Chairman Shin Dong-bin Visits 'Smart Factory' "Digital Transformation Accelerated by COVID-19"

[Asia Economy Reporter Lim Hye-seon] Shin Dong-bin, Chairman of Lotte Group, is drawing attention by embarking on on-site management efforts to innovate business through digital transformation to overcome the crisis in offline retail. After the rapid changes in the business environment following the COVID-19 pandemic and his call for countermeasures, Chairman Shin chose Lotte Chilsung Beverage’s "Smart Factory" as his first on-site management location, signaling an acceleration in Lotte Group’s digital transformation.

According to Lotte Holdings on the 4th, Chairman Shin visited the "Smart Factory" located in Anseong, Gyeonggi Province the day before. He stated, "Due to the impact of COVID-19, digital transformation is accelerating and its scope is expanding," adding, "Since the major systems of the Smart Factory were completed this year, we must respond quickly and appropriately in the post-COVID era." The "Smart Factory" refers to an intelligent production plant that utilizes digital new technologies throughout the entire process including demand, production, inventory, and distribution to improve factory productivity and quality.

Chairman Shin listened to explanations about the operation of the Anseong plant and the status of the Smart Factory construction from CEO Lee Young-gu of Lotte Chilsung Beverage and other executives, and toured the entire facility. The Anseong plant’s Smart Factory construction project is a representative innovation case of the digital transformation (DT) strategy that Lotte is promoting across the group. Lotte Group is accelerating its "digital transformation" encompassing manufacturing, logistics, and distribution, including Smart Factory construction, smart logistics, and smart retail. Since May last year, the "DT Strategy Office" established within Lotte Holdings has been acting as a control tower, and Lotte Information & Communication has created an AI Center and a Digital Transformation (DT) specialized center to develop various solutions to be applied to each Lotte Group affiliate.

Established in 2000, the Anseong plant is the largest among Lotte Chilsung’s six domestic plants (approximately 40,000 pyeong, 130,000㎡), producing Lotte Chilsung’s flagship products such as Chilsung Cider, carbonated drinks, juices, and coffee. Lotte has planned to invest about 122 billion KRW in the Anseong plant to build the Smart Factory and has been promoting this since the second half of 2018.

Lotte plans to transform the Anseong plant into a future-oriented beverage factory through a digital transformation strategy based on facility automation, big data, and artificial intelligence (AI). At the Anseong plant, a system has been established that transmits data such as the status and production volume of input, filling, packaging, and stacking equipment for each production line to a central server, enabling comprehensive real-time monitoring. Additionally, based on the accumulated data, a manufacturing execution management system has been created that allows integrated management of key indicators related to production, quality, and equipment at a glance, as well as real-time manufacturing history tracking. The work processes from demand forecasting, inventory operation, to production planning have also been automated, enabling rapid and flexible responses to variables.

All data within the Anseong plant can be comprehensively monitored at the Integrated Control Center (ICC). Chairman Shin also checked the production process and status of the entire line in real time at the ICC on this day and toured the internal facilities of the plant. Chairman Shin, who has always shown great interest in Smart Factories, carefully checked the effects of the Smart Factory construction.

Chairman Shin explained, "In the post-COVID era, food safety will become a more important issue than ever," adding, "Since the Smart Factory enables manufacturing history tracking from raw materials to product production, it can contribute to public safety through a food safety response system."

This year, Lotte plans to expand the application of the above system to newly added lines at the Anseong plant, while utilizing prediction models based on big data to minimize unexpected situations and flexibly respond to changes in the production environment to improve product productivity and quality. In the long term, Lotte aims to achieve logistics automation by establishing automated storage, picking, and loading systems in the product warehouse of the Anseong plant and to expand Smart Factory construction to other domestic plants.