Year 4 of Panasonic Transformation: Accelerating Collaboration Within the Group, Continuing to Be a Transformative Company

Panasonic Transformation (PX) is a group-wide initiative aimed at strengthening competitiveness by boldly transforming IT systems, business processes, operating models, and corporate culture, with Digital Transformation (DX) at its core. Launched in full in May 2021 and now entering its fourth year, this project is steadily advancing changes in how business is conducted and how people work, while accelerating collaboration with the various business units within the group. 

In September 2024, Hajime Tamaoki, Executive Officer and Group CIO (Chief Information Officer) of Panasonic Holdings Corporation (PHD), spoke about the latest developments as well as achievements to date.

Panasonic Transformation, or PX, is a group-wide initiative that also encompasses Digital Transformation (DX) that has now entered its fourth year. “As we enter the fourth year, various measures implemented so far have been successful,” Tamaoki reports. “Alongside our long-term environmental vision, called Panasonic GREEN IMPACT (PGI), PX is another key pillar of corporate transformation aimed at putting the Panasonic Group back on a growth trajectory.” Tamaoki provides comprehensive details in his own words, below.

To enhance corporate value, it is essential to be in a position where business strategies can be flexibly driven in line with the times and customer needs. PX is an initiative aimed at actively transforming corporate culture, mindset, work styles, business processes, decision-making processes, organizational structures, and relationships with stakeholders to support management at its core.

Since becoming a member of the Panasonic Group in 2021, I have been supporting the DX efforts of various operating companies, including refreshing the foundations and working on transforming traditional processes and culture. Initially, awareness within the group was low, and due to differing circumstances across operating companies, there was the challenge of slow progress in simplifying existing systems.

However, PX has now evolved beyond the information systems department and is being promoted as a group-wide initiative. In March 2023, we held a retreat with top executives, including CEOs of operating companies and subsidiaries, as well as CIOs, where we formulated the PX-7 Principles. We continue to convey these principles with great importance, as they are words crafted by us, the executive team.

What is especially important is that management fully commits and takes responsibility. Under this premise, as outlined in the overall plan, we are driving what we call “business process transformation” through standardization and simplification, leveraging the utilization of data that is unique to our company with its diverse customer touchpoints, and promoting the expansion of talent to support these efforts. Our goal is to help all stakeholders Live Your Best.

We are also expanding specific examples and achievements.

First, as a reform on the institutional side, starting in October 2023 we appointed process owners who are responsible for transforming business processes in various business units. The performance of these owners in driving transformation is reflected in the evaluations of CEOs of operating companies.

Regarding marketing initiatives, in our lifestyle business, we have been working towards realizing demand-driven SCM (Supply Chain Management). By exchanging actual sales and inventory data of specific products with certain retail partners, we aim to reduce distributor’s stock and eliminate stockouts. While expanding the number of target model numbers, we have reduced distributor’s stock by over 20%, while maintaining a delivery rate of 99%.

In the manufacturing frontlines, the results of PX are also evident. In China, we have implemented a standard ERP* system in 13 locations over a period of three years, achieving simplification of indirect operations and reduction of manufacturing losses. We will further expand the deployment locations to enhance value for our customers. In Japan and Singapore, we have reviewed and standardized our operations, minimizing additional system functionalities, resulting in reduced costs for system development and operation.

In procurement, we are promoting the introduction of a system that recommends general parts to contribute to the efficiency of product design across the group, as well as reviewing the indirect material purchasing processes for employees. In human resources, we have implemented an AI chatbot to handle inquiries from 70,000 domestic employees, resulting in significant cost savings.

* Note: ERP stands for Enterprise Resource Planning, a management approach and system aimed at integrally managing a company’s resources to optimize overall operations.

In the B2C domain, we are leveraging diverse customer touchpoints to expand the value of what we designate as “continuing to connect” at all stages: before purchase, during purchase, and after purchase. Currently, we are also advancing system development in Vietnam, and we are now at the implementation stage after conducting proof-of-concept trials.

In the B2B sector, particularly in the electrical materials business, we are planning to implement AI at various sites to build a business model that accumulates and utilizes data. As part of our sales DX efforts, we are promoting the review of processes and the construction and sharing of customer and subject databases, as well as enhancing customer service operations using AI. For manufacturing DX, we are working on visualizing and sharing the on-site know-how possessed by skilled workers. In terms of SCM DX, we are unifying and visualizing supply chain management standards to ensure a steady supply of electrical materials even in emergencies and to advance our procurement BCP (Business Continuity Planning).

Additionally, within the company, we are practicing decision-making using management dashboards by the executive team, and by raising awareness about data utilization, we are expanding the number of users of data analysis tools (data analysis standard platforms) at the frontlines.

In the area of human resource development, we are collaborating with HR to publicly recruit people driving transformation. Employees who voluntarily register are designated as PX Ambassadors and assist in solving the frontline challenges. Currently, 56 people are actively working across the group.

Furthermore, we have widely solicited PX case studies from within the group through an official “Frontline PX Contest,” and in September, we awarded outstanding examples from approximately 550 entries. This trend is fostering an environment where each employee perceives PX as their own responsibility and actively engages in it.

The winner of the first contest was Panasonic Information Systems Co., Ltd., which provided a case study for DIYA (Do-It-Yourself Analytics). This initiative enables the frontlines to conduct data analysis independently by offering technical support, educational services, and analysis templates. In addition to deploying this initiative within the group, we have also begun proposing it to external customers. There are many other excellent initiatives emerging that I am unable to detail here.

Starting in April 2023, we launched the AI assistant service PX-AI for approximately 90,000 employees in Japan. We have since expanded the service to about 180,000 employees globally, excluding some regions. Additionally, we are building and testing Retrieval-Augmented Generation (RAG), which reflects internal information from each operating company. We aim to expand the use of generative AI by developing products and services equipped with generative AI and promoting its application in collaboration with PHD’s engineering department.

The Panasonic Group’s IT infrastructure holds a very important position, supporting not only data related to our own businesses but also co-created products and services with other companies, including IoT appliances. Considering these factors, we will modernize the group’s common platform while reducing implementation speed and costs by more than 20% through the use of cloud technology and other methods.

To bring management and the IT department closer together, we hold a CIO Forum with operating companies every month, establishing a platform for discussions called “Management x IT.” The reforms focus on developing IT professional talent and transforming work styles have been gradually taking root over the three years since the project began.

When we launched PX in 2021, we started with PX ZERO and then moved on to PX 1.0, gradually solidifying our foundation. This year marks the beginning of PX 2.0. We aim to use digital technology even more actively to continuously change our business models and ways of working.

In closing, I would like to mention that the Panasonic Group is a conglomerate with many different business entities, making it challenging to implement system and institutional reforms across the entire organization at once. However, we are not afraid of change.

Moving forward, we will continue to drive transformation throughout the organization and instill the importance of embracing change. I believe that one of our goals is to connect this DNA to future generations. Our commitment is to spread the magma of transformation throughout the organization, and we will persist in our efforts with this mindset.