F. L. Smidth Automation: Outsourcing Tracking and Management of a Global Equipment Giant

About F. L. Smidth Automation

Founded in 1882, F. L. Smidth Automation of Denmark is the largest concrete and mining equipment supplier in the world. Boasting of a history of over 120 years, it has now evolved into a cross-industry, cross-region global conglomerate. In 2000, F. L. Smidth Group funded the establishment of Smidth Machinery Industrial (Qingdao) Co., Ltd., which becomes the most important production base of the group in China.
In 2005, F. L. Smidth Automation officially implemented the multi-lingual version K/3 system, including G/L, account receivable, account payable, fixed assets, cost management, procurement system, sales system, inventory system, inventory accounting, production data management, master production plan (MPS), material requirement plan (MRP), production task management, outsourcing management, and workshop operation management modules. In addition, the personalized, multi-lingual outsourcing business was constructed based on the K/3 BOS. Consequently, the work efficiency shot upwards.

Personalized Management

F. L. Smidth Automation adopts the combined mode of roll-to-roll production and PO based production, with a wide array of production techniques and complex procedures. In particular, a large number of the components are imported or manufactured through outsourcing.

Strengthening Resource Sharing

As the roll-to-roll production mode is adopted, the supply status of the procured parts, imported parts, and outsourced parts that a huge quantity of Work in Process (WIP) cannot be controlled properly. The insufficient resource sharing of the departments result frequently in shortage and eventually production delay. It poses a challenge to the expansion of production and the strengthening of management and planning.

Strengthening Outsourcing Management

Due to the large variety of outsourcing business, the processed parts need to be shipped home batch by batch. Mistaken POs occur often, and the implementation of the POs cannot be controlled. As a result, it causes great inconvenience and difficulty for the financial personnel in payment review.

Solution

In less than one week after the application of the K/3 BOS system, the outsourcing function was quickly constructed. The outsourcing agreement can be directly generated according to the outsourcing MOs, and on the basis of the outsourcing agreement, the outsourcing delivery notice and receipt notice are generated. Particularly, the quantity of delivered raw materials of the outsourced delivery notices was calculated and generated automatically according to the BOM information. The work efficiency and accuracy were improved. The receipt and delivery status of the outsourcing agreement could be queried at any time.

To avoid repeated work, the document print templates in Chinese and English were formulated to suit different roles of the foreign funded enterprise.

Figure 1: Management and Query of Outsourcing Agreements

Figure 2: New Related Functions of Outsourcing Agreement

Figure 3: Outsourcing Agreement

Comments of the Customer

"The Kingdee system was implemented in our company in less than a month. The user-friendly GUI and the flexibility of the system are helpful. The employees improved their independent work capability, and strengthened mutual cooperation through full resource sharing. The Kingdee system helps the management of our company to make a significant step forward."

---- Feng Hongmei, Director of IT System of F. L. Smidth Group