Slide 1
SAP FSCM Dispute Management Case Study: Dow Corning
Ritch Cushway, Global Customer Financial Services Manager, Dow
Corning Corporation, Midland, MI, USA
Dow Corning INTERNALDow Corning INTERNALHow Dow Corning deployed
SAP FSCM Dispute Management across the globe through a phased
approach that incorporated fine tuning the module to regional
variances and how it was mapped it across our diverse business
units.
1AgendaDow Corning BackgroundOur StructureOrganizationSAP
InstallationInitial Implementation of FSCM Dispute
ManagementTimelines and CostKey ChallengesDelivered ObjectivesGoing
GlobalPhased approachKey Regional ChallengesBusiness Units
DifferencesOur Implemented Dispute Mgt. LandscapeQ & ADow
Corning INTERNAL3Dow Corning is ..3A global leader in silicones and
high purity siliconMore than 7,000 products/servicesApprox 25,000
customersApprox 10,000 employeesStrong and healthy financially:
$5.09billion sales 2009Investing in our future and our customers
futures: geographic, manufacturing, innovationTransforming our
business to deliver:Efficiency, Innovation and
SustainabilityFocused on sustainability and Responsible Care
Dow Corning INTERNALclaim substantiation references - see
attached document3
AV07647)4Pursuing our vision: 4We are innovative
leadersunleashing the power of siliconto benefit everyone,
everywhere.
AV13740Dow Corning INTERNAL4
55Serving customers diverse needsDow Corning INTERNALPhoto refs
(left to right)
Top Row (left to right): AV11627, AV10013, AV09029, AV11590,
AV12460 Row 2: AV13659, AV12935, AV13176, AV06118, AV10620 Row 3:
AV13722, AV12255, AV12359, AV01161, AV10452 Row 4: AV06534,
AV07436, AV10900, AV11889, AV03983
5Our Structure: OrganizationSixteen business units organized by
Customer market or our approach to the market, includingLife
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 locationsPayment
application performed by our outsourcing partner in Krakow, Poland
and Guangzhou, China
Dow Corning INTERNAL40 CFS Staff plus 7 Outsourced6Our
Structure: SAP InstallationDow Corning first deployed SAP Globally
in 1996A 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
INTERNALUse of bolt-ons or other solutions require CIO
approval.
A significant productivity and cost impact must be demonstrated
to use a non-SAP solution!
7Initial Implementation of FSCM Dispute Management
Timelines and CostKey ChallengesDelivered Objectives
Dow Corning INTERNALImplementation: 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 INTERNALDuring our workshop we were able to identify
the module fit for Dow Corning.9Implementation: Key Challenges
FSCM Dispute Management 3.0 met our needs, except,Credit Case
Lack of ReportingCustomer 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 INTERNALCredit Case there was no solution for a
payment dispute with a credit value. SAP assumed that most clients
only had short-pays!Lack or Reporting out of the box reporting was
inadequate to support Dow Cornings objectives to drive down the
cycle time and backlog for payment dispute resolution.
10Implementation: 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 OpenedDisputes
Closed.Payment Dispute Sigma: Monthly, we measure the standard
deviation occurrences of disputes per invoice population
Dow Corning INTERNALGoing GlobalPhased approachKey Regional
ChallengesBusiness Units Differences
Dow Corning INTERNALGoing 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-2007Results: by year-end:achieved a
18% reduction in dispute volumeReduced Payment Cycle Time from 78
to 60 daysIn 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 INTERNALGoing 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 dont short pay they
simply dont 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 INTERNALCustomer Billing Complaint Disputes
resolution:
Customer agrees to pay as-is, correcting the issue in there
system. Payment matches invoice and is closed.
Dow Corning issues Credits and/or Debits to produce an invoice
agreeable to the customers. Payment is received and is used to
clear all related open items.
or related credits being issued to close the dispute case.
14Going 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/CsKorea 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 VietnamIndia 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 INTERNALGoing 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 INTERNALXIAMETER : Due to the exceptional
communications in the process and the full confirmation and
agreement of the customer when orders are placed, payment dispute
are very rare!
Dow Corning :
This model does not have as many checks and balances, leading to
greater opportunities for payment disputes to arise.
Payment dispute arise from a variety of reasons, including
price, quantity, transportation, and tax.
16Our Implemented Dispute Mgt. LandscapeUDM Case Mgt.Case life
cycleEmail NotificationsReportingBW DashboardBW Analyzer
Reports
Dow Corning INTERNALDispute Mgt. Landscape: UDM Case Mgt.We
utilize UDM Case Mgt. with some customization for our unique needs,
includingCredit Case enhancementReason CategoriesUnique Routing of
Disputes:Coordinator: always the person responsible for resolving
the disputeProcessor: person responsible for the next task in the
resolutionEmployee Responsible: always the person responsible for
the overall relationship: Sales & Service Specialist. Dow
Corning INTERNAL
Dow Corning INTERNALCan also attach documents through
UDM_DISPUTE19
Dow Corning INTERNAL20This is the high level description of the
ultimate reason for the dispute. Further breakdown is possible with
the reason code. NO cases should be closed with the category or
reason of TBD!!!!
CapGemini will use CATEGORY to determine who will be assigned
the case.
CCPs will receive: Duplicate / Discount
CPS assigned to CPS coordinator or marketing
To be determined assigned to Credit Specialist to contact
customer for actual reason
All others assigned to CSP
Dow Corning INTERNAL21These are the reason code choices. This is
a further breakdown of the category field.At this point, the only
one with further breakdown is the PRICING category.Dispute Mgt.
Landscape: Case Life CycleDriven by Payment DiscrepancyBPO receives
payment discrepancy and create payment dispute.Coordinator
notified.Coordinator contacts customer and related
parties.Coordinator gets resolution agreement and forwards to
BPOBPO adjusts or receives payment and closes dispute. Driven by
Billing Error ComplaintDC receives/establishes customer billing
error complaint.Coordinator creates payment dispute
case.Coordinator contacts customer and related parties.Coordinator
gets resolution agreement and forwards to BPOBPO performs clearing
or receives payment and closes dispute.
Dow Corning INTERNALDispute Mgt. Landscape: Email
NotificationsIn 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 INTERNALDispute 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://horizons-dev.dowcorning.net/irj/servlet/prt/portal/prtroot/pcd!3aportal_content!2fcom.dowcorning.ROLES!2fGlobalPersonnel!2fcom.dowcorning.GlobalPersonnel!2fcom.dowcorning.MySAPInbox
Dispute: 6000000031SAP Payer Number: 1041090 - PROCTER &
GAMBLE CO (OLAY)Disputed Amount: 15.90 USDReason: TAXResponsible
CSP/CCP: PJCOE
This email is auto generated. Please do not reply.
Dow Corning INTERNAL24It is not necessary to retain these
emails, as you are able to access your inbox without the
link.Dispute Mgt. Landscape: Customer DashboardResolution Cycle
TimeBacklog ChartSigma Chart Our Sigma ranges regionally between
1.7 and 3.5Our Dec-2010 sigma was 2.292
Dow Corning INTERNALDisputes= 285 Invoices= 25990 Sigma=
2.292
Roughly 1% of invoices resulting in a payment dispute!25Payment
Dispute Cycle Time
Dow Corning INTERNALEurope Cycle time reduced in 2010 from a
high of 46 days to 32 days!26Payment Dispute Backlog Chart
Dow Corning INTERNALEurope Backlog chart shows steady decline in
backlog in 2010 with open disputes decreasing from 150 to 75!27Dow
Corning Case Study TakeawaysGlobal Solution customized to our
regional needsA sound control environment Operational
ToolsCommunication via workflowReporting for management
oversightDow Corning INTERNALQ & AThank you for your time!Dow
Corning INTERNAL