Founded in 2002, LOT Vacuum is a company that specializes in vacuum for semi-conductors and displays. After 10 years of steady growth in technology and reputation, LOT Vacuum embarked on the significant journey of revising its entire organization. LOT Vacuum underwent major innovation for IT as the company undertook BPR. AXI4CNS, a Microsoft Gold Certified Partner, oversaw LOT Vacuum’s most fundamental system issue, lack of business process integration. “The entire workflow—entering order information from sales, establishment of material requirements planning (MRP) and production planning by the materials and production departments, manufacture and sale of the product to the customer, and maintenance and support from the point of installation to the point of discarding—is seamlessly integrated with Microsoft Dynamics.”
-Park Jin-hong, Corporate Planning Team-
After 10 years of steady growth in technology and reputation, LOT Vacuum embarked on the significant journey of revising its entire organization. This organizational innovation was perceived as crucial in order for the company to enter a new chapter as it aims to go beyond the current annual sales of 100 billion won. LOT Vacuum’s innovation activities were undertaken in over 30 categories including management, manufacturing, and customer support. At the core of these activities lay the need for establishing advanced business processes through Business Process Reengineering (BPR) and re-implementing major systems such as ERP, the Pump Lifecycle Management System (PLMS), and the groupware used to apply processes organization-wide.
LOT Vacuum underwent major innovation for IT as the company undertook BPR. AXI4CNS, a Microsoft Gold Certified Partner, oversaw LOT Vacuum’s most fundamental system issue, lack of business process integration. LOT Vacuum adopted an ERP system back in 2004 along with its products lifecycle management system.
The ERP system introduced in 2004 was exclusively used for finance accounting. It had no relevance to manufacturing, sales, maintenance, or any other part of the company’s business. As a result, it was just not possible to integrate the PLMS and the ERP in any way. Another issue that AXI4CNS found was that some tasks were being duplicated across different departments. One example was the duplicated work between customer support and materials management. To resolve this organizational issue, it was decided that a new team would be created to oversee all tasks concerning manufacturing, costs, and deliveries. To tackle the separation of systems mentioned earlier, the ERP system and the PLMS needed to be re-implemented together. Solution
After spending 3 months identifying the core issues in BPR thoroughly, LOT Vacuum began its implementation without delay in late 2011. LOT Vacuum worked on the development of ERP and PLMS with the goal of consolidating the lifecycle management strategy for development, manufacturing, sales, and maintenance, which formed the core of the company’s competitiveness. The solutions used for implementing the two solutions were Microsoft Dynamics AX for ERP and Microsoft Dynamics CRM for PLMS. Park Jin-hong, the Head of the Corporate Planning Team at LOT Vacuum, said, "We benchmarked many companies’ solutions before working on our BPR system and we chose Microsoft. Microsoft Dynamics was a clear winner because of the seamless integration between ERP and CRM, working almost as one single system. This would be important for complying with global standards and strengthening our lifecycle-based product management."
Based on the new processes drawn up by the BPR consulting work, AXI4CNS began to develop a new architecture for the backbone systems by pairing the ERP system and the PLMS together. With this blueprint, AXI4CNS began implementing the ERP system and the PLMS over a period of four months. As integration was given top priority from the design stage, implementation of the ERP system and the PLMS went really smoothly. The finance accounting module was the only module used in the old ERP system. Contrastingly, the new ERP system was implemented to take advantage of almost all the Microsoft Dynamics AX modules: beyond financial accounting but also for management accounting, materials, purchasing, production, and quality. A human resources module developed by a local company was also added, allowing smooth coordination among HR system, ERP system and its groupware.
The PLMS, on the other hand, was developed using the customer service functions of Microsoft Dynamics CRM. In fact, because of the highly specialized nature of the PLMS, it was questioned whether a CRM solution would suffice. But, as the implementation process began, Microsoft Dynamics CRM proved to be more than adequate. Park said, "The key function of the PLMS is to manage the product information from the point the dry vacuum pump is installed at the production site to the point the product is discarded. We have over 5,000 dry vacuum pumps running at our customers’ sites. We must be able to monitor all these pumps in real-time using their serial numbers, product maintenance priority information, and on-site details for removal, replacement, and relocation. For this, CRM was more than adequate for achieving centralization of management. Looking at other major companies using Microsoft Dynamics CRM, such as Asia Airlines, we know that we are not even using 10% of the functions of the solution. We plan to expand the use of the CRM tool into sales opportunity discovery and sales." Benefits
Paperless Management Meetings with EIS
LOT Vacuum aimed for another goal while implementing its ERP solution and the CRM-based PLMS, the development of an Executive Information System (EIS). With the ERP system and the PLMS now integrating the entire business process and data flow as a single system, it became much easier to pool management indicators. LOT Vacuum decided to take full advantage of this change and worked to develop an EIS. The company had only one in-house developer working on this. Development of the EIS was very straightforward. This ease of development is expected to translate into reduced maintenance costs as well. Park said, "The EIS must be able to show different sets of information depending on viewpoint and time. In our case, we were able to use our in-house developer to develop and operate the EIS, so we don’t have to worry about any additional costs for maintenance."
The EIS developed by LOT Vacuum’s IT department is well liked by the management team. Park said, "Previously, at our management meetings, we had to look at various reports containing information processed by each of the relevant departments. But that has all changed after using the EIS. We no longer use reports but look at the EIS screen together. We can view any information we need regarding sales, profits, production, costs, quality, or maintenance status, all pooled from the ERP system and the PLMS. The change is not only in the graphs or numbers we see but in the reliability of data. In the past, we would often have discrepancies in our data as it had to be extracted from different systems. But the EIS now utilizes highly reliable master data for data processing. We have no more concerns."
Full Lifecycle Management from Development to Customer Support
Implementation of the ERP system and the CRM-based PLMS has ensured that the advanced business processes drawn up through the BPR system are systematic and become embedded in the organizational culture. Having launched the new-generation ERP system and PLMS in 2012 after four short months of development, LOT Vacuum is now discovering the changes and effects brought by advanced business processes.
The most obvious difference among the field users is that the inter-departmental workflow has become highly synchronized. Park said, "The entire workflow—entering of order information from sales, establishment of material requirements planning (MRP) and production planning by the materials and production departments, manufacture and sale of the product to the customer, and maintenance and support from the point of installation to the point of discarding—is seamlessly integrated by the system. The tight synchronization of the ERP system and the PLMS made the company-wide process more visible. We are also now beginning to see areas where improvements could be made."
Thanks to this visibility, LOT Vacuum is now able to analyze the accumulated data to discover previously hidden issues and is working to improve the processes concerned. One such example is quality management. All quality inspection information was previously recorded in Excel documents and so trend analysis required a lot of work. But now, all product specification information down to 10 microns is entered in the ERP system and the PLMS and used for quality inspection. With the quality-related information accumulating in the system as well, trend analysis has become easier and areas of improvement are much more visible. In addition, in an effort to encourage early stabilization of the ERP system and the PLMS for achieving advanced processes, LOT Vacuum plans to train expert users for each of the modules. Park said, "We want to leverage on this project to train experts who can understand the company-wide business process and look over the barriers between departments. Since having a good system is not enough for improving the inter-departmental workflow, we will train experts for each of the major ERP modules and experts to oversee the company-wide processes. We will use this training to foster early stabilization of the ERP system and the PLMS as well as to speed up embedding the advanced processes we established through the BPR system in the organization."
Increased Customer Satisfaction
LOT Vacuum’s example of integrated operation of the ERP system and the PLMS is in the limelight among its customers. In the high-tech manufacturing fields, such as those of semi-conductors and displays, it is normal practice to perform stringent auditing on partners who supply equipment that affects uninterrupted operation of manufacturing facilities. LOT Vacuum has also been complying with auditing requests from its major customers and, after implementing the ERP system and the PLMS using Microsoft Dynamics, has received positive feedback from customers concerning the auditing process.
Park said, "We usually accommodate customers’ auditing requests on yearly basis. Most of the evaluations relates to information-related indicators. In the past, we struggled to meet the customers’ requirements in the areas of material demand planning and delivery forecasts. Now, with the new ERP system and the PLMS, we exceed their expectations. One customer actually asked us to present a case study of our PLMS to their partners as a best practice solution." LOT Vacuum is now planning to develop the already highly appraised ERP system and PLMS to add more value. Park said, "We plan to add the R&D module to the ERP system and expand the use of the PLMS to sales management so that product lifecycle management include discovery of sales opportunities and R&D."
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