Transcript SAP FSCM Dispute Management Case Study: Dow Corning

Dow Corning INTERNAL
SAP FSCM Dispute Management Case Study:
Dow Corning
Ritch Cushway, Global Customer Financial Services Manager,
Dow Corning Corporation, Midland, MI, USA
Dow Corning INTERNAL
Agenda
• Dow Corning Background
• Our Structure
– Organization
– SAP Installation
• Initial Implementation of FSCM Dispute Management
– Timelines and Cost
– Key Challenges
– Delivered Objectives
• Going Global
– Phased approach
– Key Regional Challenges
– Business Units Differences
• Our Implemented Dispute Mgt. Landscape
• Q&A
Dow Corning INTERNAL
Dow Corning is …..
 A global leader in silicones and high purity
silicon
 More than 7,000 products/services
 Approx 25,000 customers
 Approx 10,000 employees
 Strong and healthy financially: $5.09billion
sales 2009
 Investing in our future and our customers’
futures: geographic, manufacturing, innovation
 Transforming our business to deliver:
 Efficiency, Innovation and Sustainability
 Focused on sustainability and
Responsible Care ®

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Dow Corning INTERNAL
Pursuing our vision:
We are innovative leaders
unleashing the power of silicon
to benefit everyone, everywhere.
AV13740
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Dow Corning INTERNAL
Serving customers’ diverse needs…
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Dow Corning INTERNAL
Our Structure: Organization
• Sixteen business units organized by Customer market or our
approach to the market, including
– Life Sciences, Construction, Solar, and Thermoplastics, for
example.
• Customer base: typically other manufacturers with both direct
customers and distribution (channel partners).
– 9000 active customers (direct and distributors).
• Credit (Customer Financial Services) is directly aligned with the
commercial function with indirect alignment to finance
(treasury).
• CFS staff globally performing credit & collection in 10 locations
• Payment application performed by our outsourcing partner in
Krakow, Poland and Guangzhou, China
Dow Corning INTERNAL
Our Structure: SAP Installation
• Dow Corning first deployed SAP Globally in 1996
• A single instance globally with all data accessible from
anywhere within the world.
• Dow Corning uses ALL modules of SAP for operational tasks
(nearly without exception).
• Dow Corning users and our outsourced business partners
access the same system, same data, real-time, working
seamlessly with each other globally.
Dow Corning INTERNAL
Initial Implementation of FSCM Dispute
Management
• Timelines and Cost
• Key Challenges
• Delivered Objectives
Dow Corning INTERNAL
Implementation: Timelines and Cost
• Our IT project began in Jun-06, leading to a limited
implementation in the US and Canada in Mar-07.
• Most resource was internal; however, we did engage an
outside consultant to conduct a three day design workshop.
• The approximate project cost was $ 450K (internal chargeback)
with minimal external cost.
• SAP cost was initially separate for the module (based on
number of cases) and then later bundled in 2008.
• Initial startup included loading ALL existing payment disputes
(~800 open at that time).
Dow Corning INTERNAL
Implementation: Key Challenges
• FSCM Dispute Management 3.0 met our needs, except,
– Credit Case
– Lack of Reporting
• Customer Solutions were create in-house:
– Credit Case – We developed our own process utilizing additional
programming to handle overpayments. This works well and
seamlessly.
– Reporting – We created 5 Business Warehouse reports (loosely
based on the SAP default info cubes). We created a Dashboard
with our key metrics.
Dow Corning INTERNAL
Implementation: Delivered Objectives
• We focused on three key metrics and the interplay between
them. Each of these is captured in our Payment Dispute
Dashboard.
– Payment Dispute Cycle Time: The number of days between the
time a dispute is Opened and Closed.
– Backlog Chart: On monthly basis we measure the number of
• Disputes Open (the backlog)
• Disputes Opened
• Disputes Closed.
– Payment Dispute Sigma: Monthly, we measure the standard
deviation – occurrences of disputes per invoice population
Dow Corning INTERNAL
Going Global
• Phased approach
• Key Regional Challenges
• Business Units Differences
Dow Corning INTERNAL
Going Global - Phased approach
• Our initial project implementation was for the US and Canada;
where we historically had a very high rate of disputes.
– Implementation: Mar-2007
– Results: by year-end:
• achieved a 18% reduction in dispute volume
• Reduced Payment Cycle Time from 78 to 60 days
• In May-2008, we implemented in Europe, where our operations
support the emerging markets of CIS, E Europe, Turkey,
Middle East and Africa.
• In March-2010, we implemented the “rest of the world”, with key
locations of Latin America, India, ASEAN, China, Korea, and
ANZ.
Dow Corning INTERNAL
Going Global - Key Regional Challenges
• Europe:
– Customer disputes from short- and over-payments
occur most frequently in Germany and countries with
similar business behaviors (UK, Benelux, E Europe,
CIS).
– Customers in Southern Europe and Southern regions
(ME, Turkey) typically don’t short pay – they simply
don’t pay.
• For these situations, we developed a new workflow, where the
Dispute Case is created based on a customer billing complaint.
• In Europe, 40% of our Disputes are related to customer billing
complaints vs. payments.
Dow Corning INTERNAL
Going Global - Key Regional Challenges
• Rest of the World:
– Latin America – very few disputes from incorrect payments due to strong
systems to avoid billing errors, including invoice presentation and
acceptance in Mexico, banking system in Brazil, and use of documentary
collection and L/Cs
– Korea and China – a very small number of disputes; but enough to
warrant the implementation.
– ASEAN/ANZ – a reasonable number of disputes with both advance and
payment disputes involved. Higher rates in Australia, Thailand and
Vietnam
– India – lots of items can cause disputes include complex transportation
and tax impacts. Customer partial payments are also quite common. We
have been steadily applying pressure with certain customers to improve
our mutual processes.
– Japan – excluded from scope due to the rarity of payment disputes!
Dow Corning INTERNAL
Going Global - Business Unit Differences
• We have several different businesses and brands. Two of
the largest are the Dow Corning® and XIAMETER®
brands.
• The XIAMETER® brand incorporates a web based
interface for ALL customer business. This efficient model
adds surcharges for special services.
– Payment disputes are very rare!
• The Dow Corning® brand accepts orders placed by
web, email, fax, B2B Purchase Orders, or by phone.
– Payment dispute arise from a variety of reasons,
including price, quantity, transportation, and tax.
Dow Corning INTERNAL
Our Implemented Dispute Mgt.
Landscape
•
•
•
•
UDM Case Mgt.
Case life cycle
Email Notifications
Reporting
– BW Dashboard
– BW Analyzer Reports
Dow Corning INTERNAL
Dispute Mgt. Landscape: UDM Case Mgt.
• We utilize UDM Case Mgt. with some customization for our
unique needs, including
– Credit Case enhancement
– Reason Categories
– Unique Routing of Disputes:
• Coordinator: always the person responsible for resolving the dispute
• Processor: person responsible for the next task in the resolution
• Employee Responsible: always the person responsible for the overall
relationship: Sales & Service Specialist.
Dow Corning INTERNAL
Dow Corning INTERNAL
Dow Corning INTERNAL
Dow Corning INTERNAL
Dispute Mgt. Landscape: Case Life Cycle
Driven by Payment
Discrepancy
Driven by Billing Error
Complaint
1. BPO receives payment
discrepancy and create
payment dispute.
2. Coordinator notified.
3. Coordinator contacts customer
and related parties.
4. Coordinator gets resolution
agreement and forwards to
BPO
5. BPO adjusts or receives
payment and closes dispute.
1. DC receives/establishes
customer billing error
complaint.
2. Coordinator creates payment
dispute case.
3. Coordinator contacts customer
and related parties.
4. Coordinator gets resolution
agreement and forwards to
BPO
5. BPO performs clearing or
receives payment and closes
dispute.
Dow Corning INTERNAL
Dispute Mgt. Landscape: Email Notifications
• In order to drive toward faster resolution of payment disputes,
we escalate aging disputes to management at key stages.
– At 15 days, a notice goes to the coordinator and processor
– At 30 days, another notice goes to coordinator, processor and
their managers
– Notices continue every 30 days until dispute case is closed
Dow Corning INTERNAL
Dispute notifications are emailed via
workflow (example below):
A payment dispute has been assigned to you as a processor. Please click on the
link below to access your SAP Inbox or log on to SAP (DCE/010) and go to the
SAP Inbox (transaction SO01) to process this Customer Payment Dispute Case.
http://horizonsdev.dowcorning.net/irj/servlet/prt/portal/prtroot/pcd!3aportal_content!2fcom.dowco
rning.ROLES!2fGlobalPersonnel!2fcom.dowcorning.GlobalPersonnel!2fcom.dowc
orning.MySAPInbox
Dispute: 6000000031
SAP Payer Number: 1041090 - PROCTER & GAMBLE CO (OLAY)
Disputed Amount: 15.90 USD
Reason: TAX
Responsible CSP/CCP: PJCOE
This email is auto generated. Please do not reply.
Dow Corning INTERNAL
Dispute Mgt. Landscape: Customer Dashboard
• Resolution Cycle Time
• Backlog Chart
• Sigma Chart –
– Our Sigma ranges regionally between 1.7 and 3.5
– Our Dec-2010 sigma was 2.292
Payment Dispute Cycle Time
Payment Dispute Backlog Chart
Dow Corning INTERNAL
Dow Corning Case Study Takeaways
• Global Solution – customized to our
regional needs
• A sound control environment
–Operational Tools
–Communication via workflow
–Reporting for management oversight
Dow Corning INTERNAL
Q&A
• Thank you for your time!