About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

Management Foundation

TEL FOR GOOD

Data

HigherProductivity

25

Promotion of Improved
Productivity

P. 26

Productivity
Improvement in the
Value Chain

P. 27

SDGs Initiatives
■

■

■

■

■

■

■

■

Promote productivity, continuously increase
management efficiency, contribute to thedevelopment of the industry and society andcontribute to sustainable economic growth
Increase economic productivity throughdiversification, technological improvement andinnovation
Promote streamlined business operations andquality management throughout the value
chain, ensuring sustainable forms of production
and consumption
Use environmentally appropriate chemical
substances and reduce waste

Continuously increase productivity throughout
the entire supply chain by strengthening global
partnerships with suppliers

Promote the standardization and automation of operations and improve productivity along the entire value chain, such as through thedevelopment of an enterprise resource planning system and the integration of business systems in each division and the unification of databases
Recognize the importance of quality management and strive to further improve business efficiency by implementing quality focus operations
Implement quality improvement activities and continuously increase productivity throughout the entire supply chain through collaboration
with suppliersTOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessPromotion of Improved Productivity
Continuous Improvement of Business Operations

Tokyo Electron is introducing a new enterprise system (ERP1) to further improve productivity and quality. The
new ERP, being operated across operational and national boundaries, is aimed at creating the following fivebenefits: (1) compliance with the new revenue recognition standards2 in Japan; (2) management decisionmaking with quick response to change; (3) large improvements in business operation efficiency; (4) utilizationof globally integrated information with an eye toward digital transformation3; 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 fulladvantage 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 ofrealizing a globally integrated system, we will work with our partner companies to improve operations, increase
efficiency, and develop functions to further enhance system performance.

Higher Productivity

Sales CRM
(Opportunities
and Forecast)

Scheduler(Plan)

Customer
Investments Opportunities

Forecast■ IT System ■ Key Processes
Warehouse
Supply Chain
Manufacturing
Management
Management Execution System
System(Procurement) (Manufacturing)(Warehouse)

Product
Lifecycle
Management(Design)

Production Production
Planning Preparation

DesignBooking

Procurement Manufacturing

DeliveryStart-up

Global Trade
Management(Export)Technical
Acceptance

Sales

Service CRM(Fieldsupport)

Warranty

Post-sale

ERP (Sales, Inventory, Accounting)

TEL FOR GOOD

26

Data

In manufacturing operations, our current initiatives include labor saving in production through a system thatlinks BOM2 to MES3, and transforming production performance into a Digital Twin4.
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 areworking on optimizing and streamlining production planning as well as visualizing delivery dates of parts bystrengthening information coordination with our suppliers. We are also promoting comprehensive
improvement of business productivity by achieving stronger coordination between sales planning andproduction/procurement/inventory planning.
Additionally, in our manufacturing and logistics operations, where we deal with a wide variety ofcomponents, we are also working on labor savings and efficiency improvements by establishing automatedwarehouses, introducing a warehousing navigation system and promoting automated inspections.
1
2
3

Overview of the New Enterprise System

Management Foundation

4
5

Safety First: Company slogan that prioritizes the safety of every person connected with our business activities
BOM: Bill Of Materials. This shows the hierarchical structure of the product and includes basic information of each part, including which parts are used toassemble the product.
MES: Manufacturing Execution System. A system for understanding and managing production processes and for providing instructions and support toworkers.
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.
Manufacturing execution system (MES) and a supply chain management (SCM): Refer to Continuous Improvement of Business Operations on p.26

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.
Image of DX Usage
Development of applications that contribute to corporate value creation using DX infrastructure

1
2
3

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.
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
Refer to Strengthening of Product Competitiveness through Digital Transformation (DX) on p.18 andDigital transformation:refer to Higher Productivity through Digital Transformation (DX) on p.26

Product Life Cycle
Planning

Prototype

HVM*

SupportModification

A: Increased Profit

Application

D: Extension of Lifetime Value
B: Accelerated Market Launch

Initiatives for Higher Productivity
As a manufacturer of semiconductors and flat panel display production equipment, we are committed tocontinuously improving productivity while remaining focused on safety and quality in operations along theentire value chain.
Specifically, under the slogan “Safety First1,” we are striving to improve the safety and work environments ofevery 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 needsof our customers and to achieve the world’s best quality. We are also conducting company-wide activities forcompliance with safety and environmental laws and regulations and to make software development more
efficient and smarter.

DesignProfit

C: Reduced Development Costs

Cost

Data
Applicationand UseTime

Digital skill improvement, Digital awareness and culture creation, and Construction of DX Infrastructure

DX
Infrastructure
Skill
Improvement

Awareness andCulture Creation

Environment Creation(Governance and Data Infrastructure)* HVM: High Volume Manufacturing

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

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 andsupporting 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-timemonitoring of risks, control measures and implementation state across the entire Group while collaboratingwith the overseeing organizations in our headquarters. The purpose is to conduct fast risk detection anddecision-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 areformulating 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.

Data science

Ability to understand and utilize data science, such as data processing, AI
and statistics

Data engineering

Ability to give meaningful shape to data science for our efforts to create
corporate value, and to implement and operate in line with targets

Data
engineering

Businessplanning

TEL FOR GOOD

Data

27

Quality Policy
1. Quality Focus
	Focusing on quality to satisfy customers, meet production schedules and reduce required
maintenance even with temporary cost increases.
2. Quality Design and Assurance	Building quality into products and assuring in-process quality control, from the design anddevelopment phase throughout every process.
3. Quality and Trust	When a quality-related problem occurs, working as a team to perform thorough root cause
analyses and resolve problems as quickly as possible.

Skill Training Plan for DX Promotion

Data science

Management Foundation

4. Continual Improvement
	Ensuring customer satisfaction and trust by establishing quality goals and performanceindicators and by implementing continual improvement using the PDCA cycle.
5. Stakeholder Communication
	Listening to stakeholder expectations, providing timely product quality information andmaking adjustments as needed.

Business planning Ability to evaluate issues and their context, implement measures toresolve them and link this to business (earnings)

Systematically train human resources to utilize data science in our businessWe will continue to focus on the promotion of DX and utilize digital technology to improve productivity in everythingfrom accelerating the speed of development, improving productivity and quality and enhancing business efficiency
to reforming work styles.
*

13 risks: Risk Management Initiatives on p.37

Productivity Improvement in the Value Chain
Approach to Quality

We define our approach to quality in the following way: “The Tokyo Electron Group seeks to provide thehighest-quality products and services. This pursuit of quality begins at development and continues through all
manufacturing, installation, maintenance, sales and support processes. Our employees must work to deliver
quality products, quality services and innovative solutions that enable customer success.” We strive toimplement this policy.

We strive to implement self-process assurance systems1 by carrying out strict quality-related risk managementand development/design inspections beginning at the development stage, and also by ensuring thoroughverification of customers’ operations using simulations. We have also built an important component traceability
system to strengthen our information environment.
Specifically, to prevent various types of non-conformances, we built a system that allows One Platform2
to view information such as past problems, adjustment values used during manufacturing and assembly andimportant component inspection information from suppliers, and have successfully strengthened our risk
management (FMEA3).
By thoroughly implementing these self-process assurance system and prevention measures, it createstime for employees to focus on high-value-added business operations and promotes initiatives for Shift
Left4 (front-loading).
1
2
3
4

Self-process assurance systems: Refer to Ensuring Self-process Assurance Systems and Promoting Shift Left on p.28
One Platform: A platform that makes it possible to easily view multiple different systems as seamless information sources, in order to effectively andRefer to Initiatives for Higher Productivity on p. 26
efficiently achieve traceability.
FMEA: Failure mode and effects analysis. A method to identify, prevent and mitigate risks in advance.
Shift Left:
Refer to Shift Left on p.16 andrefer to Ensuring Self-process Assurance Systems and Promoting Shift Left on p.28

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessManagement System
To provide consistent, high-quality products, we have built and are implementing quality assurance systems
under the leadership of the CEO. All manufacturing companies in the entire Group have attained certification in
the latest quality management system, ISO 9001. In addition, we conduct regular internal audits as well as
neutral and fair audits by third parties for each manufacturing company of the Group to contribute toward
maintaining and improving our quality management systems.
ISO 9001 Certified Plants and Offices
Company Name

Plant/Office Name

Certification
Date

Fujii Office/Hosaka Office

September 1994

Tohoku Office

December 1994

Tokyo Electron Technology Solutions

Tokyo Electron Kyushu

Koshi Office

March 1997

TEL Magnetic Solutions—

November 2009

Tokyo Electron Miyagi

Taiwa Office

September 2012

Tokyo Electron Korea

Balan Plant

September 2011

TEL Manufacturing and Engineering of America

Chaska Office

Tokyo Electron (Kunshan)—

March 2013
May 2018

Process Improvement Activities
The production sites of our customers require limited variations in quality between equipment, accurate
process repeatability and high productivity. To provide products that match such customer needs, we focus onprocess improvement activities (PCS1) using a statistical method.
We create control diagrams for the information of various types of critical components (components directlyin contact with wafers and components that directly affect the process of systems, such as components thattransfer mechanical, thermal, electrical or electromagnetic energy to wafers) and analyze variations to quickly
detect and respond to changes in manufacturing processes. By undertaking such PCS activities together with
suppliers handling specific critical components, we work on the suppression of component quality variability
and maintenance/improvement of manufacturing processes that produce quality products to help provide
products surpassing customer expectations.
In addition, manufacturing processes handling new critical components need constant review andimprovement. Our products comprise several tens of thousands of components, and the task to select specificcomponents from these and carry out regular aggregation and analysis require many man-hours.
To optimize and streamline this task, we reexamine our operational flow, including the adoption of
automation, and improve our systems by collecting information from customers, holding discussions among

Higher Productivity

Management Foundation

TEL FOR GOOD

Data

28

our manufacturing sites in Japan and interviewing our suppliers. By continuously carrying out these activities
that are based on the concept of Shift Left, we are striving to improve our productivity further.
■ Example Initiatives

At Tokyo Electron Technology Solutions (Tohoku), design of experiments2 based on statistics is used to establish
quality metrics for critical components and the level of quality activities is being improved together with
suppliers.
The best quality metrics established using the designs of experiments are set as the targets. Conditions thatgive rise to variations in inspection, adjustment and other values in the manufacturing processes of criticalcomponents are strictly managed using PCS activities to seek accuracy and stability in the manufacturing
processes.
In the future, we will promote the automation of processing—from collection to assessment—of suppliers’
data regarding quality and detect the state of quality in real time to further improve the manufacturing
processes of critical components.
1
2

PCS: Process Control System
Design of experiments: A branch of applied statistics that aims to design efficient experimental methods and properly analyze the results

Ensuring Self-process Assurance Systems and Promoting Shift Left
In order to improve the quality of products, it is important to prevent non-conformance from occurring in
upstream processes and to ensure thorough quality control in each process so that nonconforming products—
if they occur—are not allowed to flow into later processes. From this perspective, we promote activities
focused on self-process assurance systems. In particular, we aim to further improve quality by implementing
thorough risk detection and mitigation measures (FMEA1) from the initial stages of product design, as well as
carrying out thorough inspections in each process and conducting verification using simulation.
These activities for in-process quality control make it possible to create high-value-added technologies andproducts in the upstream processes by improving the precision of each process and reducing reworking costs2,
and at the same time, lead to the promotion of the Shift Left3 concept.
We are also promoting Product Lifecycle Management (PLM) by using in-process quality control tocomprehensively manage and analyze all processes from product planning, development, design andproduction through to service in an effort to facilitate the earlier release of products, enhance operational
efficiency, improve quality and reduce costs.
1
2
3

FMEA: Refer to Approach to Quality on p.27
Reworking costs: Costs incurred by going up the chain of processes and reworking when there is non-conformance
Shift Left: Refer to p. 16

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

Management Foundation

TEL FOR GOOD

Data

29

Measures to Prevent Quality Problems from Occurring and Recurring

Initiatives with Suppliers

To comply with ISO and EN1 safety standards and achieve higher safety levels, we have established its own

Continuously improving quality based on strong(%)
38
partnerships with suppliers is essential for providing
40
high-quality products quickly to the market. Since fiscal
year 2001, we have conducted our unique Supplier Total
Quality Assessments (STQA) in an effort to ensure our
22
suppliers properly understand the level of quality expected
20
from them.
Before starting a new business with suppliers, we
conduct an STQA via self-assessment to evaluate theirproduct quality, costs and information security. The
0
BeforeAfterassessment also includes their corporate social
responsibility initiatives, including human rights, ethics,
safety, and the environment. If a risk is identified in this assessment, we visit the supplier and confirm the area of
non-conformance on-site. Once our approaches to quality and other important related issues have been sharedwith the supplier, we request that they plan and implement improvement measures and provide continuous
support until all of them have been completed. In addition, we also conduct audits once every three years for
suppliers who handle important components and for suppliers where quality issues have been found.
We also hold regular meetings with the leaders of various manufacturing sites in Japan who use STQA to sharesupplier-related information and discuss measures to resolve issues.

design rules for each product. At the same time, we have developed systems for manufacturing products,
which include safety considerations. We also have other systems in place for responding to issues such as
equipment design and production non-conformance and any occupational incidents.
In the event of an incident, we use our TIRS2 incident reporting system to distribute information to safety
and quality personnel in each division and officers and management, including senior management. An incident
investigation is also conducted immediately to identify the cause and plan preventive measures.
We use a proprietary system called QA-BOX3 to share information on equipment quality and any major
non-conformance across all quality departments in accordance with our operating rules. Measures obtained
from the results of an incident investigation are promptly applied, not only to the problem equipment but also
to relevant equipment operated by other customers. At the same time, after finding the root cause, revisions
are also made to the current design standards and processes to perpetually prevent the occurrence of major
non-conformances.
For departments that become subjects of incident investigations, we validate repercussions to otherequipment and commonalities and share the issues and countermeasures at regularly scheduled QA-BOX
meetings together with the heads of quality assurance divisions. This allows us to examine various approaches
to prevent similar non-conformances. The common policies determined at the regular meetings are quickly
deployed across the entire Group and reflected in the respective equipment. This helps to reduce nonconformances caused by equipment.

Component Appearance Defect Rate

■ Example Initiatives

Incident Information:

Information Sharing:Operations and Information Flow:

Tokyo Electron GroupManagement
Incident
Reporting
System (TIRS)

Fire
Department
PoliceDepartment

CustomerContact Point

Customer
Report and Workplace
Recovery

Permanent Measures

1
2
3
4
5

Service
Division

Defective Quality
Reporting System(Q-VICS4)
Operations
Divisions
Safety Division
Quality Assurance
Division

Relevant Divisions
Investigation of causes and development ofrecurrence prevention measures
Investigate and
Identify Causes
Confirm Spread

Determine Measures
Establish
Implementation Plan

The quality assurance division of Tokyo Electron Technology Solutions is strengthening the acceptanceinspection process to allow signs of component non-conformance to be discovered early. Component
appearance defects from scratches and dents make up approximately 40% of all non-conformances discovered
during acceptance inspection. As a result of efforts to improve and strengthen component appearance, such as
working with suppliers to find the causes and selecting appropriate packaging materials, the target value of 130
ppm (130 nonconforming products in every one million products) was achieved in fiscal year 2022 even though
the number of shipments increased. Going forward, we will continue to strengthen cooperation with suppliers
and undertake continuous improvement activities.

Issue FCN5
Share with Group
Companies(QA-BOX)
Reflect in DesignStandards
Revise Standards
Notify Revision

EN: European Norm. Uniform standard for the European Union complimenting parts of technical standards not stated in European Commission directives(“New Approach” directives)
TIRS: TEL Incident Report System
QA-BOX: Tool for the sharing and horizontal deployment of important quality-related information within our Group companies
Q-VICS: Quality Valuable Information Chain System
FCN: Field change notice. Refers to the general recall noticeTOKYO ELECTRON SUSTAINABILITY REPORT 2022