CIM and MIS in Digital Network Age 9th FAGAT in Beijing June 11, 2007

1. CIM and MIS in Digital Network Age9thFAGAT in Beijing June 11, 2007 JAGAT Managing Director Ryoichi Yamauchi

2. Outline of Presentation ＜Back ground ＞ ・What’s JDF JDF is essential standard format in realizing Computer Integrated Manufacturing (CIM) ・What’s CIM Automation achieved by allowing distribution of information between both the Management Information System (MIS) and production equipment. ・Ｍore important thing than realization of CIM in the Japanese printing industry. ←The levels of productivity achieved at production sites are already very high. ・Japanese printing companies will be more interest in ① optimization of the overall digital network including CIM ② construction of an advanced MIS ＜Outline＞ ①The current state of the Japanese printing industry and the need of major streamlining ②Cases from a mid-sized successful Japanese printing company with advanced MIS. ③What ‘s　「 total optimization」 and 「 advanced MIS」 The roadmap to achieve total optimization.

3. Maturing growth in printing←Maturity of Japanese economy and printing demand←Over capacity caused by advancement in printing technology ←Reduced added value in prepress Process

4. Effects from the diffusion of the Internet ・Advertising spending among the 4 major media has gone down for two consecutive years ・Media-mix has become the norm in advertisement planning ・Lowering the position for both broadcast media and paper media among advertising media

5. Declining Shipment of Printed Products vs. GDP Ratio and GDP Elasticity Value ・GDP elasticity values of printing industry in advanced countries drop below 1.0. ←Maturity of the demand ←Less added value in prepress ←Reduced prices due to overcapacity ←Negative impact from the diffusion of the Internet ・U.S. printing industry’s case 2006：0.8 2007：0.7 2008：0.6

6. Changes in supply and demand balance with number of business establishments ・Demand and supply balance 1 ～1985demand ＞ supply 1985～1990 demand ＝　supply 1990年～ 　　 　demand ＜　supply ・Ｔhe number of business establishments followed the changes in the demand and supply ・Projection of GDP Growth Rate 2% on average year-over-year for the next 10 years ・The total population has started to decline →The demand and supply gap of approximately 2% is expected 　　→Lead to even stronger competition ・Over 10,000 companies during the next 5 years will be making their way out of industry.

7. The need to create a new Mechanism○Reducing prices and turnaround time to 1/2 in the next five years time ・Future requirements for cost cutting and reduction of turnaround time will be unachievable only through introducing new production equipment. ・Offset printing presses ： 52,000 Web offset pres ： 1,450 ・ Number of 8 color sheet-fed offset presses is increasing ←Convert two 4 color presses into one 8 color press →Reducing manning requirements from 3 to 2 persons → Eliminating almost half day for drying ・The level of productivity achieved by the leading edge printing press is close to reaching their ultimate level.

8. Printing presses productivity reaching ultimacy ○Case Study: Vanfu,Co. Inc. ・Founded as a phototypesetting business 　→expanded through service bureau ・First installed 4-color sheet-fed press 7 years ago The company certified capability of printing 10 4-color very short run jobs per hour→ Only 6 minute for 1 job ・Accept only jobs with a short run no more than 3000 copies. ・Greatest characteristic is their ability to “guarantee” quick delivery (1 day) and open prices ・Sales went from “\0” to “US$40million” in 7 years! ・Can we expect the emergence of any new press that will bring reduction in cost and turnaround time to one half of current level.

9. Any technologies for streamlining after CTP? ・6000 plate setters for aluminum plates installed world wide annually ・3,000 CTP plate setters already installed in the Japan ・60％ of total lithographic platesare CTP ・Diffusion of CTP will saturate by 2008 ・CTP has been a big contributor in reducing costs & turnaround past 10 years → Can we expect the emergence of any new equipment enabling similar reduction in time and cost as CTP? ・What will be able to achieve to reduce cost and turnaround by 1/2 ? →Ｔhe solution lies in streamlining non-production operations at least in JAPAN

10. Streamlining the remaining white collar employees○Less than 30% of sales staff’s work is directly associated with sales ○measures to improve this situation ①Reducing traveling time →Send and receive copies and proofs through communication lines.② Reducing time for generating slips　→Introduction of effective estimation applications③Cutting down on time spent on various communications →Sharing Information using the web.

11. Challenges in printing companies <goal> ・Reduce current prices and turnaround to one half <the measures> ・ Streamlining at the production site would not be enough ・ Streamlining at non-production operations will become essential. →Remove obstacles in distribution of information, Resolve bottlenecks in communication, Improve efficiency in administration activities. →Not only introducing CIM is enough → Introducing EC/EDI, Rebuilding management systems are imperative.

12. Success stories from streamlining non-production operations <Outline of the company> Number of employees:150 Annual turnover : 4.5 billion yen, sales profitability of 8%. Equipment 12 web offset , 8 multicolor sheet-fed press, 2 other printing presses + plate-making , post press equipment ・What is unique →Not using MIS functions for calculating figures or generating slips only, →Automating time-consuming, cumbersome activities through various simulations using computer capabilities, ・Result Succeeded in achieving over 200 million yen cost reduction on a annual basis 5% improvement in profitability

13. Streamlining non-production operations (1)○Improving sales productivity <situation> ・Extremely more administration work compared to work to be accomplishing. ・Took a lot of time to prepare estimates ・Different sales staffs were providing significantly different estimations for a product with the same specifications. ・There were exceeding profits but at times there were significant losses. <measure to improve> ・The standardization and automation of the estimation process. <result> ・The estimation is completed in 5 to 10 minutes. ・The number of sales staffs has been reduced from 45 to 25. 　→Nearly 100 million yen reduction per year in labor costs.

14. Streamlining non-production operations（２）○Improved productivity in production control <situation> ・ Experienced personnel had carried out production control →high labor costs. ・Difficult to maintain profitability with high labor costs in a non-production department. <measures> ・Development of a system that would allow anyone to manage scheduling. →Automatically calculates the cost of the products to selects the most suitable printing press →System can selects machine capable of carrying out the production in time for a specific delivery date. →Schedules can be viewed on site via the Internet. <result> ・Only 3 production control staff for these three plants with plate-making capability, 22 printing presses and finishing equipments

15. Streamlining non-production operations (3) ○Reduction of transportation costs and sales operations <situation> ・The company receives 35,000 orders annually ・Sales staffs make arrangements for delivery for each item. 　→Deliveries for the same area around the same time of the day were made by different transportation companies .→high delivery cost( 7% against annual sales value) →Time consuming work on the sales staffs <measures> ・Automatically groups deliveries having close delivery timing and location by computer simulation ・Shipping assignments information will be automatically transmitted to transportation companies, the invoicing from the transportation companies to printing company were made automatically over the Internet.→ EDI (Electronic Data Interchange). ・Drivers of the transportation companies get information timely through mobile phones. <result> ・Over 100 million yen worth of cost reduction per year.

16. Streamlining non-production operations(4)○Increased customer satisfaction、reduced operation <situation> ・The biggest impediment within the production is the communication with external parties, such as customers and subcontractors. → Bottlenecks in improving production efficiency and reducing turnaround time. →Many people need to be involved in order to answer inquiries from customers 　 ＋Customer needs to wait in frustration. <measures> ・Developed system customers could check the printing and delivery schedules on their own using the web.. <result> ・Improved trust and reliability from customers. ・Sales and production control are relieved from the burden of responding to inquiries.

17. Summary of cases ・Computers are used without limiting use to calculation and generating slips ・MIS is equipped with automated simulation and administrative processing functions, ・Developing a mechanism that combines the Internet and web. →Streamlining the various non-production operations has significant impact. →Streamlining should not focus just on CIM but need to set a broader scope

18. From phase one to phase two of digitalization○digitization of each tool, equipment　　　　　　　　　　　→ networking digitized tools, equipments Phase 1 Phase 2 PostScript for DTP Auto-plate Change Automation of each tool CIP3/PPF(ink key control). etc Collaboration between production equipments CIP4/JDF（CIM,EC/EDI, MIS） Collaboration between all System in the work flow

19. Overall picture of total optimization with digital networking management ●execution of precise management (integrated systemization, digitized slip） ●improvement of customer satisfaction （EDI/EC） ●increased efficiency in non-production operation　　（computer simulation, Web) sales, production control production ●more automation （CIM）

20. Components for digital network・CIM, JDF compatible production equipment, MIS, standardization, EC/EDI ・Advanced MIS will be the core of the digital network. ・Advanced MIS must feature new function exceeding conventional capabilities like calculation and generating slips

21. Details for advanced MIS Roadmap for total optimization ○Advancement of MIS is the first in many cases

22. Thank you for your attention