Introduction

Medium-Term Management Plan
We will carry out radical reforms to achieve greater profitability
F Y2025(Initial plan)

FY2025(Revised plan)

Net sales

80.0 billion yen

85.0 billion yen

Operating income

13.0 billion yen

15.3 billion yen

Operating income
margin16% or higher

18% or higher

ROIC

10% or higher

10% or higher

ROE

15% or higher

15% or higher

EPS

300 yen or higher

360 yen or higher

or higheror higheror higheror higher

Business Strategy

As we achieved the medium-term management plan’soriginal numerical targets in its first year, we announced an
updated plan in May 2023. We are pursuing radical reforms
under the current plan to realize an operating income marginof 20% or higher in the medium to long-term, with the aim ofachieving greater profitability.
We are also strengthening our business foundation toattain sustainable growth worldwide. These efforts include
reducing our environmental impact toward the achievementof carbon neutrality, and improving employee engagement
through increased investment in human capital, implementationof workstyle reforms, and other measures.

Value Creation Story

We are pursuing four basic strategies under the current mediumterm management plan for FY2023–FY2025: promote growthstrategies, improve profitability, enhance the business foundation,and enhance ESG initiatives. Specific themes linked with ourmateriarities have been defined for each strategy, and we aretaking action on them to realize our slogan of “PASSION FOR
YOUR SUCCESS.” Leveraging the control technologies we havecultivated over the years, we are striving to achieve advancesin our core fields, including answering needs for automation,
unmanned operation, and labor-saving, and increasing safety,
ANSHIN, and well-being. In doing so, we seek to advance our
new concept of HMI-X, help solve societal challenges, andachieve sustainable growth and customer success.

Materiality

1
Megatrends

Societal challenges

Four basic strategies

Action themes

Productivity
improvement

2

3

4

ClimatechangeBusinessfoundation
Foundation For Value
Creation

Safety,ANSHIN, andwell-being

Strengthen sales based on technical problem-solving
Advances indigitalization& automation

Demographic
changes

Rapid sharing of information
Rapid technology innovation

Promotegrowth strategy

Strengthen competitiveness through production reform

Review and consolidate low-profit and unprofitable products

Enhance businessfoundation

Increase operational efficiency by promoting DX trengthen corporate platform by advancing decent work practices,S
promoting diversity, and increasing investment in human capitalImprove management transparency and effectiveness

Data

Gender and age diversification
Emerging Generation Z trengthen business structure by promoting PMI and rigorousS
management of key projects

Promote initiatives to reduce environmental impacts

Climate change
Scarcity of natural resources

Enhance
ESG initiatives
Advancesin diversity

 educe manufacturing costs through Group-wide joint procurement,
Rpart standardization, etc.

Governance

Climatechanges

Unstable political conditions
Geopolitical power shifts
Increase in pandemic risk

E xpand business in China, India, and other focus markets
Build strategic partnerships through M&A and alliances

Aging population
Rise of the middle class

Improve
profitability
Geopoliticalchanges ccelerate product development and sales based on regional andA
industry needs

Create well-being through safety and ANSHIN technology
Improve product quality and manufacturing capabilities

IDEC Report 2023

Medium-Term Management Plan

19

Growth Strategy: Actions for advancing HMI-X

Introduction

Medium-Term Management Plan
1
Multi-use mmWave radar sensors“1A1M series”

Expand new markets through collaborationsindustrial equipment. We were able to create a unique, highly
competitive product optimally matched to the needs of industrial
customers by leveraging our HMI technologies and expertisealong with the technologies that ALPS ALPINE cultivated inconsumer and automotive applications, and by steadily building
up our know-how through joint testing with customers.
In addition to the launched versions, further models
with different lens design for more specific applications areplanned to be offered. This series supports a broad range
of industrial needs, including not only factory automation,
but also for specialized vehicles, parking lots, train stations,and infrastructure.

Business Strategy

Development leveraging each partner’s strengths
The recently launched Multi-use mmWave radar sensors detectobjects using high-frequency radar (in this case, 60GHz), whichenables presence detection and distance determination for
objects up to 10 meters away. This type of radar consumes
little power and operates in a wide range of environmental
conditions, including steam, dust, rain, snow and low sunlight.
Therefore it can be used instead of ultrasonic sensors, both
outdoors and in Factory Automation.
Until now, mmWave radar technology was primarily
used in automobiles, and consequently very few products
incorporating these sensors had been developed for use in

Value Creation Story

As part of the medium-term management plan’s growth strategy,
we will seek to expand new product development and sales
networks through collaborations with leading companies indiverse industries. We will also work to expand new markets
by developing products offering new functions, with the aim ofrealizing the new concept of HMI-X [Transformation].

Examples of usage
Distance determination

Presence detection

 Identification of light-absorbing
materials (rubber, dark-colored
workpieces, etc.)

 etermination of fluid level in tanks
Dfrom the outside via a viewport
Parking lot

Aerial work platform at construction site

Features of our Multi-use mmWave radar sensors
Hardware design that capitalizes on mmWave technology
Unique beamforming know-how enables beam to be kept in a range less prone tofalse detection.
 he first sensors with anti-interference and radio wave emission control functions
Tcertified for use in Japan.
Use of a special reflector (patent pending) expands the range of applications supported

Bluetooth-equipped for easy setup HMI-X
 arious devices can be used to wirelessly monitor the sensor andVmodify its settings
Simple and convenient setting/monitoring tools are available for
laptops, smartphones, and tablets

Algorithms supporting diverse applications

Data

IDEC Report 2023

 etermination of width of vehicles
Dentering carwashes

Governance

IDEC ALPS Technologies Co., Ltd., established as a joint venturewith ALPS ALPINE CO., LTD. in September 2021, carries out
product development aimed at providing new forms of value in
HMI that contribute greater safety and ANSHIN to society. The
joint venture launched the “1A1M series” of Multi-use mmWave(millimeter wave) radar sensors in May 2023. This is the first
product developed through collaboration among IDEC and
ALPS ALPINE sites in Japan and abroad.
This product is also an innovation that combines thestrengths in HMI and sensing technology of two partners withdifferent cultures and way of thinking.
Other products are now being developed. Once marketed,the full product portfolio, including the 1A1M series, is planned
to grow into a JPY 1 billion business over a three-year period.

Foundation For Value
Creation

 ehicle detection in parking lots (anValgorithm for distinguishing between
vehicles and humans will be added)

Since the firmware can be overwritten with various algorithms developed for specificpurposes, the same hardware can be flexibly used to support different applications

Medium-Term Management Plan

20

Growth Strategy: Actions for advancing HMI-X

Introduction

Medium-Term Management Plan
2

Performance study results

Emergency-stop assist system

IDEC Report 2023

7

Prevention of near misses and otherhazards

2 Prevention of hazardous behavior

2

3 Personnel can work confidently
4 Personnel can focus on task
63

5 Prevention of trouble
6 Personnel can work efficiently

5

2

4

stops can be done
7 Emergency
promptlycase ANSHIN Sensor
Recent years have seen a greater deployment of collaborative
robots, which can operate alongside humans in diverse settings
without the use of safety barriers. They are designed to stop moving
upon contact, thereby eliminating the risk for serious collision injuries
to humans. However, personnel may still feel uneasy about the riskof collision, even if minor. Also, the robots need to be restarted every
time they automatically stop. Issues such as these can negatively
affect productivity, efficiency, and worker well-being.
Our ANSHIN Sensor can temporarily stop robotic movement in3

prevention system forcase Trapping
aerial work platforms
A key principle of occupational safety management is to separate
humans from machines by distance and time. However, this canbe difficult to achieve at construction sites, as attested by the manycases of serious worker accidents due to contact with construction
equipment. To help solve this issue, we have created a trapping
prevention system that incorporates various sensors and an
ergonomically designed three-position enabling switch we developed.
This system can be used on aerial work platforms to prevent
personnel from becoming trapped against building structures
such as ceilings and frames, thus protecting them from serious
bodily injury. The greater safety and ANSHIN afforded to workers
enhances their well-being.

Dataassist system1

Not used

Governance

We hold a 70% share of Japan’s market in emergency-stop
switches, offering international standard-compliant products thatincorporate our proprietary safety technology. Once activated,
emergency-stop switches reliably stop the machines they control.
However, they need to be pushed to operate, and this can be anissue when they are installed on mobile robots such as automatic
guided vehicles (AGV) and autonomous mobile robots (AMR),
which have soared in demand in recent years. For example, whena robot is in motion it can be difficult
to push the emergency-stop switch
and attempting to do so may place
the worker at risk of being struck ortrapped by the robot. Meanwhile,
because of population decline, thegrowing shift toward automation,and other factors, the use of selfdriving vehicles and many othertypes of robots is likely to expandin the years ahead. We have
Emergency-stop
responded to this safety challenge

1

System used

response to proximity
or even gentle contact,and can be applied tocollaborative robots,
ANSHIN Sensor
AMR/AGV and othermobile systems, production lines where people and robots work
together, and so forth. It thus can allay worker anxiety aboutmachine contact and prevent the loss of productivity that comesfrom full shutdown of collaborative robots, other automatedequipment, or production lines.

Foundation For Value
Creation1

caseby developing an emergency-stop assist system that enables
personnel to activate emergency stops from a safe position.
Our system is wireless switch worn on the arm of the worker
in charge. By operating this switch, the worker can stop the
AMR, AGV, or other robot in the same manner as pushing the
emergency-stop switch installed on the robot. Since this systemenables stops to be made from a safe position away from therobot, it helps to provide ANSHIN to operators.
A study of the system’s impact showed that it provides
significant benefits, including with regard to hazard prevention,
worker confidence, and emergency stopping performance.

Business Strategy

As part of our efforts to fulfill our Purpose—to create the optimum
environment for humans and machines, and to achieve safety,
ANSHIN, and well-being for people around the world, we develop
and supply a broad range of products and systems designed tosolve the needs of customers in not only the factory automationindustry but also many other sectors. The main focuses of our
medium-term management plan are HMI and safety, and there
is growing demand for collaborative safety / Safety2.0, whereby
P.29
humans and machines collaborate for greater safety.
Accordingly, we are expanding our diverse lineup of applications
that can improve worker well-being by enabling the creation ofenvironments where people can work with ANSHIN.

Value Creation Story

Provide diverse applications forrealizing safety, ANSHIN, and well-being

Example of system in action

Medium-Term Management Plan

21

Growth Strategy: Actions for advancing HMI-X

Introduction

Medium-Term Management Plan
3

Of the many different industries served by IDEC Group products,
our current medium-term management plan is mainly focusing
on four that have strong global growth potential: AGV/AMR,
robotics, automotive, and machine tools. Notably, AGV/AMR
are forecast to grow at an annual average of 20–30% in the
coming years, pointing to significant growth potential for thematerial handling industry.
Robotics

Automotive

Machine Tools

In order to better respond to the different needs of diverse
customers and industries, we are phasing in a system of
support covering the four services below. As of FY2023, wehave deployed services (1) and (2). Our ultimate goal is to provide
full packaged solutions (including software) for building AGV
and AMR. We are exploring opportunities for partnering and
M&A as an avenue for strengthening our software capabilities.

Business Strategy

AGV/AMR

exclusive marketing rights for ez-Wheel products in Japan throughthe partnership agreement, and since FY2023 we have offered
diverse solutions integrating their products with our emergencystop switches, safety laser scanners, and other safety devices.
The use of automated driving wheels is growing as
distribution and manufacturing businesses increasingly
consider adopting AMR to reduce staffing needs and workload
through automated transportation. Meanwhile, our assist wheel
drive, which make it easier for workers to transport heavy
objects, have been the focus of many customer inquiries fromthe automotive industry, which deals with heavy items on adaily basis. We expect to see greater adoption of both typesof wheels in the coming years.

Value Creation Story

Ramp up our solutions forthe growing material handling industry

1 Individual product sales
2 Solutions packaging optimal products
3 Packaged solutions customized for specific applications
4 Full system setup

Semiconductors Special Vehicles

Food andPackaging

Foundation For Value
Creation

Elevators

In addition, group company IDEC AUTO-ID SOLUTIONSCORPORATION offers a broad lineup of automatic identification
devices that help to improve the efficiency of distribution
operations. It is now expanding sales to serve the growing
needs of the material handling industry.

Assist wheel drive are a simple solution
for equipping industrial carts with electric
assist, which facilitates transport of heavy
objects that otherwise could not be easily
moved by a single worker.

We are committed to helping customers overcome theirchallenges by creating new value for them. To do this, we are
actively leveraging our technological strengths in core areas
such as HMI, safety, and ANSHIN, while further reinforcing
our software and IoT capabilities.

Medium-Term Management Plan

Data

IDEC Report 2023

Safety wheel drives integrate all functions
necessary for safe automated driving,
including the safe motion functionality
specified by ISO for operation in areas
with people.

Governance

In January 2022, we entered into a partnership agreementwith France-based ez-Wheel, a manufacturer that developed theworld’s first safety wheel drive for AGV and AMR to incorporate
drive control and safety features essential to safe automateddriving. ISO (International Organization for Standardization)
publication of an international safety standard in 2020 prompted
requirements for transportation robots and other mobile robots
operating in areas with people to be equipped with a safe
motion monitoring function, generating a growing need for
products compliant with the standard.
Against this backdrop, demand has been rising for ez-Wheel’s
lineup of safety wheel drives, which incorporate safety features
necessary for complying withstandards. Recognizing thispotential, we secured the22Introduction

Medium-Term Management Plan
Improving profitability, enhancing business foundation and ESG initiatives

MarketingAutomation

Sales Force
Automation

Ordermanagement

Production
planning/
management
ERP (Enterprise Resource Planning)
SCP (Supply Chain Planning)

Quality assurance

Inventory management

Example of head office system map following ERP/SCP system introduction

IDEC Report 2023

Procurement
management

Suppliers

We believe that taking actions toward sustainability,
particularly measures for addressing climate change, isan integral part of fulfilling our social responsibilities asa global corporate group. Accordingly, we have defined“response to climate change” as our third material issue.
Also, we have set sustainability KPIs necessary for attaining
our vision for 2030, and are implementing an action plan
for achieving those targets.
How we address climate change in our vision for 2030
 ontribute to the reduction of the environmental impact ofCcustomers and society through our technologies and products.
 educe CO 2 emissions, including by utilizing renewableRenergy at our sites.

In my role as Senior Executive Officer in charge of
R&D & Environment, I constantly think about how we, asa manufacturer, can effectively balance both our pursuit ofdevelopment and our response to environmental issues.
P.45
This report’s section on natural capitalpresents
our thinking and initiatives concerning environmental
management, risk/opportunity analysis, transition
opportunities, and the like.
I will strive to spread our Group’s awareness ofenvironmental action as not only a risk-related factor withsignificant implications for our business continuation, butalso an area of business opportunity with great potential
for us as a manufacturer.
Medium-Term Management Plan

Data

SFA

Further strengthening our environmental
initiatives while pursuing development oftechnologies and new products

GovernanceMA

We are seeking to strengthen our business foundation byaccelerating DX initiatives across our Group that can realize
greater operational efficiency and leaner management. The
ERP and SCP systems that we are now introducing globally
are interlinkable with various existing systems, and thus will
enable integrated management of marketing, sales, order
handling, production planning, procurement, inventory, andother functions. This project is starting with the head office andwill be phased in globally with completion in FY2025, the final
year of the current medium-term management plan.
At the same time, we are carrying out Group-wide work
process reforms, as well as workstyle reforms—such as
introduction of discretionary work and flextime systems while
making effective use of existing systems—in an effort to realize
flexible work arrangements and improve employee engagement.

Tomonori
NishikiFoundation For Value
Creation

Customers&
distributors

Enhancing operational efficiency
through DX

Senior Executive Officer
in charge of R&D& Environment

Business Strategy

We are realigning our global network of manufacturing, sales,and distribution sites as part of our efforts to improve profitability,
a major focus of our medium-term management plan. We took
action to shrink fixed costs by consolidating our nationwide
network of sales offices in Japan into two locations, one inTokyo and one in Osaka, in FY2022—an action spurred by the
COVID-19 pandemic—and by carrying out realignments andstructural reforms at our overseas manufacturing/distribution
sites and supply chains.
Moreover, we globally raised our product prices to reflect theincreased costs of raw materials, and lowered our cost ratio by
optimizing our selling prices and restructuring our product mix toincrease the share of new products offering greater profitability.
As a result, we raised our FY2023 gross profit margin to 44.6%
and operating income margin to 16.8%, enabling us to reach two
key targets of the medium-term management plan in its first year.
Our sales-related initiatives have included launching the
Solution Business Promotion Department, recruiting and training
talent from within and outside the Group to lead the expansion of
our business in providing solutions for customer challenges, andstrengthening our sales organization through the collaboration ofrelated departments. For our component sales, we are leveraging
our established sales networks to further grow sales, while atthe same time stepping up the formation of new networks ineach region that realign our distributor relationships to focus on
distributors eager to sell IDEC products.
In FY2024, we will implement structural reforms to build thefoundation for globally expanding our businesses and increasing
earnings. In particular, we will pursue production reforms aimed atstrengthening our global competitiveness. We will also separate
our procurement and supply chain management functions into
an independent organization to enable objectively optimized
procurement, with the aim of lowering costs and building optimal
supply chains across our Group. We are also working to radicallyoverhaul our production systems and processes to achieve
quality and cost improvements.

Value Creation Story

Building the foundation forhigh profitability

23

Introduction

Medium-Term Management Plan
Enhance ESG initiatives

Introduced new personnel systems

Strengtheningof management

360° assessment of executive personnel
Develop talent for directors and executive
officer candidates
Conduct career development training

Invigorationof communication

 nhance information disseminationE
toward “One IDEC”

Workstyle reform romote working from homeP
Increase work efficiency through digitaltransformation

Promotion of diversity
and inclusion

 onduct career training for women on theCmain career track
Actively recruit global talent

24%

Reduction in industrial wastes

24%

Cumulative ratio of
enhanced eco-friendly products
to total new products

60% or higher

Renewable energy
utilization ratio

18%* vs. FY2020 (excluding renewable energy utilization ratio)

IDEC’s originalenvironmental label (eco-mark)

LED lighting “LF3D” series,
an enhanced eco-friendly product

IssuesMajor initiatives to be taken from FY2024 and beyond

Improve humanresource
development
systemsImprove personnel training through managerial
training, career design training, etc.
Implement a career design program
Prepare to introduce a global talentmanagement system

Invigorationof communication

 urther enhance information dissemination toFachieve “One IDEC”
Ensure full awareness and compliance withregard to the medium-term management plan,
corporate policies, etc.

Promote workstyletransformationand improve
benefit programs hase back in benefit management services
PIntroduce flexible workstyles (discretionary workand flex-time) and promote working from home

Improve thework climateImplement an action plan to resolve workplaceissues in each department

Promotion of diversity
and inclusionImplement policies to support families raisingchildrenMedium-Term Management Plan

Data

IDEC Report 2023

Strengtheningof human resource
management systems

Major initiatives taken in FY2023

Reduction in CO2 emissions

GovernanceIn 2019, IDEC conducted its first employee engagement survey,
and in 2022 conducted a second survey. Five issues from theresults of the 2019 survey were selected, and we are currently
promoting activities to resolve those issues. In the 2022 survey,
the scores for the major metrics “Total Employer Attractiveness”
and “Total Workplace Attractiveness” improved, and the scoresfor most of the other items improved as well.
IDEC also plans to tackle new issues indicated in the
results of the 2022 survey. Increased investment in humancapital and workstyle transformation are already included in
the sustainability KPIs, so we plan to improve human resource
development systems and promote workstyle transformationand so on to boost engagement further and strengthen thebusiness foundation.

IssuesSustainability KPIs (FY2025)

Foundation For Value
Creation

Increase investment in human capital,
promote workstyle transformation andso on to increase engagement andstrengthen the business foundation

are certified as “enhanced eco-friendly products”, and ouroriginal eco-mark is stamped on them, compliant with ISO/JIS
Q 14021 (Type II).
Moreover, in manufacturing and logistics processes as well,
we are working to reduce environmental impact—such as byusing bubble wrap with film containing 25% or more biomass
plastics as product packaging materials—and are proceedingwith management practices that emphasize environmental
issues.
Since FY2023, we have introduced internal carbon pricing(ICP) as a framework to promote environmentally conscious
investment. Converting CO 2 reduction amounts into money
promotes the use in investment decisions of the improved returnon investment achieved through the adoption of ICP.

Business Strategy

IDEC has formulated a new vision for 2050 to “realize a safer andmore sustainable world that brings happiness and ANSHIN to all
people.” To achieve the objective, the medium-term management
plan focuses on strengthening ESG activities, and it also
promotes reducing environmental impact to attain the interim
goal of accomplishing the sustainability KPIs related to climatechange, with the goal of achieving carbon neutrality in 2050.
As part of these initiatives, we are promoting the effective
use of limited resources, based on the concept of a “circular
economy.” At the stage of designing and developing products,
we are working to reduce the number of parts and productweight, a quantify use of recycled plastics, and so on. In addition,
we phased the eco-friendly degree of new products based on
our own standards. New products that meet those standards

Value Creation Story

Promote reduction of environmental
impact to achieve carbon neutrality

24