.
Tamaki: The Company's Principles of Conduct for Audit &
Supervisory Board Members also states that we should
"strive for self-improvement, be trustworthy at all times." To
make this attitude a part of us, learning from other
companies is imperative.
Hosoi: Going forward, we on the Audit & Supervisory Board
will be observing the company not only from ground level
but also from above, and digging beneath the surface to
dive deep into the organization. We will keep striving to
uncover management issues and address them through the
evolution of Audit 3.0.
Collaborative Risk Management and Shared
Awareness Essential for Governance of a Large
Organization
Mr. Miura, you became an Outside Audit & Supervisory
Board Member in June 2024, so what have been your
impressions of OMRON's audit and governance
frameworks?
Miura: To be honest, I do not think I have ever come across
audit & supervisory board members who conduct
themselves so courageously. Given the nature of their
responsibilities, audit & supervisory board members
normally find just asking themselves how they can contribute
to the enhancement of corporate value to be an immense
challenge. At many companies, even just assessing the
compliance status of operations and the effectiveness of
internal control systems, which is their basic mission, is
actually not easy. So three to five audit & supervisory board
members, working in cooperation and receiving help from
the internal audit division, department , the accounting
auditors, and so on, are tasked with gauging the status of a
huge corporate group, including its subsidiaries and
affiliates domestic and overseas. But at OMRON, they are
intent on doing even more, assessing risk management
processes and even recommending solutions to
management issues. I feel that this corporate culture, in
which management seeks the views of the Audit &
Supervisory Board Members and they endeavor to respond
to such requests, is illustrative of an excellent governance
framework.
Kunihiro: In a sense, fundamental topics such as
management issues are where we are finally going to end
up no matter what we are talking about. One of our
strengths is a structure whereby not only the Outside Audit
& Supervisory Board Members but also the full-time Audit &
Supervisory Board Members bring up issues based on facts.
I think we have gone one step beyond just a simple
atmosphere of it being "easy to speak up," and represents a
step forward in terms of sharing a common understanding.
Miura: I agree. It is certainly true that the world of corporate
management is one in which there are no single right
answers. There are always multiple options for the future,
and managers must ultimately reject indecisiveness and
choose one path with conviction. And during this process, it
might be the Audit & Supervisory Board Members who can
give objective advice from a slightly different perspective
than on the executive side. There's a concept called the
"Three Lines Model”, which divides the organization into the
Governing Body, Management, and Internal Audit, with each
conducting monitoring from their respective standpoints,
but audit & supervisory board members are in a position to
make recommendations to management based on the
overall picture, rather than from the third line. In fact, for
executives to make appropriate management decisions, it is
also important to adopt macro perspectives, asking
questions like "Does this meet the needs of society?" and
"Does this meet the expectations of stakeholders?" The fact
that the Audit & Supervisory Board Members fulfill this role
in cooperation with the Outside Directors can be regarded
as demonstrative of OMRON's pioneering approach to
governance.
The Ideal Situation is for Directors and Audit &
Supervisory Board Members to Work Together
and Blurring the Boundaries between "Offense"
and "Defense"
How do the Outside Audit & Supervisory Board
Members function within the governance framework?
Please tell us what makes OMRON distinctive.
Kunihiro: OMRON's Board of Directors shares the view that
governance is a function for enhancing corporate value, and
cooperation between Outside Directors and Outside Audit
& Supervisory Board Members is very strong. The Corporate
Governance Committee also includes members from both
groups, and provides a forum for close information
exchange and discussion. I think with monitoring, which is
among the tasks of the Outside Directors, there is a lot of
overlap with the Audit & Supervisory Board Members.
Personally, in my own work, I do not think much about
whether I am an Outside Director or an Outside Audit &
Supervisory Board Member. At the meeting of the Board of
Directors or the Corporate Governance Committee,
everyone speaks freely without imposing constraints on their
own roles. No one says things like "I am a Director so ..." or "I
am an Audit & Supervisory Board Member so ..." Although a
distinction is made in the text of the Companies Act, the
reality is that we just have different perspectives and
backgrounds. A characteristic of OMRON is that both
Outside Directors and Outside Audit & Supervisory Board
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Members are committed to sharing their wisdom to the
greatest extent possible in order to enhance corporate
value.
Miura: Yes, I have really noticed that myself. A general view
is that within a governance framework, the Audit &
Supervisory Board Members are responsible for “Defense”
while the Outside Directors handle “Offense”. This binary
distinction makes the roles easy to understand. However, in
the case of a big M&A deal, for instance, the Outside
Directors may take a cautious approach. And given that the
Audit & Supervisory Board Members sometimes support the
hefty capital expenditures required for growth businesses, I
think that a sound governance framework entails both
groups being conscious of both the defense and offense
sides. I think OMRON is a good example of this happening
naturally.
Kunihiro: Especially when responding to emergencies,
action that straddles the boundary between the two is
essential. When it comes to managing risks, it is not enough
to simply leave it to the Audit & Supervisory Board Members.
Tamaki: “Defense” and “Offense” is a frequent topic of
discussion in governance, and it is easy to understand if you
compare it to soccer. During a spell when you're scoring a
lot of goals (which can be compared to increasing corporate
value), it's usually the forwards who are attacking, but
sometimes the defenders take shots, too. Conversely, when
you're under attack (protecting corporate value), even the
forwards have to drop back and help out with the defense.
You will never have a strong team if your attackers are
saying, "I am an attacker so I will not go the defense."
Miura: When the Corporate Governance Code was first
announced, it was said that the authorities' aim was to
reverse the recent tendency of Japanese companies to
overemphasize “Defense”, and instead to promote “Offense”
in management through sensible risk-taking. So it was
viewed as strategy for reviving Japan. The renewed
emphasis that was put on “Offense” reflected a mood of
crisis, as many companies that had grown large were being
shackled by their past glories, and were lagging behind in
transforming their business models to respond to the
changes of the times, causing their international
competitiveness to decline. During that period, however,
corporate scandals were occurring one after another, and
this became a national talking point. Nowadays, the concern
is that most companies consider governance to be
synonymous with internal control, and that little progress has
been made with the discussion of “Offense-Oriented
Governance”.
To Avoid a Repeat Deterioration in Financial
Performance, Essential to Have Wild Attitude,
Rather Than Being a Straight-A Student
FY23 saw earnings forecasts revised downward twice.
Looking back on that as the Audit & Supervisory Board
Members, what do you think some of the issues were?
Hosoi: We on the Audit & Supervisory Board also regret the
fact that the Company did not grasp market and internal
changes and take action at an early stage. By studying the
past, I have discovered that when a downward revision was
made, it was sometimes due to the lack of a swift response
to signs of trouble. So there had been a failure to take
lessons from the past. Looking ahead, discussions are
currently ongoing about how to collect and analyze
information more speedily and accurately, identify risks at an
early stage, and take appropriate measures to enable more
proactive responses.
Tamaki: During our free discussions, we ask ourselves,
"What could have been done?" Communicating this
experience to future generations is another responsibility of
the Audit & Supervisory Board Members. We have to analyze
what happened so that we can become the storytellers.
Right now, we still don't have any clear answers, but multiple
hypotheses are beginning to emerge through our honest
discussions.
Kunihiro: Discussing these hypotheses, I have come to
believe that it was OMRON's weakness that led to the
deterioration in financial performance. Specifically, an
excessive preoccupation with "scoring 100% in all aspects of
governance" resulted in sanitized presentations and reports,
which ultimately shielded underlying issues from view. The
times are changing dramatically. To earn money in this
challenging operating environment, it is vital to have a wild
and aggressive attitude, even if that means being a bit rough
and ready, rather than being a serious, straight-A student.
Unless OMRON adopts a hungry spirit, keeps an eye on
competitive fundamentals, and engages in thorough
discussions, it will probably make the same mistake again.
Transforming the Constitution of OMRON, Which
Has Lost the Venture Spirit Exhibited by JMDC Inc.
Another big topic last fiscal year was making JMDC Inc.
a subsidiary. Please give us your current assessments.
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restructuring program, we should not only observe short-
term outcomes, but also rigorously follow up on medium- to
long-term themes. Furthermore, from FY26, the company
will be implementing a new medium-term management
plan to take it closer to its long-term vision, "SF2030." A
crucial role of the Audit & Supervisory Board Members is to
contribute to the development of strategies for the
maximization of corporate value while keeping an eye on
the future and properly assessing risks.
Kunihiro: The key question is how monitoring should be
conducted. Medium- to long-term monitoring by the Audit
& Supervisory Board alone is insufficient. The Outside
Directors should also be involved, so as to allow the
executive side to be observed from a range of perspectives.
The forwards and the defenders must work together to
deploy a variety of approaches for optimizing governance.
Tamaki: Ultimately, I think there ought to be a break from
"scoring 100% for governance." Choices about what to focus
on should be made, and flexible thinking should be the
order of the day. OMRON's corporate climate is
characterized by seriousness, but the founder, Kazuma
Tateishi, advocated the "7:3 principle," which states that if
Tamaki: JMDC Inc. is a fast-growing company. And from the
perspective of “Audit 3.0”, too, we have a lot to learn from
them. Meanwhile, OMRON, which has acquired the shares,
needs to fulfill its responsibilities to investors and other
stakeholders by taking a firm approach to grasping risks, and
that falls under the heading of “Audit 2.0”. I have been trying
to analyze JMDC Inc. myself in my own way, for example, by
carefully reading the securities reports it has filed since it was
listed. And I intend to keep working to gain a full
understanding of the company and the challenges it faces.
Kunihiro: OMRON was once a start-up company, but
gradually turned into a dignified large corporation without
even realizing it. A culture that has been built up over many
years is difficult to change from the inside. What kind of
chemical reaction will JMDC Inc., with its venture spirit, bring
to OMRON's corporate culture? I am really looking forward
to finding out. For JMDC Inc. to be a catalyst, it should not
be restricted to being a "little OMRON." I want it to
demonstrate uniqueness as a transmitter of different
cultures, much like the island of Dejima did during Japan's
long period of isolation during the Edo period.
Hosoi: It's important that OMRON and JMDC Inc.
collaborate by leveraging and synergizing their respective
traits. I believe that making the most of the unique strengths
of both companies and building a cooperative relationship
that allows them to complement each other will lead to an
increase in corporate value. By working with JMDC Inc.'s
Director Audit & Supervisory Committee Members, we hope
to unlock the full potential of both companies and contribute
to building a foundation for achieving sustainable growth.
Miura: Changing the corporate culture is important. If the
corporate culture can be evolved to take it to the next level,
it can also bring about a change in the business model.
Facilitating a transformation from “Selling Product Value” to
“Selling Essential Value (products + services) “is a key
objective of the collaboration with the JMDC Inc. Group. I
believe that the data sales style, which involves not only
selling products but also providing solutions tailored to
customer needs, can be utilized not only in JMDC Inc.'s data
solution business, but also in the Industrial Automation
Business, Healthcare Business, and Social Solution Business,
and that synergies with JMDC Inc. will be maximized. I think
the success of business acquisitions is measured by these
sorts of intrinsic synergies.
Kunihiro: The success of the transformation from “Products”
to “Products + Services” may also help with the
transformation of the corporate culture. The next step should
be to create a new cycle in which businesses and
organizations have a positive impact on each other.
Monitoring of Structural Reform Programs Should
Be Approached from Two Axes: “Present
Perspective” and “Future Perspective”
OMRON is currently pursuing a structural reform
program called "NEXT2025," but it must also balance that
with medium- to long-term growth. Given these
circumstances, please share your thoughts on how the
Audit & Supervisory Board Members should contribute to
the enhancement of corporate value.
Hosoi: For the Audit & Supervisory Board members to
contribute to the enhancement of corporate value, they will
need to approach it not only from the perspective of
restructuring, but also from the perspective of balancing that
with medium- to long-term growth. One of the priorities for
the Audit & Supervisory Board this fiscal year is to check on
the progress with restructuring. And we're going to be
approaching that from two perspectives: a “Present
Perspective” to check whether there are any omissions in the
content of the measures and whether they are taking root,
and a “Future Perspective” to ascertain what kinds of results
will appear over the medium to long term. With a
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there's a 70% chance of success, you should go for it. So
instead of waiting till the probability is 100%, you get going
when it's 70%, and then gradually eliminate the 30% failure
risk as you move forward. OMRON ought to revisit that spirit
and regain the eagerness to take on challenges.
"Flexible" as the Keyword for Transforming the
Corporate Culture to Realize SF2030
How should the Audit & Supervisory Board evolve as
OMRON restructures en route to SF2030? Please tell us
how you envisage the future?
Miura: Generally in Japan, the larger a company grows, the
greater the pressure it comes under to meet societal
expectations, and it tends to fall back into a defensive
approach to management in order to avoid failure. Of
course, fatal mistakes cannot be tolerated, but the fact is that
achieving resounding success entails taking on risk. Minor
missteps can be corrected while on the go, and a corporate
culture of proactively embracing risk will be a powerful
weapon in the future. Faced with financial under-
performance right now, tough situations will keep coming
up, but I hope that this period will be valued as an
opportunity to make necessary changes. To that end, I think
the Audit & Supervisory Board should evolve so that it can
help the company take a new step forward.
Kunihiro: Hard times are opportunities for change, aren't
they? The keyword might be "flexible." With flexibility the
preoccupation with "scoring 100% for governance" as the
starting point, excess, duplication, and waste must be
discarded, and the focus must be narrowed. I have also seen
numerous examples of companies being reborn after
running into difficulties. For OMRON, this is an opportunity.
Tamaki: To abandon the pursuit of "scoring 100% for
governance," the Audit & Supervisory Board must also not
permit its meetings to be clean and cordial. My aim is for the
Audit & Supervisory Board to also explore a new governance
model that is not constrained by pre-existing notions, and to
present that to the world.
Hosoi: We are going to keep striving to evolve the Audit &
Supervisory Board so that when its members a decade from
now look back on today, there will be no regrets. With a
venture spirit, we will actively incorporate AI utilization and
collaboration with other companies to build an "Audit 4.0"
future that puts us a step ahead of the pack. As a future-
oriented audit team, we intend to deliver more valuable
audits by constantly taking on challenges and adapting to
changes.
Mr. Miura, you've just started your first year as an
Outside Audit & Supervisory Board Member, but please
remind us of your future aspirations.
Miura: I became an Outside Audit & Supervisory Board
Member in June 2024, so I have only recently joined the
Audit & Supervisory Board, but the spirit of OMRON's Audit
& Supervisory Board Members, which has been created by
all of the previous Audit & Supervisory Board Members, is
already infusing me. The immediate challenge is to analyze
the causes of the deterioration in financial performance,
create a scenario for recovery, and transform the corporate
culture for the next stage of growth. While making use of my
“Outer Eye” as an Outside Audit & Supervisory Board
Member, I intend to work closely with the "Inner Eye" of the
Full-time Audit & Supervisory Board Members and the
Directors to contribute to the enhancement of OMRON's
corporate value.
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Basic Stance for Corporate Governance
At the OMRON Group, corporate governance is defined as
the system of processes and practices based on the OMRON
Principles and the OMRON Management Philosophy. The
system is intended to ensure transparency and fairness in
business and speed up management decisions and
practices. This is done by connecting the entire process from
oversight and supervision all the way to business execution
in order to boost the OMRON Group’s competitive edge.
OMRON’s corporate governance also involves building such
a system and maintaining its proper function. The ultimate
objective is to achieve sustainable enhancement of
corporate value by earning the support of all stakeholders.
OMRON Corporate Governance Policies
OMRON established the OMRON Corporate Governance
Policies based on the Basic Stance for Corporate
Governance. Since establishing the Management Personnel
Advisory Committee in 1996, we have spent more than 25
years formalizing and strengthening our framework of
corporate governance. We intend to continue our pursuit of
ongoing improvement of corporate governance to achieve
sustainable enhancement of corporate value.
Corporate Governance Framework
OMRON has elected to be a company with an Audit &
Supervisory Board. The OMRON Board of Directors consists
of eight members to ensure substantive discussion and
deliberations. To increase objectivity on behalf of the Board
of Directors, the titles and roles of the chair of the Board
and President (CEO) have been separated. The Chairman
serves as chair of the Board of Directors with no direct
corporate representational authority. To enhance the
oversight functions of the Board of Directors, OMRON has
established the committees include the CEO Selection
Advisory Committee, the Personnel Advisory Committee,
the Compensation Advisory Committee, and the Corporate
Governance Committee.
The CEO Selection Advisory Committee, the Personnel
Advisory Committee, and the Compensation Advisory
Committee are all chaired by outside directors with at least
half of the committee members being outside directors. The
Corporate Governance Committee is chaired by an
independent outside director and its members are
independent outside directors and independent outside
Audit & Supervisory Board Members as well as non-
executive inside directors. This structure endows the
decision-making process with another layer of transparency
and objectivity. The President and CEO is not a member of
any of these committees. With these policies, OMRON has
created a hybrid governance framework combining the best
features of a company with an Audit & Supervisory Board
and a company with a Nomination Committee.
Policy regarding Composition of the Board of
Directors
In order to strengthen the supervision function of the Board
of Directors, at OMRON, management oversight and
business execution are kept separate, and a majority of the
Board of Directors shall consist of Directors who are not
involved with business execution. In addition, at least one-
third of the Board of Directors shall consist of Outside
Directors. Regarding Outside Directors and Outside Audit &
Supervisory Board Members, from the perspective of
ensuring their independence, they are elected in
accordance with OMRON’s “Independence Requirements
for Outside Executives.” Based on the above, the Board of
Directors shall consist of diverse members who possess the
experience, specialized knowledge, and insights necessary
to realize the OMRON Group’s management vision and shall
ensure diversity without distinction as to gender, nationality,
international experience, or age.
* The Sustainability Committee identifies important issues relating to sustainability in the focus domains, the head office divisions, and various committees (the Corporate Ethics &
Risk Management Committee, the Information Disclosure Executive Committee, and the Group Environment Activity Committee) and oversees them on a Group-wide basis.
Personnel Advisory Committee
Compensation Advisory Committee
CEO Selection Advisory Committee
Corporate Governance Committee
Executive Organization
Shareholders’ Meeting
President
Executive Council
Audit & Supervisory Board Office
Accounting Auditor
Board of Directors Office
Sustainability Committee*
Business Companies (Internal Companies)
Head Office Divisions
Internal Audit Division
Chair: Chairman of the Board
Board of Directors
Audit & Supervisory Board
Corporate Governance Framework
OMRON Corporate Governance Policies
Corporate Governance
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Title
Name
Ceo selection
advisory committee
Personnel Advisory
Committee
Compensation
Advisory Committee
Corporate Governance
Committee
Chairman of the Board
Yoshihito Yamada
□
○
Representative Director
Junta Tsujinaga
Representative Director
Kiichiro Miyata
□
Director
Masahiko Tomita
□
Director
Shizuto Yukumoto
○
○
○
□
Outside Director
Takehiro Kamigama
◎
□
□
◎
Outside Director
Izumi Kobayashi
□
◎
□
□
Outside Director
Yoshihisa Suzuki
□
□
◎
□
Audit & Supervisory
Board Member
Shuji Tamaki
Audit & Supervisory
Board Member
Toshio Hosoi
Outside Audit &
Supervisory Board Member
Tadashi Kunihiro
□
Outside Audit &
Supervisory Board Member
Hiroshi Miura
□
Composition of Board of Directors
* In September 2023, the Corporate Governance Committee membership was revised to consist of outside directors,
outside Audit & Supervisory Board Members, and non-executive inside directors.
Chairperson Vice-Chairperson Committee Member
Independent under Tokyo Stock Exchange rules
Fiscal 2024 Advisory Committee
Policy regarding Appointment of Directors and
Audit & Supervisory Board Members
• Directors, Audit & Supervisory Board Members, and
Executive Officers are composed of diverse members who
possess the experience, specialized knowledge and
insights necessary to realize the OMRON Group’s
management vision and shall ensure diversity without
distinction as to gender, nationality, international
experience, or age.
• To swiftly respond to the need for global-scale growth and
greater competitive strength, as well as significant changes
in the business environment, the Personnel Advisory
Committee shall work to ensure diversity in the Board of
Directors, Audit & Supervisory Board, and among
Executive Officers in terms including work experience,
specialized knowledge, insights, gender, nationality,
international experience, and age.
• The experience, specialized knowledge, and insight
necessary for the realization of the OMRON Group’s
management vision related to Directors and Audit &
Supervisory Board Members is presented in the skill matrix.
[Criteria for Appointment of Outside Directors]
• Outside Directors are deeply involved in the CEO
Selection Advisory Committee, which specializes in
matters such as the appointment of the President, which is
the top-priority matter in management oversight. In order
to establish a highly transparent and objective system for
appointing a President and CEO, Outside Directors must
have management experience or equivalent experience.
[Criteria for Appointment of Outside Audit & Supervisory
Board Members]
• Audit & Supervisory Board Members must possess the
necessary insight, high ethical standards, fairness, and
integrity as an Audit & Supervisory Board Member, as well
as specialized knowledge in law, finance, accounting,
management, or other areas.
62.5%
12.5%
41.7%
Ratio of
Non-executive Directors
Ratio of
Female Directors
Ratio of Outside Executives
(Outside Directors / Outside Audit &
Supervisory Board Members)
5/8
37.5%
Ratio of
Outside Directors
3/8
1/8
5/12
Outside
Directors:3
Inside Directors:5
Executive
Directors:3
Nonexecutive
Directors:5
Male Directors:7
Female
Director:1
Inside
Executives:7
Outside
Executives:5
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96
directors, as set by a resolution of the General Meeting of
Shareholders. The amounts of compensation for individual
executive officers shall be determined according to the
recommendations of Compensation Advisory Committee.
The amounts of compensation for individual Audit &
Supervisory Board members shall be determined in
accordance with the Compensation Policy for Audit &
Supervisory Board Members, which is set forth through
discussions among Audit & Supervisory Board members.
These amounts shall be within the maximum limit of the sum
of compensation amounts for all Audit & Supervisory Board
members, as set by a resolution of the General Meeting of
Shareholders.
Status of initiatives towards improving the Board
of Directors’ effectiveness
1. Overview of initiatives towards improving the Board of
Directors’ effectiveness
The Company ensures transparency and fairness in business
management, speeds up managementdecisions and
practices, and strives to boost the OMRON Group’s
Officer Compensation
OMRON has set up Compensation Advisory Committee for
the purpose of bolstering the management oversight
function of Board of Directors by enhancing transparency
and objectivity in determining compensation amounts for
each director and executive officer.In response to a
consultation request from the chairperson of Board of
Directors, Compensation Advisory Committee deliberates on
and makes recommendations regarding the Compensation
Policy for Directors. Compensation Advisory Committee also
deliberates on and determines the Compensation Policy for
Executive Officers in response to a consultation request from
the CEO. Reflecting the committee's recommendations,
Board of Directors determines the Compensation Policy for
Directors. Based on the above-mentioned respective
Compensation Policy, Compensation Advisory Committee
deliberates on compensation of Directors and Executive
Officers. The amounts of compensation for individual
Directors shall be determined by a resolution of Board of
Directors, reflecting the recommendations of Compensation
Advisory Committee. These amounts shall be within the
maximum limit of the sum of compensation amounts for all
competitive edge. The ultimate objective is to achieve
sustained enhancement of corporate value. To this end, the
Company reinforces the supervisory functions of the Board
of Directors through initiatives for improving its
effectiveness.
Such initiatives are undertaken in a cycle of (1) evaluation of
the Board of Directors’ effectiveness and(2) determination
of the policy for the operation and focus themes of the
Board of Directors and formulation and implementation of
annual plans.
(1) Evaluation of the Board of Directors’ effectiveness
The Company’s evaluation of the Board of Directors’
effectiveness is conducted by the Corporate Governance
Committee chaired by an Outside Director and comprising
Outside Directors and Outside Audit & Supervisory Board
Members (hereinafter “Outside Executives”), as well as
non-executive internal Directors. Outside Executives act as
members of the Board of Directors while having the
perspectives of all stakeholders including the shareholders.
The Corporate Governance Committee,which is composed
of Outside Executives and non-executive internal Directors,
performs evaluations in order to ensure that evaluations are
both objective and effective.
Initiatives Towards Improving the Board of Directors’ Effectiveness
Compensation Policy for Directors and Overview of the Compensation Structure
Implementation
bodies
Corporate Governance
Committee
Board of Directors
Board of Directors
Determination of policies
for operating the Board
of Directors for the
following fiscal year
based on evaluation results
Determination of policies
for operating the Board
of Directors for the
following fiscal year
based on evaluation results
Determination of
the operating policy
Determination of
the operating policy
Implementation of
measures to
improve the effectiveness
through the Board of
Directors meetings
Implementation of
measures to
improve the effectiveness
through the Board of
Directors meetings
Execution
Execution
Evaluation
Analysis and evaluation of the
Board of Directors’
effectiveness and the execution
status of measures
Analysis and evaluation of the
Board of Directors’
effectiveness and the execution
status of measures
Evaluation
Fiscal 2024
Fiscal 2023
Fiscal 2022
Corporate Governance
Committee
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(2) Interviews by the Chairman of the Board of Directors
• The Chairman of the Board of Directors conducted individual
interviews of Directors and Audit & Supervisory Board
Members between December 2023 and February 2024.
(3) Evaluation by the Corporate Governance Committee
• The Corporate Governance Committee conducted
evaluations of the Board of Directors’ effectiveness on
March 26 and April 24, 2024.
3. Policy for the operation and focus themes of the Board
of Directors for fiscal 2023
The Board of Directors will exercise its oversight functions
from a medium- to long-term perspective as we move
forward to achieving the OMRON Group’s long-term
vision, SF2030, and the medium-term management plan,
SF 1st Stage, under the new business execution system.
This will be done by recognizing the link between the
following focus themes and issues subject to oversight.
1) Monitoring progress of the long-term vision and
medium-term management plan
• Operational status of the new business execution system
• Progress of global human resources strategy
implementation
• Autonomous growth and business model transformation
• Future business strategy in alliance with JMDC Inc.
2) Response to risks in the era of uncertainty
• Response to global geopolitical risks including changes
in markets
• Enhancement of cybersecurity
3) Construction of the Corporate IT System
• Progress of Enterprise Resources Planning (ERP) system
deployment in Europe and Japan
(2) Determination of the policy for the operation and focus
themes of the Board of Directors and formulation and
implementation of annual plans
Based on the evaluation results by the Corporate
Governance Committee in (1) and the business environment,
etc., the Board of Directors determines the policy for the
operation and focus themes of the Board of Directors for the
next fiscal year. The Board of Directors formulates and
implements annual plans based on this operation policy.
The Company continues to improve the Board of Directors’
effectiveness by implementing (1) and (2)above on a yearly
basis. The Corporate Governance Committee has evaluated
these initiatives to be the Company’s unique, optimal
activities that are both objective and effective. The Board of
Directors recognizes the Company’s initiatives as being
more effective than evaluations by third parties.
2. Methods of Evaluation of the Board of Directors’
effectiveness for fiscal 2023
The methods of the evaluation of the Board of Directors’
effectiveness and the evaluation items in the self-evaluation
for fiscal 2023 are as described below.
(1) Self-evaluations by Directors and Audit & Supervisory
Board Members
• Each Director and Audit & Supervisory Board Member
performed self-evaluations of the contents of discussions
at the meetings of the Board of Directors and the extent of
oversight functions exercised, immediately following each
meeting of the Board of Directors. Immediately after each
meeting of the Board of Directors, Outside Executives
evaluated the Board of Directors and held a review
meeting to review the Board of Directors.
• Each Director and Audit & Supervisory Board Member
performed self-evaluations* of the operation, etc. of the
Board of Directors over the course of the year following
the meetings of the Board of Directors held on February
26 and March 26, 2024.
* Self-evaluation: Performed by completing questionnaires. For each evaluation item,
answers are provided using five-point scales and free comment fields.
1) Self-evaluations performed immediately following meetings of the Board of Directors
[Contents of discussions at the meeting of the Board of Directors, Extent of oversight
functions exercised by the Board of Directors]
2) Self-evaluations for the entire year, performed at the end of the fiscal year
[Operation of the Board of Directors, Increasing information sharing opportunities, Each
advisory Committee, Other overall issues regarding the Board of Directors]
Background of the establishment of the policy for the
operation and focus themes of the Board of Directors for
fiscal 2023
(discussed and decided at the Board of Directors meeting
held in May 2023)
The Board of Directors confirmed that monitoring progress
of the long-term vision and the medium-term management
plan led by the new executive structure, following the
changes in President and CEO, CFO and Presidents of all
Business Companies, was an important part of oversight
functions, and confirmed its intent to continue discussions
with an emphasis on a medium- and long-term perspective.
It was also confirmed that the alliance with JMDC Inc. would
be a significant, revolutionary theme for the Company. The
Board also confirmed that “2) Response to risks in the era of
uncertainty” and “3) Checking the progress of establishing a
companywide IT system” would remain focus themes,
following on from the previous fiscal year.
4. Results of evaluation of the Board of Directors’
effectiveness for fiscal 2023
4-1. Performance of operation of the Board of Directors
Focus Theme 1
Monitoring progress of the long-term vision and medium-
term management plan
Contents of reports and resolutions at the meeting of the
Board of Directors
The business execution division reported the following
points to the Board of Directors.
• In an agenda item regarding the business plan for fiscal
2023, each of the business companies reported on sales
growth plans based on self-propulsion amid the continued
slow growth in the global economy, and the Board of
Directors resolved on this. In reporting Short-Term
Management Plans, the President of each Business
Company reported on specific initiatives toward
*ERP：Enterprise Resources Planning
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encouraging self-propulsion. In particular, the Industrial
Automation Business (IAB) reported on a plan for winning
orders by shifting toward customers with growth potential
and adopting the solution business model.
• Regarding an agenda item of “forecasts of the
consolidated financial results for the second quarter and
for the full-year” (hereinafter, “financial results forecast for
the second quarter”), in which the first downward revision
was made to the forecasts, they reported that demand had
slowed down more than expected in the Chinese market
and elsewhere, resulting in sluggish net sales in IAB and
the Device & Module Solutions Business (DMB). They also
reported that a decrease in operating income was
attributable to decreased added value due to lower sales,
as well as decreased sales in China that accounts for a
large portion of our sales of the solution business with
high added value. This resulted in changes in the sales
composition of products and geographical areas and led
to a lower gross profit margin. Business environment
projections for the second half of the fiscal year they
reported were continued sluggishness for IAB and DMB,
mixed conditions for the Healthcare Business (HCB), and a
continuous favorable environment for the Social Systems,
Solutions and Service Business (SSB). Under these
circumstances, they reported that they would accelerate
the respective actions they had set, such as capturing
demand through enhancing and demonstrating self-
propulsion, toward fully achieving the financial results
forecast for the second quarter.
• Regarding an agenda item of “forecasts of the consolidated
financial results for the third quarter and for the full-year”
(hereinafter, “financial results forecast for the third quarter”),
in which the second downward revision was made to the
forecasts, it was reported that the business environment
underlying the full-year forecast worsened compared to
that at the time of the forecast of the second quarter
results, despite signs of moderate recovery seen in some
industries served by IAB and DMB. As a result, sales, gross
profit margin and operating income would all fall well
below the financial results forecast for the second quarter.
Contributing factors reported by IAB were the impact from
postponement or contraction of capital expenditures by
major clients, such as those in the semiconductor and
rechargeable battery industries. They also reported that a
significant decrease in operating income was mainly
attributable to an increase in inventory provisioning, in
addition to lower added value accompanying decreased
sales, and that the current rigid fixed cost structure allows
little room for All OMRON to respond to market condition
changes. In light of these circumstances and with a view to
returning IAB to growth, transformation to customer-driven
management and a reform of the rigid fixed cost structure
were determined as challenges for expanding customer
value (added value). They reported on the IAB Revival Plan
and five management measures, including headcount and
capacity optimization.
Main contents of discussions at the meeting of the Board
of Directors
• Regarding the agenda item on the management plan for
fiscal 2023, the Board of Directors suggested that in order
to achieve the plan, it is essential to prepare for changes in
the market environment, such as the possibility of a crisis
in the U.S. financial markets. Next, with regard to evolving
the profit structure for businesses reflecting an essential
value perspective, which is important for autonomous
growth, the Board of Directors confirmed that discussion
had started between distributors and the management
team on the solution business. In IAB’s report on the
Short-Term Management Plan, the Board discussed the
current state of value transfer capability, which is important
for shifting to customers with growth potential and
evolving into the solution business, and confirmed the
need for reviewing the human resources portfolio.
• With regard to the report on the financial results forecast
for the second quarter, given the drastic changes in
circumstances after the first quarter, the Board of Directors
confirmed what kind of analysis and scenarios had been
developed based on the latest market situation and
medium- to long-term changes. The Board also mentioned
the division’s failure to grasp the inventory status of
distributors, and pointed out that in a highly volatile
business, it is essential to improve the system so as to get
the picture of real demand in the market. The Board also
requested that the current inventory status be analyzed
carefully, with factors other than the economic climate
taken into account.
• In the reporting on the financial results forecast for the third
quarter, the Board of Directors confirmed the causes of
differences between our results and those of competitors,
and discussed how the unbalanced area portfolio and
industry portfolio, which is an issue of IAB, can be
optimized and lead to growth. In terms of portfolio, the
Board considered the most profitable business structure
and combination and discussed how to ensure resilience in
the event of a downside phase marked by economic
fluctuations. The Board of Directors confirmed that the
client portfolios and area portfolios need to be reviewed
for all of our businesses, not just for IAB. Then, as to the
fixed cost structure, in which selling and administrative
expenses are relatively high, the Board confirmed that the
problem lies in labor cost, IT-related operation/
maintenance, and depreciation expenses. The Board of
Directors therefore confirmed the need for changing the
labor cost structure, the significance of launching a
companywide IT system on schedule, which is currently
under development, and the importance of a shift to cash
flow management for increasing investment efficiency by
going beyond ROIC management led by each Business
Company. Lastly, the Board of Directors discussed the
withdrawal of the medium-term management plan 1st
Stage, deliberated about five structural reform programs
and passed resolutions on them.
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