IIJ and Hirata Corporation to Launch "Cognitive Factory," a Solution for Promoting Manufacturing Reform

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TOKYO-July 3, 2018-Internet Initiative Japan Inc. (IIJ, NASDAQ: IIJI, TSE1: 3774) and Hirata Corporation (Hirata, TSE1: 6258) today announced that, on September 1, 2018, they will launch Cognitive Factory, a solution that promotes process reforms at manufacturing sites as well as supports the manufacturing industry's shift to smart factories.

Cognitive Factory is a jointly developed and distributed solution from IIJ and Hirata. Leveraging networking, the cloud, security, and other information communication technologies (ICT), this solution promotes digital transformations at manufacturing sites and allows for process reforms through the automation and optimization of production management using IoT and AI technologies. This means the solution provides users with robust support for creating and maximizing added value for their marketing capabilities, supply potential, and back-office functions (training human resources, securing successors, and guaranteeing safety), as well as for realizing business strategies aimed at building the factories of the future.

In implementing this solution, IIJ and Hirata offer consulting for manufacturing reforms, provide advice from the planning stages, and combine the perspectives of ICT and of manufacturing/production to solve on-site manufacturing issues, leading to optimal solutions derived from the technical strengths and knowledge of both firms.
With a lineup of solutions that cover four stages of manufacturing reform, from digitalization and visualization to data analysis, data use, and automated optimization, IIJ and Hirata have options to suit any user's needs. (Step 3 and Step 4 are scheduled for release in 2019.)

Cognitive Factory Highlights

Manufacturing reform consulting

This service provides comprehensive support for the PDCA cycle, from system implementation to improvement. Consulting begins at the planning stage, from analyzing issues users face in applying ICT, IoT technologies, or production/manufacturing data to management-led process reforms-including digitalization and organizational applications that serve to maintain and improve on-site capabilities, as well as automation and quality assurance for added-value production processes-to formulating optimal implementation proposals.

Step 1: Connection-Making production activities more efficient

By introducing communication tools such as videophones, chat bots, data sharing equipment, and monitoring cameras, IoT sensors, etc. on the production lines, users will be able to automatically detect equipment faults, remotely provide immediate instructions when devices fail, and otherwise reduce costs and make their production activities more efficient. Promoting digital transformation in manufacturing alters how production sites operate and supports the creation of environments that autonomously help in forming digital assets representing skills and knowledge.

Step 2: Integration-Automating information management

This solution is meant to improve product quality and productivity by automatically collecting data from sensors; aggregating data on production plans, production results, and equipment operation status (including data on faults and warnings); and automating and visualizing, via a dashboard, the management of information related to the traceability of production, product quality, equipment, maintenance management, and products.

Step 3: Application-Automating knowledge acquisition and use

Using AI and other analytical technologies to analyze data acquired from production lines, predicting equipment failures and parts replacements, improving production quality output and equipment utilization rates, and otherwise improving the efficiency of entire production facilities allows users to create new production process reforms.

Step 4: Automated optimization-Automating PDCA

This solution automates the PDCA cycle and provides efficient production management. By fully automating production lines, users can enhance their corporate competitiveness by mass-customizing the production of custom products on the same delivery and cost schedules as those of standard products.

Sample pricing

Manufacturing reform consulting	Planning phase, two months, from JPY 3,000,000
Solution options	Step1	Initial fees, from JPY 2,000,000; monthly fees, from JPY 200,000 (*)Sample pricing for five cameras and ten retrofit installation sensors (excluding installation costs)
	Step2	Initial fees, from JPY 8,000,000; monthly fees, from JPY 300,000 (*)It can be provided from any of production, quality, equipment, and maintenance management and traceability (excluding installation costs)

• For details on the solution, see the following website:
  https://www.iij.ad.jp/biz/cognitive-factory/ (Japanese text)

The statements within this release contain forward-looking statements about our future plans that involve risk and uncertainty. These statements may differ materially from actual future events or results. Readers are referred to the documents furnished by Internet Initiative Japan Inc. with the SEC, specifically the most recent reports on Forms 20-F and 6-K, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.

For inquiries, contact

IIJ Corporate Communications

• +81-3-5205-6310
• +81-3-5205-6377
• press@iij.ad.jp

Hirata Corporation Director and Executive Officer of Accounting and IR Fujimoto

• +81-96-272-5558
• +81-96-272-3618
• hirata_info@hirata.co.jp
• www.hirata.co.jp/en/

For inquiries about the solution, contact

IIJ Information Center

• +81-3-5205-4466
• info@iij.ad.jp

Hirata Corporation Global Business HQ IoT Solutions Group

• +81-96-300-5102
• gr.cognitive@hirata.co.jp

• (*)All company names and service names used in this press release are the trademarks or registered trademarks of their respective owners.
• (*)The trademark registration for "Cognitive Factory" is pending.