Panasonic’s Acquisition of Blue Yonder : What does it really mean?
On April 23, 2021, Panasonic announced that it has decided to acquire an additional 80% stake in Blue Yonder, a supply chain software specialist. The total purchase price is expected to be US$7.1 billion (approximately ¥770 billion). This acquisition, together with the 20% stake already acquired in July 2020, will result in the acquisition of all shares of Blue Yonder.
What is the point of spending so much money to acquire Blue Yonder?
In the press release, Panasonic states as follows
“The need for more intelligent, autonomous and edge-aware supply chains has been dramatically heightened by the COVID-19 pandemic, the rise of e commerce and the proliferation of data. This acquisition strengthens Panasonic’s portfolio and accelerates the companies’ shared Autonomous Supply Chain mission, empowering customers to optimize their supply chains using the combined power of AI/ML and IoT and edge devices. By unifying supply, demand and commerce solutions with IoT and edge technologies, companies can better utilize predictive business insights to pivot their operations in real-time.”
Importance of Supply Chain Management
So why is “supply chain management” so important to Panasonic?
In last year’s “White Paper on Manufacturing”, the following points were made.
“To begin with, the manufacturing process roughly consists of an “engineering chain”, which is a chain of R&D, product design, process design, and production, and a “supply chain”, which is a chain of order placement, production control, production, distribution and sales, and after-sales service. The latest digital technologies, such as the IoT, provide excellent solutions to promote the use of data at each point of both chains, bringing revolutionary innovation to the manufacturing industry.” (Bold type is by the author. The same applies below.)
In the supply chain, there are applications such as “joint order-taking,” which enables each factory to equalize its peak and off-peak periods; “skills inheritance,” which facilitates the transmission of master craftsmanship through digitalization; “logistics optimization” through supply chain coordination; “sales forecasting” by analyzing customer usage data; and “predictive maintenance” and “remote maintenance” of facilities and equipment. and “remote maintenance” of facilities and equipment.
Panasonic has “industrial engineering technology, know-how, and edge devices” at the production site. By combining these devices with SCM solutions, it is possible to optimize not only the factory, but also the entire supply chain, including ordering, distribution, and maintenance.
And by making it possible to build such a system, they will be able to realize their own process reforms and provide their customers with “superior solutions that advance the use of data and bring revolutionary innovation to the manufacturing industry” (Monozukuri White Paper). The goal is to provide this as a recurring business to customers.
This has the potential to expand to end-to-end optimization, including not only individual manufacturing companies, but also distribution, service, and other business partners, as well as optimization of smart cities as a whole. The target market is infinitely expanding.
According to Gartner Research, Blue Yonder is one of the leaders in three categories of planning solutions: Warehouse Management Systems, Transportation Management Systems, and Supply Chain Planning Solutions.
For Panasonic comments
In the release, Panasonic said
“Panasonic aims to solve vital societal issues caused by extreme fluctuations in demand and the logistics issues brought on by dynamics such as COVID-19, changing shopping trends, and labor shortages. With Blue Yonder, Panasonic will be better equipped to empower customers to optimize their supply chains using the combined power of AI/ML and IoT and edge devices. “
“By merging the two companies, we would like to realize a world where waste is autonomously eliminated from all supply chain operations and the cycle of sustainable improvement continues.”
“There are still many such losses and stagnation in supply chain operations, so through the drastic reduction of wasted labor and resources, we would like to provide better ways of working, and contribute to customers’
Another pillar needed in the manufacturing industry
Now, as mentioned in the quote from the Monozukuri White Paper above, another necessary factor when considering manufacturing innovation is to reform the “engineering chain” and link it to the “supply chain”. As a manufacturer and solution provider, Panasonic will not ignore this point.
At this point, Panasonic has not announced its policy on this aspect, but it is likely that they are considering some way to do so.
Partnerships with major PLM suppliers and integrators may be under consideration.
Hitachi also made a major acquisition
In the major Japanese manufacturing industry, Hitachi, Ltd. is also making large-scale acquisitions with the aim of becoming a solution provider that leverages its experience as well as its own internal reforms.
Japanese companies have not been good to achieve much in the way of major acquisitions in the past, but we need to pay attention to see whether they will be able to make good growth through these acquisitions.
