What’s good for customers is better for society

26 July 2006

GREG Field is managing director, Omron Electronics for the Oceania region. Bringing a wealth of experience and knowledge of the market, Field has been with Omron Electronics for over 14 years, beginning his career in sales. Here, he speaks with Denes Bolza, editor of Process & Control Engineering (PACE) magazine.

DENES BOLZA: Omron stands alone among multi-billion dollar companies for pursuing strong ethical, social and philosophical ideals. Why, where, how?

GREG FIELD: Omron aims to contribute to the sustainable development of society, striving for the best matching of machines to people. The company’s founder, Dr Kazuma Tateisi, believed that no company is worth continuing its operations unless it is positively evaluated by society. In 2001, Omron introduced its long-term corporate vision: Grand Design 2010. This strives to cultivate societal needs such as safety, security and environmental conservation by drawing on our core sensing and control technology. It’s astonishing that Dr Tateisi had the foresight to see the enterprise as a public servant, that it exists to provide service to society. In Oceania, we follow this philosophy and have developed our Grand Design plan to suit our market requirements. Currently we are in the second phase of this plan, which runs until 2007. We feel very proud that we can contribute to society through our safety, quality, traceability and environment solutions.

The company recently acquired Scientific Technologies Incorporated (STI), a safety market leader in the US. What is the significance of this purchase?

One of our main strategies is the development of our safety division. The STI acquisition fits nicely into this, providing the space for greater growth in the field of safety devices. STI’s strength lies in North America and China, two major markets into which Omron wants to increase penetration. By capturing these key positions, our industrial automation business, which leads the safety devices market in Japan, expects to grow hugely. In Oceania, we have had some good success with our safety products. This new development will further enhance our ability to service the market.

Omron also recently acquired Pioneer Precision Machinery Corporation of Japan, as well as Aduro Inc. of the US*. Is growth through acquisition part of a new business strategy?

Omron has always attributed its growth through its own product range and development. But in today’s ever-changing business world, growth through acquisition is a necessity to help enhance overall product ranges. These acquisitions will further enhance our strategic direction in the respective markets.

* Pioneer Precision Machinery Corporation develops and manufactures backlight units. Aduro manufactures precision high-speed optical subassemblies.

Have there been other expansion areas of late?

In April this year, we began a full-scale entry into India market. Both the China and India markets are the main focus of Omron and our competitors to establish global supremacy. Oceania can receive a flow-on effect from this in MRO business as more and more equipment comes from these markets.

Also, in June this year, our global design and production centre for control components and systems equipment began operations in Shanghai, China.

What about customer improvements?

In April this year, we established a global service centre in Japan. It’s part of a global plan to centralise services currently managed separately by sales and product divisions. Over the next few years, we’ll be rolling out regional customer support centres modelled on the global service centre’s customer support division and customised to match local needs. In Oceania, we have also implemented our customer centres to be part of this global strategy.

Turning to recent technological advances, what’s hot off the press here?

Our sensing technology division delivers new and innovative ideas each month. These can enhance our customers’ production lines, especially in the food and beverage industry, where checking for quality is vital to ensure their customer satisfaction. Recently, we released our smart sensor ZFV range and colour vision FZ series. Both of these enhance production lines by identifying defects on products early in the production stage. Coupled with our latest IP69K sensors, designed for a washdown environment, these products will help Omron to lead the way in offering the customer a solution to many quality issues.

Omron recently announced that it plans to invest $20 million worldwide in the Radio Frequency Identification (RFID) business over a two-year period. What’s the story behind this aggressive pursuit?

RFID is not a new technology. Omron has had the product for more than 10 years. We’ve responded to increasing market demand in the global RFID market. Our plan is to increase annual production above 350 million RFID inlays by the end of the year.

Why has RFID not taken off in grand style, given that the technology has been around for quite a while?

It’s the chicken and egg situation. The cost of tags, labels and readers needs to fall substantially, particularly for tags, as these are going to be thrown away. Until you get more people using RFID, you can’t drive costs down. This can only happen when large users – like Wal-Mart* in the US – get involved, putting pressure on expanding upstream supply chains. It will probably take another couple of years for Australia to catch up with what’s happening in North America and Europe. It’s going to be a gradual change. Omron is also doing its bit to drive down the total cost of RFID tags.

*Wal-Mart, the world’s largest retailer, has mandated that its largest 300 suppliers ship RFID-equipped goods, with full compliance required this year. Also, the US Food and Drug Administration is pressuring distributors and manufacturers to implement RFID technology by 2007 to guard against counterfeit drugs.

How?

We use a patented process called “Jomful” to manufacture our RFID inlays. Instead of applying adhesives, Jomful uses an ultrasonic welding method to bond the chip and strap to the substrate. With Jomful too, we can provide the high volumes needed for the supply chain market. Inlays are

produced up to 10 times faster than adhesive-based processes and contain a more robust electrical connection. The results are higher survivability and reliability for label conversion and application.

Which industrial sectors are driving the use of RFID?

Food and beverage, automotive and pharmaceuticals – primarily because of the importance of traceability. For example, you need to know that the right product is being used in the right batch. Also because of traceability, RFID is being used a lot in car assembly plants.