Promotion of Improved Productivity

Continuous Improvement of Business Operations

Tokyo Electron is introducing a new enterprise system (ERP*¹) to further improve productivity and quality. The new ERP, being operated across operational and national boundaries, is aimed at creating the following five benefits: (1) compliance with the new revenue recognition standards*² in Japan; (2) management decisionmaking with quick response to change; (3) large improvements in business operation efficiency; (4) utilization of globally integrated information with an eye toward digital transformation*³; and (5) realization of ultimate work style reform.

In fiscal year 2022, we started with introduction of the new ERP at headquarters, and we completed (1) compliance with the new revenue recognition standards. From fiscal year 2023 onward, we will take full advantage of the knowledge gained in the process of introducing the system at headquarters, and gradually introduce the system at manufacturing sites in Japan and at overseas subsidiaries. In addition, with the aim of realizing a globally integrated system, we will work with our partner companies to improve operations, increase efficiency, and develop functions to further enhance system performance.

Overview of the New Enterprise System

*1 ERP: Enterprise Resource Planning. A system that integrates the core business operations of an enterprise, such as accounting, personnel, production, logistics and sales, for better efficiency and centralized information.
*2 New revenue recognition standards: New Accounting Standard for Revenue Recognition that establishes rules for calculating sales in financial statements, and which became applicable to listed companies, etc. from April 2021
*3 Digital transformation: Refer to Strengthening of Product Competitiveness through Digital Transformation (DX) and refer to Higher Productivity through Digital Transformation (DX)

Initiatives for Higher Productivity

As a manufacturer of semiconductors and flat panel display production equipment, we are committed to continuously improving productivity while remaining focused on safety and quality in operations along the entire value chain.

Specifically, under the slogan “Safety First*¹,” we are striving to improve the safety and work environments of every person connected with our business activities, and at the same time, we are building quality management systems and pursuing quality improvement throughout the value chain in order to understand the true needs of our customers and to achieve the world’s best quality. We are also conducting company-wide activities for compliance with safety and environmental laws and regulations and to make software development more efficient and smarter.

In manufacturing operations, our current initiatives include labor saving in production through a system that links BOM*² to MES*³, and transforming production performance into a Digital Twin*⁴.

Furthermore, to respond swiftly to customer requests and market fluctuations, we have built a production system that centralizes all information related to production, and have developed an IT infrastructure with manufacturing execution system (MES) and a supply chain management (SCM)*⁵ system.

By utilizing the wide range of data aggregated through these systems in each business operation, we are working on optimizing and streamlining production planning as well as visualizing delivery dates of parts by strengthening information coordination with our suppliers. We are also promoting comprehensive
improvement of business productivity by achieving stronger coordination between sales planning and production/procurement/inventory planning.

Additionally, in our manufacturing and logistics operations, where we deal with a wide variety of components, we are also working on labor savings and efficiency improvements by establishing automated warehouses, introducing a warehousing navigation system and promoting automated inspections.

*1 Safety First: Company slogan that prioritizes the safety of every person connected with our business activities
*2 BOM: Bill Of Materials. This shows the hierarchical structure of the product and includes basic information of each part, including which parts are used to assemble the product.
*3 MES: Manufacturing Execution System. A system for understanding and managing production processes and for providing instructions and support to workers.
*4 Digital Twin: A "Twin in digital space" refers to a technology that copies and replicates various data collected from physical objects in the real world onto a digital space.
*5 Manufacturing execution system (MES) and a supply chain management (SCM): Refer to Continuous Improvement of Business Operations

Higher Productivity through Digital Transformation (DX)

We aim to enhance product competitiveness and improve capital efficiency in various operational processes— from the product planning stage to maintenance—by promoting DX.

* HVM: High Volume Manufacturing

In our DX activities, regarding the 13 risks*, we implement a risk management PDCA cycle that includes formulating and executing measures to minimize these risks, monitoring the state of management and supporting and promoting risk management activities of the various departments.

We are building a system that allows appropriate risk management at the right time through real-time monitoring of risks, control measures and implementation state across the entire Group while collaborating with the overseeing organizations in our headquarters. The purpose is to conduct fast risk detection and decision-making from the perspectives of data and digital technology utilization.

Furthermore, we are also making clear the human resources necessary for the promotion of DX and are formulating and training plans to develop the respective skills needed. In parallel, we are also carrying out human resource development to provide all employees with a minimum level of DX knowledge.

Equipment Data Management Plan

We will continue to focus on the promotion of DX and utilize digital technology to improve productivity in everything from accelerating the speed of development, improving productivity and quality and enhancing business efficiency to reforming work styles.

* 13 risks: Risk Management Initiatives