Dow Corning INTERNAL

SAP FSCM Dispute Management Case Study:

Dow Corning
Ritch Cushway, Global Customer Financial Services Manager,
Dow Corning Corporation, Midland, MI, USA

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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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Pursuing our vision:

AV13740

We are innovative leaders

unleashing the power of silicon
to benefit everyone, everywhere.

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Serving customers diverse needs

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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

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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.

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Initial Implementation of FSCM Dispute

Management
Timelines and Cost
Key Challenges
Delivered Objectives

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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.

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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

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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.

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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 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 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

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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://horizons-dev.dowcorning.net/irj/servlet/prt/portal/prtroot/pcd!3aporta
l_content!2fcom.dowcorning.ROLES!2fGlobalPersonnel!2fcom.dowcorning.GlobalPer
sonnel!2fcom.dowcorning.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

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Payment Dispute Cycle Time

Cycle Time by Month

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Payment Dispute Backlog Chart

Backlog by Month

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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!