Unlocking Hidden Opportunities to the Optimised Cash Allocation Process


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Unlocking Hidden Opportunities to the Optimised Cash Allocation Process

  1. 1. Chasing the DollarUnlocking Hidden Opportunities to the Optimized Cash Allocation Process Pg. 1
  2. 2. General Introduction Hans Hartman Located in Terneuzen, Netherlands Married, two boys Finance Director Globally accountable for a Next Enterprise Architecture Finance team of around 120 team members migrating the Finance function towards: From a Finance perspective to a set of globally integrated and standardized set of work processes that remain agile to support the company’s transformation From an IT perspective an SAP R2 driven landscape to a Business Suite 6 focused application landscape Also: Chairman of the VNSG Finance Focus Group Chairman of the SABRIX – SAP Influence Council Pg. 2
  3. 3. Agenda Quick introduction of The Dow Chemical Company The NEA Program Our Application of AutoBank Lessons Learned Pg. 3
  4. 4. Some Facts Founded in 1897 Development and production of over 5.000 different Terneuzen plastics and chemicals Midland Worldwide headquarters in Midland Customers in 160 countries 50,000 employees 188 production locations in 35 countries Annual sales of 53,7 billion dollar Vision To be the most profitable and most respected science driven chemical company in the world Mission To passionately innovate what is essential to human progress by providing sustainable solutions to our customers Core Values Integrity, Respect for people and protecting our planet * 2010 base Pg. 4
  5. 5. Dow’s Operating Segments Advanced Materials Electronic & Coatings & Specialty Materials Infrastructure Health & Agricultural Sciences Health & Agricultural Sciences Performance Products & Systems Performance Systems Performance Products Basics Basic Plastics Basic Chemicals Hydrocarbons & Energy Pg. 5
  6. 6. Next Enterprise Architecture Next Enterprise Architecture (NEA) is… An Investment in a new generation of our Work Process & Information Systems An Enabler for Dow’s corporate transformation to the new business model, offering greater flexibility and capability to address Dow’s Businesses and Joint Ventures A Strategy for providing a robust platform for the new Dow and future enterprise capabilities A Program structured to manage the delivery of the next generation of work process-enabling systems and reporting capabilities DOW RESTRICTED – For Internal Use Only Pg. 6
  7. 7. NEA Business Case HighlightsDow is investing in Next Enterprise Architecture to… Support Dow’s transformation to the new business model, including flexibility and capability to service Joint Ventures and Market Facing Businesses Integrate to a single platform to maintain Dow’s low cost to serve position – Avoid significant development and implementation costs – Reduce ongoing IT operating costs Capitalize on the investment that SAP has made in their product over the past 20 years Leverage hROH capabilities and experience to accelerate the NEA Journey DOW RESTRICTED – For Internal Use Only Pg. 7
  8. 8. Deliver the next Generation of Diamond Systems 1990 2010 Diamond Systems was originally The next generation of Diamond introduced in the early 1990s Systems is positioned to enable Dow’s transformation Implementation of Dow’s first integrated business system A refreshed and extended suite of robust, sustainable IT At the time, enabled more capabilities consistent implementation and execution of standard business Enables the global business rules processes and provide reporting for the corporation, businesses and functions Addresses the need for flexibility to respond to business needs efficiently Pg. 8
  9. 9. NEA Roadmap Rohm and Haas Milestone 1 Scope Rohm and Haas business moves to NEA first ++ Milestone 1 Dow Latin America March 2011 LAA First Dow regional deployment• Global Template Milestone 2• All SAP Modules July 2011 GEO Area 3 APAC (minus EM)• 360 Work Processes October 2011 Milestone 3 GEO Area 4• 115 Integrating  NAA/EUR/EM Applications Milestone 4 GEO Area 5• 1,600+ RICEF objects Dow will move by geography –• 250+ BW Reports to be sequenced as required Milestone 5• Localization for 38  countries 2009 2015 Milestone 1 targeted to capture synergies of Dow & Rohm and Haas in the base NEA solution Latin Region for Milestone 2 will allow the first Dow business to exercise the functionality while minimizing  risk to the company Milestones 3 – 5 to be sequenced and staged based on demand from the business (Dow NA, Dow Europe,  Dow APAC) and other transformation activities Pg. 9 Dow CONFIDENTIAL, FOR INTERNAL USE ONLY ‐ DO NOT FORWARD
  10. 10. Our New Integrated SAP System Business Suite 6 Business Suite 6 ESOA EPM MDM Hanse Orga PayWare BPC GRC-PC OneSourc e ERP Pg. 10
  11. 11. Dow Requirements – A/R Functional Objectives: Highest degree of automated payment allocation. Strong internal controls for manual payment processing. Accept and process all known payment methods. Minimum Requirements: Seamless integration of payment receipt and allocation. Receive all bank files in various formats and process through single program for clearing. Matching on numerous customer reference criteria (Customer Purchase Order Number; Customer Material ID; Delivery Number; Invoice Number; Amounts) including separate rules for different customers. Rate of global automated (no-touch) allocation of payments must be over 90%. Simplified workflow for Payment Receipt and Handling Process – hand- offs for discrepancy resolution. Integration with SAP Financial Supply Chain Management tools – Collections Mgmt.; Dispute Mgmt.; Credit Mgmt. Clear determination between Cash Discounts taken vs. Short Payments. Pg. 11
  12. 12. Dow Requirements – A/R Why NOT SAP? Data elements are scattered on several screens – no single display to facilitate manual payment application. Lacking robust allocation algorithms without custom development and even then still challenged. Electronic Bank Statement and Lockbox programs still separate in ECC with different criteria and results. Pg. 12
  13. 13. Benefits of the Hanse Orga solution No IT resource needs to continuously enhance the matching rules. This saves significant amounts of continuous improvement projects for IT in order to enable the capabilities for the A/R processes. Increased Bank Statement Line item matching towards open receivable open items and thus improving account reconciliations. This improves the internal controls as required by SOX. Improved credit scores for customers, reducing the risk for blocked sales orders. Improved efficiency in manual handling potential eliminating roles within the A/R department or Service Center. Pg. 13
  14. 14. Options Assessed Three options assessed: Acquisition of Hanse Orga’s AutoBank. SAP ECC 6.0 enhanced with the same automation as currently available in SAP R/2 and improve towards the Hanse Orga tool Standard SAP ECC 6.0 and rework hROH user exits (customizations) and continue to build upon the solution to achieve similar rates as current Dow’s R/2 and longer term AutoBank. Pg. 14
  15. 15. Decision Drivers Value Case clearly showed that AutoBank was more favorable then IT custom coding in ECC. In order to ensure continuous work process improvement, flexible rule building by the Work Process Experts is fast, drives results immediately and eliminates significant testing through a systems development life cycle. Drives engagement of those who executes the processes into the continuous improvement process. Reduces IT engagement and thus reduces the IT spending and workforce once we are in the Run-the-Business mode. Pg. 15
  16. 16. Geography Diversity – Milestone 1 (2011) 39 countries, 200 legal entities in scope for 2011 Asia Pacific: MS1b Australia India Europe/ME/Africa:  Indonesia MS1c Japan North America: France Malaysia United States Germany New Zealand Canada Italy Pakistan Bermuda Netherlands Peoples Rep of China Poland Philippines Romania Singapore Russia South Korea South Africa Taiwan Spain Thailand Latin America: Sweden Vietnam MS1A: Switzerland Argentina Turkey Brazil United Kingdom Finland Chile Columbia Denmark Luxembourg Mexico Pg. 16
  17. 17. Geography Diversity 24 more countries, 600 more legal entities in scope for 2012+ North America: Europe/ME/Africa:  MSx: MSx Barbados United Arab Emirates Puerto Rico Austria Virgin Island Bahrain Asia Pacific: Egypt Nothing added Greece Hungary Ireland Latin America: Kenya MS2: Kuwait Bolivia Norway Costa Rica Portugal GUATEMALA Romenia Peru Saudi Arabia Paraguay Ukraine Uruguay Venezuela Pg. 17
  18. 18. One Month After Implementation History Current rate LAA NAA EUR PAC hDOW 16% 41% 54% 25% hROH 24% March 2011 ECC LAT AR only All processes March 2011 57% 17% Minimum Expectation 60-80% (1) 50-70% (2) (1) when customer name rule is turned on (2) when F&S rules are created and turned on Pg. 18
  19. 19. Some Initial Learnings for LAA Mexico, Colombia : Billing in USD / Payments in loc currency Argentina : Check payments without details in NP (evaluate of Check registration can be used) General: Very low hit rate if we look at the statistics for all bank statement line items as no rules have been turned on so far for F&S and AP Unstructured MT940 : does not allow exclusion of certain BTC from upload into Autobank (remain in post processing and therefore negatively impact hit rate %) Pg. 19
  20. 20. Some things to take home Ensure a strong integration between the “stakeholders” of the Bank Statement information (AR, Treasury, TER, APAY, Payroll etc) Define the right “RACI” model for your organization to define end-users, rule builders, AutoBank application owner. Ensure AutoBank Bank Statement processing operates with other SAP Treasury/BCM applications. Had to build a “wrapper” to enable both. Have dedicated resources on this application in the project team. Lots of power in the tool when designed properly. Role out cross functionally to get the larger benefits from day one. Start simple, move to complexity. Pg. 20
  21. 21. uestions ???Pg. 21