Mitsubishi Corporation

Vol.7 DX Business

Create the Next

DX Business

DX in Industry
Finding Solutions to Societal and Environmental Problems

Note: The photographs for this report were taken with due attention to COVID-19 precautions.

This series introduces some of MC's global operations and its challenges in new fields. Our seventh instalment features MC Digital, a tech company headquartered in Tokyo's Chiyoda Ward that MC established in 2019 to spearhead its digital strategies. Not only is MC Digital endeavoring to reform operations throughout the MC Group, but it is also building an open DX* platform that can service the full breadth of supply chains and working closely with projects geared towards industry-wide development.

*Digital Transformation

President & CEO Takuya Hirakuri is in the pursuit of bold reforms

President & CEO Takuya Hirakuri is in the pursuit of bold reforms

Bringing Businesses into the Digital Age with a First-Rate Team of IT Pros

When it comes to business, MC is truly a global player. The sogo shosha is engaged in virtually all industries and has a hand in every link in their supply chains, from upstream to downstream. The focus of MC's digital strategy is to leverage DX to reform its diverse operations, and MC Digital serves as its hub for tech support. Takuya Hirakuri is the General Manager of MC's Digital Strategy Department, but he also serves as President & CEO of MC Digital. His job is to work closely with each of MC's divisions to ensure that its tech hub is managed in a unified fashion. At a time when many companies are outsourcing their DX work, MC is determined to do everything in house.

MC Digital's office in Tokyo's Kanda district has all the hallmarks of a modern tech firm. As in many offices, employees can be seen seated at their desks working away on their computers, but the most noticeable difference here is how casually dressed everyone is. In one corner, a group of engineers is huddled in front of a white board, engrossed in discussion.

The office's 16 employees average in their late 20s. Many of them are young engineers who joined the company because they were excited about working for a newly launched tech firm. Their leader is Chief Technology Officer Rei Kubonaga, whose impressive resume includes the development of a job-placement app. The team is overflowing with the kind of top-flight talent that is routinely snapped up by leading Western tech firms, such as data scientists who have won awards at the International Olympiad in Informatics and other notable programming competitions.

"Dialogues with industry pros have given us some new perspectives and ideas," says Kubonaga, who has found working in the digital space to be very rewarding.

"MC Digital brings together people with advanced expertise in specialized fields, some of which can be automated and optimized by adopting artificial intelligence to MC's existing businesses. Bringing our company's technologies into the fold opens up new possibilities to create value together."

The purpose of DX is to leverage the power of digital technologies to transform business models, which Hirakuri is determined to do by developing in-house talent.

"We need our own engineers to be at the forefront of IT-driven reforms, so I intend to encourage their growth and ideas," he says. Hirakuri is sparing no effort to build the kind of working environment that will get the most out of his team.

Optimizing Supply and Demand
Leveraging AI to Eliminate Food Waste

MC's DX vision involves digital platforms that are designed to stimulate industry-wide growth, as opposed to new systems that are tailored for individual companies.

There are approximately 1,700 companies in the MC Group, and that number is much greater if we include all of their customers and other stakeholders. The fates of those companies and their industries will largely depend on the success of their digital transformations, which is why standard, cross-industry platforms are needed. Determined to help create those platforms, MC Digital is developing open-source software and other assets that can be shared with companies both within and outside the MC Group.

"We want to be a behind-the-scenes player that encourages industry-wide development through the provision of digital platforms," says Hirakuri.

One of the company's first projects involves increasing efficiency in Japan's foods distribution industry, which MC has been involved in for many years.

Until now, food manufacturers, wholesalers and retailers have all made their own decisions on sale-and-order volumes, resulting in considerable gaps in their respective forecasts and a great deal of waste. By using MC Digital's cutting-edge AI technology to comprehensively analyze orders, inventories and other supply-chain data, MC is hoping to optimize the entire foods distribution industry. According to Kubonaga, the pilot project has been quite successful.

"By using an algorithm to calculate order volumes in accordance with demand forecasts, we've developed more precise ordering systems," he says.

If DX can increase precision and eliminate redundancies, then it should help to address societal and environmental problems that have long plagued Japan's foods distribution industry. For example, it could reduce both food waste and transport-associated CO2 emissions. Not only will this be MC's way of paying back an industry that has aided its own growth over more than half a century, but it also conforms to the shosha's overarching mission to simultaneously generate societal, economic and environmental value.

But MC's challenges in DX do not end with the foods distribution industry. Hirakuri is quick to point out that MC Digital has already begun developing new business models in other fields.

"There is no reason that a platform that succeeds in one industry's supply chain cannot be adapted to succeed in another," he says.

As far as Hirakuri sees it, MC Digital's mission is to combine its strength in digital technologies with MC's broad industry expertise to solve society's problems.

"If society adopts the systems built by our company, then there will definitely be a measurable impact," he adds. "We shoulder a lot of social responsibility in doing this kind of work, so we are determined to make it succeed."

From the March 9 edition of the Nikkei.