Xiamen Tungsten Group unifies enterprise management with Microsoft Dynamics AX

After years of business development, Xiamen Tungsten Group has grown into the world’s largest tungsten refinery and manufacturer of materials that end up in comsumer products, such as light bulbs and batteries that people use every day. The company has extended operations to the entire industrial supply chain, including mining, metal smelting, and powder metallurgy. Mining and refining operations now include rare-earth materials used in everyday products such as batteries for hybrid automobiles, which support a more economical, environmentally friendly way of life. Xiamen has also expanded into precision machining and even luxury real estate ventures.

By 2012, Xiamen Tungsten Group had integrated multiple forms of production, including flow manufacturing, discrete manufacturing, and lean manufacturing, as well as multiple business forms, selling its products in the domestic market and importing and exporting finished products across many sectors, with branches and subsidiaries distributed across China.

Background and Challenges
Given the enormous range of businesses and products under its corporate umbrella, the rapid growth of individual subsidiaries, and the geographic sprawl of its growing operations, Xiamen Group was challenged to ensure efficient flow of information up and down the supply chain.

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*A unified ERP solution serves Xiamen Tungsten Group's financial management and controls. But more importantly, it meets needs of our many subsidiary companies across the entire discrete and process manufacturing industry.*

Hong Chao'e
Vice President
Xiamen Tungsten Group

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Xiamen Tungsten Group companies had implemented a variety of ERP and MRP systems, both off-the-shelf and custom developed, to meet their individual needs and operating models. As early as 2006, Xiamen Golden Egret Special Alloy Co. Ltd. (GESAC), a subsidiary of Xiamen Tungsten Group, had deployed Microsoft Dynamics AX as its core ERP system. After six years, Microsoft Dynamics significantly improved GESACs management purchasing, sales and inventory, fixed assets, quality control, production management, and finance-business integration.
 
However, the mix of ERP systems across the entire Group resulted in variation in both the quality and format of business data reported from the subsidiaries to the Group headquarters, hindering the ability of management to effectively control and leverage data from subsidiaries to make effective decisions at the Group level. Furthermore, the disparity of IT system platforms also resulted in high maintenance costs and low efficiency.
 
To support further development and business expansion, company leadership sought to effectively unify management of the individual companies at the Group level. To this end, the Group conducted a comprehensive review of ERP and MRP systems in use by its companies, as well as commercially available software. The company ultimately decided to expand deployment of Microsoft Dynamics AX based on the previous success in GESAC, as well as the ability of Microsoft Dynamics AX to support various business models, scalability, fast deployment, and seamless integration with other Microsoft technologies.

In an effort to achieve business integration under the unified management of the Group, Xiamen Tungsten deployed Microsoft Dynamics AX as an enterprise-wide platform for work process control, consolidating manufacturing functions (such as procurement, logistics, and quality control) and production management, as well as financial functions including cost accounting and budget controls.

Solution
By implementing a single, comprehensive ERP and master data strategy across the entire enterprise and all subsidiaries, Xiamen Tungsten Group has standardized management and unified its many subsidiary businesses. The solution enables sharing of company data up and down the supply chain and facilitates aggregate reporting and analysis of manufacturing and financial performance across all subsidiaries. Integration with business intelligence systems supports faster, more informed decision-making by managers at all levels of the organization.

"A unified ERP solution serves Xiamen Tungsten Group's financial management and controls,” says Hong Chao’e, Vice President of Xiamen Tungsten Group. “But more importantly, it meets the needs of our many subsidiary companies across the entire discrete and process manufacturing industry.”

Consistent Data on All Products
Xiamen Group has consolidated product data for its full range of products in Microsoft Dynamics AX, making standard definitions and custom product categories for the entire range available to all subsidiaries. The system maintains a common data set and enables standardized reporting, while allowing the flexibility for subsidiaries to configure product definitions according to their own production processes and management processes.

Centralized Procurement
The solution has enabled Xiamen Group to consolidate procurement across the enterprise, leading to efficiencies and enabling more effective intercompany purchasing and sharing of resources. Microsoft Dynamics AX enables the Group to set flexible procurement policies according to the operational characteristics of the different subsidiaries. Centralized procurement allows the Group to improve purchasing power by combining purchase 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.

Highly Efficient Logistics and Inventory Management
Microsoft Dynamics AX also manages raw materials inventory; automatically identifies the ingredients necessary for a batch or process based on product definition, quality requirements, and customer specifications; and uses serial numbers and shipping systems to manage the entire manufacturing and shipping process.

Xiamen Group products
Xiamen Group products
Xiamen Group uses barcode scanning to manage their products end-to-end, tracking products from raw material storage, to production, to semi-finished production process management, to production of finished products. The barcode library within Microsoft Dynamics AX has greatly improved the efficiency of field operations and the accuracy and validity of product traceability, while helping to ensure timely delivery of products.

GESAC’s on-time delivery rate has improved drastically since before the system was deployed, from 50% in 2006, to 85% in 2007, to 85–90% today. Moreover, Microsoft Dynamics AX, coupled with Microsoft Office, provides for the customization of Word templates according to customers’ product certification and labeling requirements, thus improving efficiency and reducing errors in labeling and packaging.

Commercial Benefits
Unifying operations on a single, centrally managed ERP platform has provided Xiamen Tungsten Group with precise control of its expansive operations, at both the company and group levels. Standardizing on Microsoft Dynamics AX provides company leaders with visibility into the entire supply chain, ensuring completeness, accuracy and timeliness of information flow throughout the enterprise. This has not only addressed many business and management issues in various departments of the Group, but has provided a reliable source of data for more strategic decision-making that will enhance the competitiveness of the enterprise.

Improved Product Quality
Microsoft Dynamics AX has provided the Xiamen Group with a comprehensive, integrated approach to quality assurance across the entire operation. Procurement, inventory, manufacturing, process control, quality management, and sales can be highly integrated with the quality control system. The system enables tracking and reporting on quality controls and inspections throughout the manufacturing lifecycle, including support for IQC, PQC, FQC, and OQC.

Increased Customer Satisfaction
Unified product data management enables the use of a unified product data structure for product data information across the entire enterprise, enhancing data management standards. The system manages data using barcodes, resulting in the improvement of field operational efficiency and enabling system data recording. It leverages system data to run screening of batch and serial number properties, which has reduced the error rate in the manufacturing process and customer complaints. It also enables the acquisition of quality tracking information across the supply chain via batch number and serial number, which has improved quality recording and tracking and thereby enhanced the accuracy of quality management.

Reduced Cost and Financial Risk
Microsoft Dynamics AX has enabled Xiamen Group to standardize financial management processes across all subsidiaries. Processes such as travel and expense management, reconciliation of sales and receivables, and cost management have been standardized under the central system and roll-up easily for enterprise reporting and analysis.

Through integration of financial and business management, the system has greatly enhanced the timeliness and accuracy of financial statements at the Group level. This enables all subsidiary companies to submit their monthly statements to the Group before the fourth day of each month, so that the Group can complete consolidation of monthly statements on the fifth day of each month, which is three to five days earlier than the process before deploying the system. Furthermore, the financial data is based on the business data of the entire system, thus ensuring the completeness and accuracy of the report.
Meanwhile, the procurement management based on the system has significantly improved the ability of the Group to control purchasing and procurement globally, and provided comprehensive data for the Group to negotiate with suppliers, which has led to significant cost savings and enabled subsidiaries to negotiate more effectively with suppliers and vendors. The system has enabled flexible settlement for ores, streamlined financial reconciliation, and reduced errors due to manual computing, thus reducing errors in reconciliation at the end of each month.

Next Steps

This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.
Document published September 2013

Customer Size: Large Organization
Industry: Life Sciences, Chemicals; Oil & Gas, Mining
Country or Region: China
Solutions:
  • Microsoft Dynamics AX 2012
  • Microsoft Dynamics AX 2012 R2
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