Midea Revolutionize Manufacturing for the Future: A Case Study of Digital Transformation in the Asia-Pacific
Rather than being content with its laurels as a conventional manufacturing giant, Midea today is upgrading itself to an intelligent manufacturer and moving toward becoming a global technology group.
How Midea has innovated and changed the game for the future of manufacturing enterprises in the region.
Midea Group, a leading home appliances manufacturer in China, has been ranked among the Fortune Global 500 for seven consecutive years, rising from 481 to 245.
Midea Group won the IDC China Future Enterprise Award and the Future Enterprise of the Year award at the IDC Asia/Pacific Future Enterprise Awards 2022 for its Midea Cloud Empowers the Digital Transformation of Midea's Lighthouse Factory project.
Midea Group is one of the world’s most advanced factories, which is leading the way in the adoption of Fourth Industrial Revolution technologies. As well as increasing the speed and productivity of operations, they are also committed to upskilling the workforce and boosting their eco credentials. (Source: World Economic Forum)
After the 2008 global financial crisis, the weakness and flaws of the Chinese manufacturing sector relying on scale merit and low cost became prominent. Unable to sustain business with a low-cost development path, Midea began to explore a new business model.
The company started its digital transformation in 2011, driving its business and business model with digital intelligence. It has built four Lighthouse Factories in three years, becoming one of the enterprises with the most Lighthouse Factories in China.
In 2016, Midea purchased the German industrial intelligent solution provider KUKA began its adventure in applying intelligent automation in manufacturing. The company also unveiled its cloud computing and services platform MeiCloud. It aims to improve products, boost sales, and promote after-sales services with the support of big data technology.
In 2018, it began its transformation of becoming an industrial Internet solutions provider driven by digital technologies and artificial intelligence. At that moment, it officially graduated from being a conventional manufacturer and became an intelligent solution provider.
In 2021, Midea Group's first version of IoT operating system is launched in Foshan, Guangdong province.
The project, empowered by the MIOT platform, leverages big data analysis to gain insight into consumption trends and automatically analyzes and pushes cross-regional inventory allocation plans based on sales-optimized algorithms.
This has reduced the delivery cycle from 27 days to 12 days, down 56%, and channel inventory fell 40% year over year. It’s also increased the inventory turnover of finished products by 125% and lit up the digital transformation path for other manufacturing enterprises.
Taking Midea’s electric appliance manufacturing as an example, through M.IoT:
We have reduced our raw materials inventory by 80%.
Our failure rate has decreased by 36%.
We have increased production efficiency by 17%.
We have reduced fault response time by 57%
Artificial intelligence quality testing has slashed inspection costs by 55%.
External appearance assessment accuracy has improved by 80%.
Abnormal response time has been cut by 75%.
“Midea Group is an example of the transformation of China’s conventional manufacturing industry. Based on the company’s experience, future manufacturing must be innovation-driven and tightly integrated with services.”
Li Jinbo, director of the innovation center for domestic air-conditioners of Midea Group.
Midea Industrial Internet (MIOT) is at the heart of the company's strategy
The platform leverages advanced digital technologies and AI to enhance the user experience across the value chain. This includes providing digital empowerment for all employees and partners to create a flexible, labor- and energy-efficient supply chain with shorter delivery times and better quality. As a result, partners across the value chain can collaborate digitally.
The company has established ecological cooperation with IBM, Aliyun, and Huawei to obtain technical support for Internet enterprises. Through the layout of KUKA, Servotronix, Swisslog, M.IoT, and Meicloud, Midea has gradually established an advantage in hardware, equipment, software of intelligent manufacturing and in the ecological layout of system service.
Midea Group is at the forefront of driving digital transformation in manufacturing. Its innovative approach is providing best practices for enterprise digital transformation and lighthouse factory construction. The company's continued leadership and demonstration in this space have earned it global recognition and positioned it as a leading player in the future of manufacturing.
Business Innovation through Digitalization: Midea 2025 digital strategy targets 100% business digitalization
Midea has specified the goals of its 2025 digital strategy:
100% digitalization of the entire operation across the whole value chain, driving business through a user perspective and reaching high-tech industry standards, maintaining industry leadership by building core technology barriers, becoming the first choice in the global smart home industry, and integrating digital technology into business development to innovate business models.
Source: Media Group, International Data Corporation (IDC), FOSHAN NEWS, CHINA SCIO, CHINADAILY.COM.CN, CHINA TODAY.
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