China Market Insider - Series "China's AI Factories" Part 5 How AI Factories Are Transforming the Manufacturing Industry: Example Haier

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The world's first water filter factory among the World Economic Forum's "lighthouse factories" was built by Haier. We introduce it to you.

No other company has as many factories that have been recognized as "lighthouse factories" by the World Economic Forum in Davos as Haier. The Chinese manufacturer of household appliances has just been included in this list for the 13th time.

Haier Strauss Science & Technology in Qingdao on the Yellow Sea, where the Group's headquarters are located, was included in the World Economic Forum's (WEF) list of "Global Lighthouse Factories" on January 15. It is a joint venture between Haier and the Israeli company Strauss Water and manufactures water filters for household use, among other things.

The justification from Davos explains why we are also including the plant here in our series of "AI factories": In order to increase productivity and improve the purity of the water treated by its appliances, Haier Strauss has used "AI algorithms and 32 digital technology solutions", writes the WEF jury.

"The Haier production facility in Qingdao comprehensively integrates artificial intelligence into all stages of the water treatment process," reports the Chinese science newspaper "Keji Ribao".

One of these process stages is the preparation of the filter cartridges. The engineers in Qingdao have trained AI models with millions of data sets to create dynamic temperature control curves for each material batch, achieving pore homogeneity in the micrometer range and ensuring that "every drop of water is pure", as the science journal writes.

In quality control, AI algorithms are combined with intelligent monitoring for leaks in water circuits in order to locate leaks "in the micrometre range" within seconds. This is very helpful for applications such as water for infants or hot/cold drinking water, they say.

Another AI application in this new lighthouse factory is the continuous training of an AI model that analyzes the water quality and usage behavior of various systems in real time and then provides predictions about the service life of the water filters.

The 32 digital technology solutions mentioned by the WEF in its presentation of the factory include SKU (Stock Keeping Unit) based demand forecasts generated with the help of machine learning.

For every filter cartridge or kitchen filter produced, AI is used to calculate how much will be needed in the near future and how much should be produced.

All these AI technologies, in combination with IoT solutions, have led to a 40 percent reduction in the error rate in Qingdao, a 72 percent reduction in quality assurance costs and a 53 percent reduction in average storage time, writes the WEF.

The inclusion of this 13th factory among the WEF's "Lighthouse Factories" puts Haier in joint first place with Schneider Electric on the list of the world's most frequently honored companies in this way, ahead of Unilever (12), Johnson & Johnson (10), Midea (9) and Siemens (7).

The rapid and diverse integration of AI at Haier is not only due to confidence in this new technology, but also to a general openness towards transformation processes. This is part of Haier's corporate DNA in Qingdao.

When company founder Zhang Ruimin saw the poor quality of the refrigerators produced by Haier in 1985, he distributed sledgehammers. The workers had to smash the appliances, which they had just built themselves, with their own hands. Some of them cried. A single fridge cost as much as two years' salary for a worker in China at the time. "But it was important to motivate them," Zhang Ruimin once told me during an interview in his office.

Zhang later saw the internet and IoT as a great opportunity to make production more customer-centric and modern. Haier's factories previously recognized by the WEF include the Haier Shanghai Connected Washing Machine Factory and a state-of-the-art refrigerator factory.

Haier is now demonstrating the same willingness to "smash" old processes and supplement or replace them with new technologies where necessary in its introduction of artificial intelligence. The company currently sees industrial AI as a great opportunity to further improve the quality of its products and productivity at its sites.

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