Opto Tech Corporation Reduces Cost-Settlement Time by 84% and Meets IFRS Requirements with Enterprise Resource Planning Upgrade
 
 

Opto Tech Corporation Reduces Cost-Settlement Time by 84% and Meets IFRS Requirements with Enterprise Resource Planning Upgrade

Established in 1983, Opto Tech Corporation is a market leader in the light emitting diode (LED) design and manufacturing industry. The company manufactures a variety of LED chips, displays, and lighting, as well as chips for silicon sensors. It produces more than 4.5 billion LED chips and 1.5 billion silicon sensor chips each month. The company is also committed to researching, developing, and promoting innovative energy-saving products to meet the challenges of climate change.

Opto Tech Corporation upgraded to Oracle E-Business Suite Release 12.1 in January 2012 to strengthen internal controls, improve operational efficiency, and meet International Financial Reporting Standards (IFRS). The company has reduced cost-settlement time from three hours to half an hour and halved its volume of paperwork.

 
 

 
 

Challenges

A word from Opto Tech Corporation

  • “We upgraded to Oracle E-Business Suite Release 12.1 to take full advantage of its world-leading technology and support for IFRS. We have improved the efficiency of our complicated operational processes, reduced cost-settlement time by 84%, and halved the volume of paperwork required for customer returns.” – Lin Tzu-Chun, Vice President, Opto Tech Corporation

  • Comply with new regulatory requirements mandated by the Taiwan Financial Supervisory Commission to prepare financial statements in accordance with IFRS dating from January 1, 2012, and before the full implementation of standards for 2013
  • Reduce daily workload for maintaining and upgrading 1,200 customized enterprise resource planning (ERP) programs, such as budgeting, sales, and cost analysis
  • Strengthen and standardize internal data approval and security controls
  • Improve operational efficiency in response to a rapidly changing economic environment in the LED industry and revisions to transaction types, such as order fulfillments
  • Streamline the company’s business model, which previously required 30% of LED products to have different accounting treatments and revenue recognition

Solutions

  • Cut the time taken to complete cost-settlement processes during month-end closings by 84%—from three hours to half an hour
  • Halved the paperwork required for customer returns in the property management department—and alleviated system workloads—by implementing a simpler, order-based format that requires one item and one report to complete accounting tasks
  • Reduced overall ERP system footprint from 346 gigabytes to 170 gigabytes by clearing out old data, improving system performance by approximately 75%
  • Shortened weekly ERP reporting time from 32 hours to 8 hours by using the gather-scheme-statistics feature on a weekly basis to ensure system resources are used efficiently
  • Complied with the new IFRS by using features, such as flexible, subledger-accounting and comprehensive reporting functions
  • Increased the efficiency of operational processes, for example by replacing an overly complex and paper-heavy, 10-step customer returns process
  • Eliminated a fifth of customized reports, such as the operating-expense analysis report, by replacing the most needed and frequently used legacy reporting programs with Oracle E-Business Suite Release 12.1 functions, or by improving related processes
  • Provided real-time visibility and control of inventory and shipments by implementing fulfillment sets to record orders with long shipping times, such as LED display screens

Why Oracle

Opto Tech Corporation had been using Oracle E-Business Suite Release 11.5.9 since 2003. At the time, Taiwan had limited local resources to help companies comply with IFRS requirements. The company decided to upgrade to Oracle E-Business Suite Release 12.1 because the software provided full support for IFRS requirements.

“Oracle’s outstanding service team and world-leading product technology—together with the opportunity to leverage Oracle’s practical experience and resources on an international level—were key factors in our decision to choose Oracle products and Oracle Consulting for our upgrade project,” said Lin Tzu-Chun, vice president, Opto Tech Corporation.

Implementation Process

Opto Tech Corporation divided the ERP upgrade project into two phases. The first phase ran from March to September 2010, and focused on upgrading and replacing the legacy ERP system.

The second phase, which began at the end of November 2010, focused on reconfiguring the ERP system to comply with IFRS and implementing process improvements. Oracle E-Business Suite Release 12.1 went live on January 3, 2012.

A management consulting company also carried out an analysis to identify opportunities to strengthen and standardize internal controls and auditing. With further help from Oracle Consulting, these needs were incorporated into the ERP system.

“By following standard Oracle best practices, we upgraded to Oracle E-Business Suite Release 12.1, easily and cost-effectively,” said Lin. “We took full advantage of the integrated solution and achieved the changes we needed in our LED, enterprise resource planning processes.”