Ferrotec: Building a flexible IT foundation from the ground up
Explore Ferrotec’s journey with SAP
When Ferrotec Manufacturing Malaysia Sdn. Bhd. expanded its semiconductor advanced materials product lines to Malaysia, it needed to launch an ERP system to support the region—and fast. But the right solution needed to do more than handle the heavy lifting of its operations. It needed to be primed for innovation and growth in the future.
| Industry | Region | Company Size | Partner |
| Industrial manufacturing | Kulim, Malaysia | 497 employees | Axxis Consulting |
improvement in finance team productivity.
increase in procurement efficiency.
decrease in supply chain costs.
IT Manager, Ferrotec Manufacturing Malaysia Sdn. Bhd.
| Industry | Region | Company Size | Partner |
| Industrial manufacturing | Kulim, Malaysia | 497 employees | Axxis Consulting |
improvement in finance team productivity.
increase in procurement efficiency.
decrease in supply chain costs.
IT Manager, Ferrotec Manufacturing Malaysia Sdn. Bhd.
Finding an ERP solution to centralize operations
Ferrotec Manufacturing Malaysia Sdn. Bhd. develops precise materials, components, and manufacturing solutions that boost performance for key industry sectors, including automotive products, medical devices, and semiconductors.
The company’s manufacturing footprint spans the United States, Germany, and Asia, and its expanded product lines demanded moving several business units to Kulim, Malaysia.
Production for its semiconductor parts was complex, requiring precise steps, specialty knowledge, and technology with built-in automation and IT support. But the first order of business at the Kulim plant was to get a reliable ERP system up and running for its finance, sales, supply chain, and manufacturing divisions.
Ferrotec didn’t have the option to leverage shared IT resources from other company locations, since each region had its own ERP system. For example, its sites in China used a Chinese platform locally developed and custom designed, and the United States site had an American ERP vendor.
Without a centralized IT foundation, business processes required significant manual work, so time was of the essence. Ferrotec needed to quickly evaluate, select, build, and go live with the right ERP system to match its unique requirements.
Adopting a fast-track IT solution that supports future growth
After evaluating three vendors, Ferrotec decided SAP was its vendor of choice. In addition to meeting its technology criteria, SAP was selected for its industry legacy of stability and reliability.
Ferrotec chose GROW with SAP, a comprehensive offering that includes solutions, services, and access to a community and instruction to accelerate cloud ERP adoption that can evolve as the company scales. Using GROW with SAP, the company was able to speed its implementation of SAP S/4HANA Cloud Public Edition. Because the ERP solution is cloud based, there is no hardware to maintain, delivering a cost-effective path for business process automation with solution integration capabilities for the future.
Since this was a time-sensitive initiative, the implementation was divided into two phases. Phase one included implementing capabilities for financial accounting and controlling as well as supply chain management. Phase two would include go-live with functionality for production processes. The full project was anticipated to take a year and a half.
To complement and accelerate its work with experts from SAP, Ferrotec partnered with Axxis Consulting to support solution implementation and training in both phases of the project.
Transforming from manual operations to maximized performance
Before Ferrotec began running SAP S/4HANA Cloud Public Edition at its new manufacturing site, time-consuming manual processes, poor data accuracy, and sluggish productivity were the norm.
Now, Ferrotec is seeing major improvements across every aspect of the business that SAP S/4HANA Cloud Public Edition touches. The finance team’s productivity has improved by 40%. Procurement efficiency has been boosted by 90%. Supply chain process costs are down by half. And there are 80% fewer data accuracy issues.
SAP solutions are also expected to bring sizable cost savings and efficiencies across inventory, logistics, and warehouse operations once the Kulim site starts its delivery and shipment operations.
Another positive outcome of leveraging SAP technology is that the company can standardize its IT platform as it expands to other planned locations in Malaysia.
Enhancing operations for tomorrow with SAP solutions
Ferrotec plans to customize SAP solutions to support its precise, advanced materials production. To build on these improvements, it wants to add manufacturing capabilities to its IT platform to enable quality management and compliance. It will also integrate the product lifecycle assistant tool that’s available as part of inventory optimization services from SAP.
The company also plans to evaluate additional SAP offerings to support more business operations, including SAP SuccessFactors solutions to enable management of HR functions, SAP Ariba solutions to automate spend management, and SAP Customer Experience solutions to help manage customer relationships.
Ferrotec is assessing standardizing and connecting its Malaysia-based SAP solutions with potential SAP solutions in the United States to harmonize its platforms, which is expected to bring additional cost savings.
Featured partner
Axxis Consulting is an Asia-based IT and management consulting firm. The company provides leading-edge services for SAP offerings, including strategic consulting, technical development, implementation, and support. Axxis works with companies ranging from small local businesses to global Fortune 500 companies, helping manage and support their digital transformation projects.