"The Company Underwent a Complete Transformation"... Partnering with Samsung Ended the 'Nomadic Era' [AI Autonomous Manufacturing, Opening the Future]

A time when even one vehicle a day was out of reach...
Shift to a flow production system
Adoption rate at 18.6%...
For most SMEs, still out of reach
Expanding the base is advancement itself...
University-industry collaboration is also key

"It was a complete transformation. We have become an entirely different company."

On June 12, at Hanseojeonggong's production site in Cheonan, Suhan Kim, Chief Operating Officer (COO), made this remark to a reporter observing the production facilities. In recent years, Hanseojeonggong has completely overhauled its production system into a fully smart manufacturing model. Work instructions are now delivered in real time through an advanced Manufacturing Execution System (MES), and the assembly process has been reorganized to mimic a conveyor belt system. The company has also implemented a "kitting" method, arranging materials by assembly line. Most production-related work information, such as the status of each process stage, is shared in real time via monitors.

Hanseojeonggong workers are inspecting vehicles produced through the MES (Manufacturing Execution System) and flow production process line developed in collaboration with Samsung Electronics. Cheonan - Photo by Yoon Dongju

A time when even one vehicle a day was out of reach... Shift to a flow production system

As recently as 2022, Hanseojeonggong's production method was what could be described as the "nomadic" model. Employees would follow the vehicles being assembled, and materials had to be located one by one. This resulted in serious delays, material confusion, and imbalances between processes. At that time, the average daily production of special vehicles was only 0.9 units, with annual sales at 35.2 billion KRW and operating profit at just 700 million KRW. Both productivity and delivery responsiveness were hitting their limits, as the company could not even produce one vehicle per day.

The turning point came with the "Large, Medium, and Small Win-Win Smart Factory Support Project," jointly promoted by the Ministry of SMEs and Startups and Samsung Electronics. With financial assistance and mentoring from Samsung Electronics, the company began building a customized smart factory in 2023. According to COO Kim, up to 20 Samsung mentors were stationed on-site at a time, providing intensive support for three months. As a result, the previously nomadic production system was transformed into a "flow-oriented smart production system."

The results have been remarkable. Average daily production increased by about 50%, and manufacturing time was reduced by approximately 36%. Inventory management accuracy improved by as much as 104%. Thanks to these changes, Hanseojeonggong's sales last year rose to 43.6 billion KRW, and operating profit doubled to 1.4 billion KRW. The number of employees also grew from 70 to 80, significantly improving employment. Depending on the level of ICT utilization, smart factories are divided into four stages: basic, intermediate 1 and 2, and advanced. Hanseojeonggong's smart factory is currently at the "intermediate stage 2" level.

Suhan Kim, Chief Operating Officer (COO) of Hanseojungong, is explaining the flow-oriented production method established through advanced manufacturing site operations in collaboration with Samsung Electronics. Cheonan - Photo by Dongju Yoon

What is especially noteworthy is that Hanseojeonggong has systematized Samsung's know-how into manuals, turning it into intellectual property. The new production methods applied to special vehicles have now been expanded to the entire product lineup, including fire trucks and agricultural machinery. Recently, the company has begun further upgrading its facilities by introducing artificial intelligence (AI). In this way, Hanseojeonggong is gradually moving closer to the autonomous manufacturing systems considered "the future of manufacturing."

Adoption rate at 18.6%... For most SMEs, still out of reach

Hanseojeonggong's transformation is widely recognized both inside and outside the industry as a representative success story achieved through a combination of government policy support and large company technology assistance. However, the problem is that such cases remain rare. For most small and medium-sized enterprises, building a smart factory and transitioning to autonomous manufacturing systems is still a distant dream. According to the "First Smart Manufacturing Innovation Status Survey" by the Ministry of SMEs and Startups in April, only 18.6% of the approximately 160,000 small and medium-sized manufacturing companies with factories in Korea had adopted smart factories. In other words, fewer than 2 out of every 10 companies have made the transition.

The awareness of the need to introduce smart factories is not low. According to a 2021 Korea Development Institute (KDI) survey on SME perceptions of smart factories, 36.6% of SMEs agreed on the need to transition to smart factories. "Neutral" responses accounted for 42.8%, while only 20.6% disagreed. The expected benefits are also clearly recognized: increased production volume (68.0%), improved operating rates (68.8%), and reduced defect rates (61.0%).

Nevertheless, the biggest reason companies hesitate to adopt smart factories is the "burden of conversion costs." According to the Ministry of SMEs and Startups, building a smart factory costs an average of 1.13 billion KRW, and even for SMEs, the cost is 750 million KRW. However, government support is limited to 50 million KRW for the basic stage and up to 200 million KRW for intermediate stage 1 or higher.

Recently, the Ministry of SMEs and Startups shifted its smart factory policy focus from "quantitative expansion" to "qualitative advancement." This is because the quantitative target of 30,000 smart factories has already been achieved through projects such as the win-win initiative among large, medium, and small companies. As a result, financial support for the basic adoption of smart factories has somewhat diminished. If advancement does not occur, the overall competitiveness of the manufacturing sector will inevitably weaken. The longer the transition to autonomous manufacturing systems capable of AI-based analysis, prediction, and real-time control is delayed, the greater the risk of falling behind in the global supply chain competition.

Expanding the base is advancement itself... University-industry collaboration is also key

From this perspective, while the government's judgment has some basis, some experts argue that it is even more urgent to focus on expanding the quantitative base and building a foundational ecosystem for long-term autonomous manufacturing. They emphasize that strengthening the basic capabilities necessary to drive industry-wide autonomous manufacturing remains crucial over the long term.

Jeongsoo Park, Professor at Sungkyunkwan University's Department of Smart Factory Convergence, said, "It seems the government's policy is to raise the average level of the 30,000 smart factories," adding, "The problem is that the government keeps trying to pick out star players." He emphasized, "What we need now is not 30,000, but 300,000 basic smart factories."

Oh Youngjoo, Minister of SMEs and Startups, is delivering a greeting at the "Large, Medium, and Small Win-Win Smart Factory Win-Win Agreement Ceremony" held at the Korea Federation of SMEs in Yeongdeungpo-gu, Seoul, in March last year. Photo by Yonhap News

Above all, Professor Park argues that SMEs should be allowed to "experience" smart factories at the basic level, even through win-win projects. Once companies gain experience, they will recognize the need for change themselves, which can then lead to further advancement.

Professor Park added, "Among companies that have experienced the basic stage, some will have strong enough fundamentals to advance without government help. That is entrepreneurial spirit and true autonomous manufacturing." He explained that expanding the basic foundation leads to self-sustaining innovation.

Suyoung Kim, Professor at Hoseo University's Department of AI Smart Factory Convergence Engineering, also expressed concern about the rapid shift toward advanced smart factory policies, saying, "It feels like we're trying to fly before we can even walk." He continued, "Advancement is meaningless without properly establishing the analog-digital convergence foundation at the basic stage."

Both professors agreed on the need to improve university-industry-research collaboration systems. They explained that companies with experience in basic systems need to strengthen their capabilities through education, enabling them to understand and independently adopt necessary technologies. The professors suggested that if each regional university provides industry-academia-research education programs to companies, many of these difficulties could be significantly alleviated.