Schaumburg, IL -- Omron Electronics LLC, the Americas industrial automation division of Japanese parent company, Omron Corp., last week outlined an aggressive plan that it says will double its business brand value by 2007.
For the America's division, that means doubling its current $200 million revenue, which is a lofty but attainable goal, according to Craig Bauer, president and chief operating officer of Omron Electronics. In the U.S., Omron has spent the last 12 months restructuring its business, identifying new market opportunities, aligning strategic partners and even upgrading its own IT infrastructure.
Omron Corp., which ended fiscal year 2004 in March with net income of $280.1 million on sales of $5.65 billion -- year-over-year increases of 12.6% and 4.1% in net income and sales, respectively -- is halfway through a ten-year strategic plan dubbed Omron Grand Design 2010. The aim of Phase 1 was to achieve operational efficiency, which company officials claim to have accomplished, pointing to a healthy balance sheet. The emphasis in Phase two is on growth.
That doesn't necessarily mean more sales for Omron's industrial automation division, which posted worldwide revenue of $2.3 billion vs. $2.18 billion in the prior fiscal year. But rather, the company is instead emphasizing more quality relationships, which could drive additional revenue.
"Strengthening customer intimacy is a vehicle to double the business," said Bauer, during a press conference here. "Up until now we've been going through distribution channels. Doing it more directly rather than through an intermediary will be a factor [in our growth]."
The company has nearly tripled its sales force to almost 40 people, the majority of whom are now dedicated to direct sales. On the distribution side, Omron is asking channel partners to focus on the top 20 customers and cultivate a better understanding of what they need to buy and why. The goal is to improve customer loyalty and to remain cost competitive.
While Omron does cater to vertical industries, including automotive, food and beverage, and recently added a semiconductor sector sales team, the company's forte remains packaging technology, which is a more horizontal sell. In the U.S., packaging machines and technology is a $5 billion market, a small but significant piece of a $24 billion worldwide market, according to Ben Miyares, vice president of industry relations at Packaging Machinery Manufacturers Institute (PMMI).
In an effort to seize emerging domestic opportunities, Omron has focused its development efforts on vision systems, RFID and safety products. It used last week's event to announce additions to its product portfolio.
For example, the Omron F210-ETN Ethernet vision sensor controller is a quality inspection system that uses a digital camera to capture an image of a product moving down the production line, searching for "nonconforming products" that may impact quality (i.e., a foreign object in a water bottle). It then compresses the images in its onboard storage and sends them via an Ethernet connection to a remote PC or laptop for analysis.
The camera can see as small as 2-to-3 millimeters, while response time of the product is between 3 to 34 milliseconds and it can capture 1,000 to 2,000 parts per minute.
This product, which costs $5,800, is crucial to ensuring tainted products don't leave the production line and appear on retailers' shelves. "The cost of a recall is $250,000 to half a million dollars, not including the cost of clean-up, locating the product and downtime," said Robert Lee, Omron's sensor product marketing manager.
The camera and the cost of integration, which can amount to about $10,000, is a small investment relative to the potential savings. "The waste reduction alone will recapture the cost of the controller," he said.
Omron also rolled out a DeviceNet safety controller, the $1,995 SNC-EI, which can control multiple functions without the need for a separate PLC. It is based on the recently-developed CIP Safety protocol and conforms to various standards including IEC 61508 SIL3.
A separate position controller, the $1,650 CJ1W-NCF offers up to 16-axis high-speed positioning using a single controller, reducing the cost of cabling and programming each positioning drive individually. Using the CX-One software suite, the controller can connect with and program multiple PLCs, motion controllers, HMI and drives.
In addition, a new UHF-RFID starter kit includes three levels. The basic kit includes RFID reader/writer hardware, one antenna, cables, a power supply, a quick start guide plus 100 RFID labels with Omron's inlay included. The second level is the advanced kit which provides software to write an EPC code to labels, associates cases to pallets and prints a compliant label that includes bar code and human readable text. The third kit includes V740 RFID suite software which enables user to create full RFID shipping labels for EPC compliance.
Meanwhile, the company has revamped its IT infrastructure, upgrading five old AS/400 servers to IBM eServer iSeries systems partitioned to accommodate Oracle Corp. (formerly JD Edwards) ERP applications, as well as IBM Websphere for e-commerce applications and Cognos business intelligence tools. Having the right infrastructure in place will allow mobile salespeople to tap directly into the Omron knowledge base, making the company easier to do business with, company officials said.
The new products and IT infrastructure form the foundation for Omron's business strategy, but as the company approaches Phase 3 of Grand Design 2010 -- defined by accelerated growth -- much of the success will hinge on integrated solutions. For that reason, Omron used last week's press conference to unveil nine new strategic partners whose products can be tightly integrated with Omron's. They include: Ann Arbor Technologies (industrial PCs); Digi International (device networking); CCL Label (pressure-sensitive labels); Domino Amjet Inc. (inkjet, laser, RFID printing); Gross Automation/Westermo (data communications); Motoman (robotics); InduSoft LLC (Web-based HMI/SCADA); Navitar Inc. (optical systems for machine vision); and Yaskawa Electric America Inc. (AC drives, motion controls, robotics).
Omron is well-positioned for the future, according to Jim Pinto, an independent automation analyst and futurist. Its Japanese parent company promotes ethical and social responsibility and the Grand Design plan, despite its elongated view, has put the company on the right track.
"You have to think about the long term and the short term and what it means to you and your stakeholders," Pinto said during a keynote address here. "Omron's Grand Design not only thinks about it but puts it into practice."