Unifying enterprise management
12 September 2013
Karen McCandless explores how Dynamics AX is enabling Xiamen Tungsten Group to improve efficiency as it undergoes rapid growth
Headquartered in China with a workforce of more than 10,000 and turnover of ten billion Chinese Yuan, Xiamen Tungsten Company Group boasts the world’s largest tungsten smelting capacity. The company is China’s leading exporter of carbide, molybdenum, and tungsten products, including batteries; wire and plate; powders; and refined materials used by other manufacturers.
With the global market for its products growing – and bolstered by China’s economic development support for the manufacturing sector – the group has extended its operations to the entire industrial supply chain, from mining and refining rare metals and rareearth elements, to manufacturing, import and export of finished products, and research and development in magnetics, luminescence, and energy production and storage. “We are increasing the depth and breadth of product coverage,” says Wu Gaochao, vice president of Xiamen Tungsten.
Given the enormous range of businesses under its corporate umbrella; the rapid growth of individual subsidiaries; and the geographic sprawl of its growing operations, Xiamen Group needed to ensure efficient flow of information up and down the supply chain. Company leaders sought credible data to guide decision-making for both the company's internal management and external marketing strategies. “As an organisation, we needed to unify our systems and processes, as we have grown rapidly from a company of 100 to more than 10,000, with operations spanning 18 countries,” says Wu.
Xiamen companies had implemented a variety of ERP and MRP systems, both offthe- shelf and custom developed, to meet their individual needs and operating models. The mix of systems resulted in variation in both the quality and format of business data reported from the subsidiaries to the group headquarters, hindering management’s ability to make effective decisions at group level. The disparity of IT system platforms also made it difficult to provide cost-effective technical support and systems maintenance to its subsidiaries.
“We had no central system to share resources across the entire group in areas like financial, fund and budget management,” says Xu Huoyao, finance director at Xiamen Tungsten Group. “Our process for collecting data was quite basic and we had no way to manage operational risk.” Anticipating further development and expansion, company leaders sought a way to effectively unify management of the individual companies to support group-level strategy and decision-making.
The group conducted a comprehensive review of ERP and MRP systems in use by its companies, as well as commercially available software. It ultimately decided on Microsoft Dynamics AX 2012 R2, an earlier version of which had been in use at Xiamen Group subsidiary, Xiamen Golden Heron, since 2006. The company’s success with the solution served as a proof of concept and successful test of the system.
In an effort to achieve business integration under the unified management of the manufacturer, the group deployed Dynamics AX as an enterprise-wide platform for work process control, consolidating manufacturing functions, such as procurement, logistics, quality control and production management, as well as financial functions including cost, accounting and budget controls on a single enterprise-wide ERP. “Dynamics AX covers all production and operation management processes, from sales management to quality management to financial system functions and overall information management,” says Xu.
In our quality control and production management system, Microsoft technology has brought revolutionary change
Xiamen Tungsten By implementing a single, comprehensive ERP and master data strategy across the entire enterprise and all subsidiaries, Xiamen Group has standardised management and unified its many subsidiary businesses. Standardising on Dynamics AX 2012 provides company leaders with visibility into the entire supply chain, delivering a reliable source of data for more strategic decision-making that will enhance the competitiveness of the enterprise. Unifying operations on a single, centrally managed ERP platform has provided Xiamen Tungsten with precise control of its expansive operations, at both the company and group level.
“A unified ERP solution meets the needs of our subsidiary companies across the discrete and process manufacturing industry,” says Hong Chao, vice president of Xiamen Tungsten Group.
Xiamen Group has consolidated product data, making standard definitions and custom product categories for the entire range available to all subsidiaries. This has enabled a comprehensive, integrated approach to quality assurance across the entire operation. Procurement, inventory, manufacturing, process control, quality management and sales are now highly integrated. The system enables tracking and reporting of quality controls and inspections throughout the manufacturing lifecycle. Process controls have improved the rate of the manufacturing process and reduced customer complaints about reported errors. When errors do occur, quality management controls enable inspectors to trace raw ingredients through the entire manufacturing process, according to batch or serial number, and correct deficiencies. “In our quality control and production management system, Microsoft technology has brought revolutionary change,” says Wu.
The organisation can now consolidate procurement across the enterprise, enabling more effective inter-company purchasing and sharing of resources. The manufacturer is able to set flexible procurement policies according to the operational characteristics of each subsidiary. Centralised procurement allows it to improve purchasing power by combining requests from multiple sources. Subsidiaries that prefer to exercise independent purchasing can still refer to the central data store to compare purchase prices for commodities, increasing their bargaining power with suppliers.
Dynamics AX 2012 manages raw materials inventory, automatically identifies the ingredients necessary for a batch or process based on product definition, quality requirements and customer specifications, and feeds manufacturers using serial numbers and shipping systems. Xiamen Group uses barcode scanning to manage the entire product lifecycle, tracking products from raw material storage, to production, to semifinished production process management, to production of finished products. The barcode library has greatly improved the efficiency of field operations, and the accuracy and validity of product traceability. Custom labels and documents are printed according to customers’ product certification and labelling requirements, improving efficiency and reducing the opportunity for errors.
Dynamics AX 2012 has enabled Xiamen Group to standardise financial management processes such as travel and expense management, reconciliation of sales and receivables, and cost management. The system also streamlines procurement by allowing advance payments and purchases and ensuring the timeliness and accuracy of accounts by matching invoice costs, distribution, processing and tracking of purchase orders. Harmonisation of evaluation and control of the budgets for individual subsidiaries has greatly improved the efficiency of budget preparation and approval at group level.
“Dynamics AX 2012 is a very good fit for our group,” says Hong. “Its features are suitable for all the companies across the organisation. It also has a lot of useful features integrated into the one solution, like the global geology library and control mode. The solution has increased the velocity of both business and manufacturing processes, improving overall business efficiency.”
“Our customers are reaching out to us for help in simplifying their legacy systems architecture that has grown up over the years, creating complexity in manufacturing and supply chain processes,” concludes Melissa Cook, Dynamics Global Manufacturing Industry senior director. “With that complexity comes high costs and the inability to quickly react to new opportunities or risks. The economy and manufacturing industry is predictably unpredictable right now. Customers are really embracing the ability for Microsoft Dynamics to adapt to whatever business problems they are faced with, be it an increase or decrease in demand, a change in manufacturing modes, the need to move into emerging markets, or the need to integrate information to better see future product opportunities.”
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