Cemat Silicon, which manufactures silicon wafers for the production of electronic components, implemented Microsoft Dynamics AX for better control of costs and improvement of production, logistics, and sales processes. The ERP solution integrates with their legacy manufacturing systems to enable the company to control production processes, accurately predict production costs and schedules, and analyze business performance. Microsoft Dynamics AX also helps Cemat gain complete control over logistics and procurement processes and optimize the use of existing inventory.
Cemat Silicon S.A. has several years of experience in manufacturing materials for electronic subassemblies. It is an established conglomerate supplying semiconductor materials to various manufacturers located in the area of the former Eastern Bloc countries. Cemat is owned by Danish investors Topsil Semiconductors and employs a team of 300, including 36 engineers.
|The system ensures production viability. The ability to correctly determine our costs for various orders guarantees that we will not add to production costs, but make a profit.|
| Abdelmottaleb Doulan|
Using the Czochralski method, the Warsaw-based company manufactures silicon wafers for small and medium-sized enterprises. It manufactures 500 to 20,000 wafers per month, depending on the volume of orders received. Each order is different. Placed mainly by foreign companies – such as General Electric, Mitsubishi and Toshiba – the orders must be completed in accordance with detailed specifications submitted by the customer. The diversity of orders means that the manufacturing process for each batch is associated with changing costs. Cemat Silicon was looking for a solution to provide control of the entire process – from the placement of an order through manufacturing and quality control to the final settlement of costs with the customer.
The company’s priority is to guarantee customer satisfaction and to offer top-quality products. Because it is focused on long-term cooperation with its customers, it continuously introduces improvements in its manufacturing processes, and its ISO 9001:2000 and ISO 14001:2004 certificates are a confirmation of the product’s outstanding quality and highest standards of manufacturing.
Cemat Silicon manufactures more than one thousand product versions. The wafers vary in diameter and in the applied manufacturing process techniques. Both these factors have a significant impact on production costs and profit margins.
The most significant problem before the implementation of the solution was to assess production costs for various product batches. Cemat Silicon used specialized software, however, various applications covered only a limited range of the company’s activities and were not integrated with each other. In effect, the company was not able to effectively use the data it possessed, manage production in an optimal manner, or control the current status of various orders.
These difficulties also negatively affected the company’s ability to control costs and its financial liquidity. Because it lacked insight into production costs, the company would at times accept orders that not only were unprofitable but required the contribution of additional funds. This situation led to Cemat Silicon’s decision to implement a system that would support its operations in a comprehensive manner.
Before the implementation of the solution, Cemat Silicon had a modest information infrastructure. It used an accounting program called Fiks to manage general ledger and fixed assets, in addition to other non-integrated applications that supported other areas of its business activities. Because the applications were not linked, data resided in various places and was quite difficult to view. Moreover, there was no software support for the management staff; thus, management decisions were often based on intuition rather than hard data.
As a result, Cemat Silicon decided to implement Microsoft Dynamics AX, with help from Microsoft Dynamics Certified Partner, Columbus Poland. The first step was to create a detailed analysis of the company’s needs. The expert implementation team identified bottlenecks that limited the effectiveness of operations and acquainted themselves with current and planned business processes in order to map them in a system, thus ensuring precise support for particular areas of the company’s business activities.
How Does It Work?
Microsoft Dynamics AX is an integrated system supporting key areas of the company’s operations, such as manufacturing, sales, finance, logistics, and warehouse administration. It enables the free transfer of data between particular modules and allows for control of all aspects of the company status in real time.
Better Cost Control
The lack of connections between various applications used by the company had led to large error margins in cost control and was associated with high financial risks. Cemat Silicon deals with high fixed costs, such as wages, rental fees, and electric energy bills; therefore, it has to be aware of its current financial condition at all times.
With Microsoft Dynamics AX, the company’s management board now has a better view of the company finances. With the valuable knowledge they have gained, management can plan the company strategies as well as identify the contracts that are worth renegotiating. All the benefits achieved by using the Microsoft Dynamics AX platform assist in maintaining the company’s financial liquidity.
”The system ensures production viability. The ability to correctly determine our costs for various orders guarantees that we will not add to production costs, but make a profit,” says Abdelmottaleb Doulan, Managing Director/CEO, Cemat Silicon S.A.
It is also important to mention that the bilingual interface in Microsoft Dynamics AX allows the parent company of Cemat Silicon, Topsil Company, to view any data, for example the data pertaining to the progress of various orders or the warehouse inventories at any place or time.
Correct Evaluation of Manufacturing Costs
Microsoft Dynamics AX also enables better control of variable costs and better analysis of order profitability. Accessible system tools led to a calculation proving that the company completed as much as 10 percent of orders below production costs.
The new system makes it possible to evaluate manufacturing costs and completion times to fulfill various orders more accurately. Manufacturing silicon wafers in accordance with various specifications, using different techniques, takes varying manufacturing lead times. All these impact the final cost of the order. The calculation of these costs before the implementation of the Microsoft Dynamics AX system were encumbered with considerable errors; therefore, the company incurred losses. Cemat Silicon can now forecast the value of each order far more precisely.
Integration with the SIMACS Application
Cemat integrated its Microsoft Dynamics AX solution with SIMACS, a specialized manufacturing application, which enables them to inventory production materials as well as finished goods. Integration between SIMACS and Microsoft Dynamics AX provides greater clarity into the production processes and better control of the entire company’s business activities.
Because the wafers manufactured by Cemat Silicon are delivered mainly to foreign customers, including Japan and the U.S., the supply chain process must be worked out to perfection.
All the tools that support logistics, warehouse operations, and deliveries included in the system allow those areas to be managed in more efficient and standardized ways, ensuring the company’s continuous and smooth operation. A significant number of company assets are frozen in the form of inventory; therefore, the efficient management of those assets affects the financial liquidity of the company. The Microsoft Dynamics AX application enables full control over the logistics of the manufacturing processes. The system also allows for fast responses to changes in the prices of raw materials and – depending on their levels – helps determine product pricing, which is a key factor in the company’s profitability.
The main function performed by Microsoft Dynamics AX is control of the company’s finances. The platform integrates data coming from various departments, while advanced reporting tools allow raw data to be transferred into recommendations for further actions, thus ensuring the company’s financial success.
Implementation of Microsoft Dynamics AX brought some other notable benefits to Cemat Silicon, namely:
More effective management of production due to integration with the SIMACS application.
Collection of all data in one place, which enabled better control of all areas of the company’s business activities.
Production cost evaluation, thus allowing for a correct assessment of order value and the achievement of higher profits.
Better cost control and prevention of financial losses.
Full control over logistics and supply operations, in addition to optimal utilization of material reserves.
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