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KPMG Consulting and Hitachi Systems Collaborate on AI Policy Simulation in Utsunomiya

In a pioneering joint research initiative, KPMG Consulting, Hitachi Systems, and Utsunomiya City are employing the power of artificial intelligence to simulate policies aimed at sustainability. This collaboration, which will take place from April to December 2024, focuses on creating a framework to address the city’s challenges amid decreasing population and aging demographics.

Research Overview

The main objective of the study is to explore sustainable scenarios for Utsunomiya City as outlined in the "Sixth Utsunomiya City Comprehensive Plan." To tackle the pressing issues facing the city, researchers extracted 358 indicators from the city’s plans, utilizing data from the past decade. An impressive 20,000 AI simulations were then conducted to develop seven potential scenarios for the city’s future by the year 2050.

The simulations revealed that in order to realize the most improved scenario by 2050, the city needs to navigate four critical turning points. The study has shed light on which indicators should be prioritized to reach these pivotal moments, underscoring the importance of data-driven decision-making in local governance.

The Importance of Evidence-Based Policy Making (EBPM)

This research is underpinned by the principles of Evidence-Based Policy Making (EBPM), a concept gaining traction in Japan. Following the release of the "Final Summary of the Statistical Reform Promotion Council" by the Cabinet Office in 2017, there has been a push for EBPM to enhance policy efficacy. The significance of leveraging data and statistical rigor in local governance has been repeatedly emphasized in government directives, including the "Basic Policy on Economic and Fiscal Management and Reform."

AI-Driven Scenarios and Their Implications

The research focuses on two key themes: 1) The development of a compact city model based on networks, and 2) Strategies and timings for implementing important initiatives. This exhaustive approach allowed for the creation of a causal relationship model that outlines how various indicators influence one another. By using AI to analyze this model, the researchers could simulate different scenarios and identify critical turning points leading up to 2050.

Among the seven developed scenarios, one stood out as offering the best outcomes for the indicators by 2050, with key turning points identified in 2030, 2031, 2043, and 2044. By highlighting which policies to prioritize before each turning point, the research provides a roadmap for sustainable growth.

Roles of Each Partner

• - Utsunomiya City: Responsible for determining simulation objectives, selecting indicators, and future scenario considerations.
• - KPMG Consulting: Provided consulting services, statistical processing, workshop organization, coefficient establishment, and future vision analysis.
• - Hitachi Systems: Utilized advanced AI technologies developed by Hitachi to support statistical processing and data organization in collaboration with KPMG Consulting.

Future Direction

Utsunomiya City plans to leverage the findings from this collaborative study to advance EBPM initiatives. KPMG Consulting and Hitachi Systems are committed to supporting the municipalities in promoting EBPM and fostering regional revitalization. By rooting local policies in data and evidence, these organizations aim to contribute significantly to the realization of a sustainable and prosperous future for Utsunomiya City.

About Utsunomiya City

Often referred to as the 'Gyoza Capital' of Japan, Utsunomiya has a rich cultural and historical tapestry, thriving as a castle town in the shadow of the Futarasan Shrine. The city's unique cultural heritage, characterized by its distinctive 'Oya stone culture,' has earned it a spot among Japan's heritage sites. Located just 48 minutes from Tokyo via shinkansen, Utsunomiya boasts excellent transport links, making it a crucial hub for high-tech industries, particularly manufacturing.

Thanks to the recent opening of a new light rail line, Utsunomiya is embarking on the development of a 'networked compact city,' chosen as a 'SDGs Future City' by the national government. The city continually strives for improvement in various metrics, including child-rearing environments and fiscal health, ensuring a high quality of life for both current residents and future generations.

About KPMG Consulting

As a member firm of KPMG International, KPMG Consulting specializes in three primary areas: business transformation, technology transformation, and risk & compliance. With consultants possessing deep expertise in strategy formulation, organizational management, and governance, the firm serves a broad spectrum of industries including finance, manufacturing, healthcare, and public sectors.

About Hitachi Systems

Hitachi Systems excels at solving diverse business challenges across various industries, utilizing the expertise and know-how of their workforce in collaboration with partners within the Hitachi Group. Committed to sustainability and the UN's SDGs, Hitachi Systems strives to create solutions that foster a truly enriching society.