dow chemicals’ customer-centric …wurban/case studies/dow chemicals' e... · customer...
TRANSCRIPT
DO NOT COPY
ITSY/033
IBS Center for Management Research
Dow Chemicals’ Customer-centric E-Business Strategy
This case was written by P. Mohan Chandran, under the direction of Vivek Gupta, IBS Center for Management Research. It
was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either
effective or ineffective handling of a management situation.
2004, IBS Center for Management Research. All rights reserved.
To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: [email protected]
www.icmrindia.org
DO NOT COPY
1
ITSY/033
Dow Chemicals’ Customer-centric E-Business Strategy
“Our focus is making sure we’re a sustainable growth company. The best way you can do that is
to be very productive, very customer-focused and create an organization that delivers new ideas.
We’re taking the company strategy and aligning our IT investments with it.”1
- David Kepler, CIO & VP, e-Business, Dow Chemicals.
“At Dow we recognized early on that the Internet had the potential to become the primary
communication channel between the company and many of our customers, shareholders and
suppliers. Our approach was to go beyond using information technology just to simplify the 'buy-
sell' process and look at global integration of information technology into all our processes.”2
- Dennis Lauzon, President & CEO, Dow Chemicals (Canada).
AWARDS FOR CUSTOMER-CENTRICITY
US-based Dow Chemicals (Dow) is a leading „science & technology‟ company that produces
chemical, plastic and agricultural products. The company is the world leader in the production of
plastics, chemicals, hydrocarbons, herbicides and pesticides. For the fiscal ending 2002, Dow
reported revenues of $27.6 billion. With operations spread over 170 countries, Dow produces
products that cater to the requirements of many industries, including food, transportation, health &
medicine, personal & home care, and building & construction.
With more than five million visits per year, Dow‟s website (www.dow.com) was one of the
company‟s most important customer communication tools. The website provided 24/7 access to
news and information on Dow‟s businesses, manufacturing facilities, corporate operations,
financial reports and product technical data. Dow was recognized as one of the most customer-
centric companies in the chemical industry, and one that used IT and internet enabled technologies
to serve its customers. The company received several awards for its proactive application of
IT/internet for providing better customer service (Refer Exhibit I for the awards won by Dow).
In 2000, Dow was third among the Fortune 100 companies and was the only chemical company to
be listed in the „Global Top 10‟ in providing electronic customer service. For this, the company
received the „Swift-E Award for Excellence in Electronic Customer Service‟ from California-based
Brightware, a leading vendor of CRM software. In 2001, InternetWeek placed Dow among the „top
100 e-business companies‟ in the US for effective use of internet in enhancing customer and supplier
relationships. The US President honored Dow with the „National Medal of Technology‟ in 2002 for
its innovative technological initiatives and its impact on the chemical industry and society. All these
awards and recognitions bear testimony to Dow‟s customer-centric culture.
1 As quoted in the article titled “Transformation Isn‟t Easy,” by Robert Preston and Rutrell Yasin, posted
on www.internetweek.com, July 20, 2000. 2 As quoted in the article titled “E-Business & Internet Redefining Dow,” posted on www.dow.com,
May 22, 2001.
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
2
Emphasizing the importance Dow attached to customers, Mack Murrell (Murrell), Global Director,
Dow‟s Corporate Customer Interface Initiative, said, “We believe that if we center all of our
thinking – organizational, cultural, procedural, and technological – around the customer, we will
create the kind of breakthrough thinking we need to achieve our vision of being the easiest
company in the world to do business with.”3
BACKGROUND NOTE
Founded in 1897 by Herbert Dow, Dow Chemicals began commercial production of bleach in
1898. The company diversified its line of business in 1935 and ventured into the production of
plastics with the launch of Ethocel ethylcellulose resins. Dow‟s stock began to be listed on the
New York Stock Exchange from June 1937.
Since its inception, Dow‟s management has placed a major emphasis on developing strong
customer relationships. The company‟s customer-centric values, as laid down in its mission
statement, (Refer Exhibit II) reiterated Dow‟s focus on its customers. Dow worked closely with its
customers to gauge their present and future expectations from the company. This enabled it to
fulfill customer demands and sometimes even exceed their expectations. Explaining the
importance of customer intimacy, Charles Churet, Commercial Director of Dow said, “Customer
intimacy and market intimacy put you in a better position to understand the latent needs of your
existing and prospective customers. Customer knowledge enables you to understand where you
can innovate and develop solutions that capture greater value than the sale of products alone.”3
Over the decades, Dow witnessed significant growth and by 1964, its revenues crossed $1 billion.
By 1980, Dow‟s revenues exceeded $10 billion and by 1995, the revenues crossed $20 billion.
After witnessing significant revenue growth till the late 1980s, the company faced the problem of
stagnant revenues in the 1990s. In 1998, Dow‟s annualized revenue growth rate over the previous
ten years was less than 0.5 percent. The top management of Dow felt that it had to find ways to
overcome the negative implications of the commoditization of its core chemical products business.
In its efforts to increase the revenue growth, the management made fresh attempts to improve
Dow‟s relationship with its customers.
In the late 1990s, Dow decided to focus on achieving improved levels of customer service and
customer intimacy by redefining its image as a more „customer-friendly‟ company. The company‟s
mission statement reflected the transformation in its image from a product manufacturing company
to a science and technology solutions company (Refer Table I).
Dow decided to use IT extensively to improve customer service. The company viewed customer
service as the holistic responsibility of all departments in the organization. Elaborating on the
importance of using IT to integrate various departments to deliver effective customer service,
Luciano Respini, Vice-President of marketing and sales for Dow, said, “An effective sales process
extends throughout an organization – well beyond the boundaries of the traditional sales function.
People working in areas like logistics, finance, technical services, production planning and EH&S
(Environment, Health & Safety) have as much of a role to play in fulfilling the needs of our
customers as those employed within customer service, marketing or the sales function itself. Only
by adopting a consistent process across the entire organization can you ensure these diverse groups
are effectively integrated, properly aligned and entirely clear on the critical part they each play in
building great customer relationships.”4 In order to imbibe a stronger customer focus throughout
the organization, Dow launched the „Six Sigma‟ program in September 1999 (Refer Exhibit III).
3 From the book, Taking Care of eBusiness, by Thomas Siebel, page 179.
4 As quoted in the article titled “The Dow Chemical Company Named Inaugural Recipient of the Miller
Heiman Sales Excellence Award,” posted on www.dow.com, April 28, 2003.
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
3
Table I
Dow’s Mission Statement
MISSION
To constantly improve what is essential to human progress by mastering science and
technology.
The mission statement can be broken into three components:
Constantly Improve – This concept is bedrock to Dow‟s culture and has been since Hebert
Dow first said, “If you can‟t do it better, why do it?” It underscores our drive to become an
ever better and bigger company.
Essential to Human Progress – The products we make find their way into products that
provide people the world over with improved lifestyles. All of us at Dow must understand
and take pride in this. We must also use this concept to further connect Dow with the
external markets we serve. When we think in terms of the markets we serve, we become
more outside-in focused and we can better seek growth opportunities.
Mastering Science and Technology – We must put our science and technology to work to
create solutions for our customers and for society.
Source: www.dow.com.
THE SIX SIGMA INITIATIVE
The Six Sigma initiative was considered a logical extension of Dow‟s quality policy, (Refer Table
II) which aimed at exceeding customer expectations. Through this program, Dow wanted to
achieve excellence in product quality as well as customer service. The management implemented
the program throughout the organization by training 1,000 employees, who were designated as
„black belts.‟ Black belts were responsible for ensuring strict quality control standards in
manufacturing and other business processes. They had to identify quality-related problems using
specialized statistical tools and techniques (like statistical quality control and statistical process
control). Through the Six Sigma program, Dow provided an assurance of quality to its customers
(Refer Table III).
Table II
Dow’s Quality Policy
Quality Performance is a commitment to excellence by each Dow employee. It is achieved
by teamwork and a process of continuous improvement.
We are dedicated to being the leader in providing quality products and services which
meet or exceed the expectations of our customers.
Quality management plays an important role by assuring that the company can produce and
deliver the quality products and services expected by its customers.
Source: www.dow.com.
Another important objective of implementing the Six Sigma program was cost reduction. Michael
D. Parker (Parker), former President & CEO of Dow, estimated that the implementation of the
program would yield cost savings of $1.5 billion. Dow regarded Six Sigma as a transformational
tool that could make the company‟s culture more customer-centric. Kathleen M. Bader (Bader),
who headed the Six Sigma initiative, said, “Six Sigma is a cultural change program that accelerates
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
4
perfection. Some companies are using it as an incremental change approach; at Dow it‟s a
transformational tool. Six Sigma makes common sense the enemy. Rather than accept what you
think you know as fact, you go back and prove it.”5
Table III
Six Sigma – Focus on Customers
Quality Assurance
Dow is one of the few premier companies that focus on customers as the basis of Six Sigma
efforts. Our objective is to create customer loyalty based on six sigma level quality. The desired
outcome is unparalleled business excellence.
Customer Focus
Dow views its product and service quality as being defined by its customers. Dow works closely
with its customers to understand their businesses and their expectations. This close working
relationship helps Dow to better meet its customers‟ expectations today and to anticipate and
meet their future needs.
Source: www.dow.com.
In the late 1990s, Dow‟s top management announced the acceleration of its e-business initiatives
to make the company more customer-oriented. The company launched the SAP program across all
its operations, standardized 40,000 Windows desktops and provided access to its 2-terabyte Oracle
data warehouse by integrating all its workstations. Explaining Dow‟s customer-centric e-business
strategy, Dennis Lauzon (Lauzon), President and CEO, Dow Canada, said, “Our overall approach
and strategy with respect to e-commerce and information technology has centered on initiating
business growth, fostering customer loyalty and creating internal operating efficiencies. Ultimately
this reduces customer costs and makes it easier, faster and more convenient for our customers to
do business with Dow.”6
DOW’S E-BUSINESS STRATEGY
When Dow launched its website in 1994, it was one of the first companies in the chemical industry
to create an online presence of all its brands, products and services. By 1999, the site was being
accessed by 1.6 million unique visitors, and the figure increased to 3 million in 2000. Dow
upgraded the site continuously and also widened the range of services offered, to include e-mail
marketing, online customer surveys and feedback and virtual trade shows.
In 1999, Dow employed nearly 700 customer service representatives, 50 telesales personnel, 110
inquiry support agents and hundreds of other technical support personnel, to work both on the field
and in call centers. Dow‟s main customer channel was its sales force that comprised of over 1,400
salesmen worldwide. An important element of Dow‟s eBusiness strategy was the “customer
interface initiative,” that aimed at integrating the company‟s various customer service and support
channels including the internet, call center, field sales offices and telesales. This would enable
seamless customer interaction with Dow.
Dow‟s top management faced several challenges while implementing its e-business strategy. The
first challenge was to significantly change the way the company conducted its business. This
required a sense of urgency and seriousness among employees and a need for overcoming
5 As quoted in the article titled “Dow Chemical,” by Michael McCoy, posted on www.pubs.acs.org,
June 18, 2001. 6 As quoted in the article titled “E-Business & Internet Redefining Dow,” posted on www.dow.com,
May 22, 2001.
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
5
organizational inertia. The second challenge was to successfully initiate organizational and
process-related changes needed to function as an e-business organization before implementing any
technological change. And another major challenge was technological implementation and
integration with the existing processes.
Selecting the technology supplier was an important factor for the successful implementation of the company‟s e-business strategy. Dow‟s criterion for selecting a technology supplier was the supplier‟s market leadership. When implementing its e-business strategy, Dow adopted three core principles – think big, start smart, and scale fast. (Refer Table IV). The company then started installing the IT systems necessary to execute its strategy. Dow adopted some vital technologies for its new operations, „MyAccount@Dow,‟ Elemica and DowNET.
Table IV
Core Principles of Implementing E-Business
Think Big: Starting with a market-driven vision, the company considers all e-business possibilities and evaluates all strategic alliances that are in line with its growth objectives.
Start Smart: Prior to implementing new e-business initiatives, Dow executes pilot programs to test fresh ideas, incorporate customer feedback into the design process and minimize the risk of disruption.
Scale Fast: Technologies that demonstrate value to internal and external customers are aggressively leveraged by Dow across all of its global businesses and markets.
Source: Taking Care of eBusiness, by Thomas Siebel, page 186.
‘MYACCOUNT@DOW’ – AN EXTRANET SERVICE
In late 1999, Dow introduced a unique extranet service for customer-focused order management system called „MyAccount@Dow.‟ The extranet service enabled the customers to communicate and interact with the company in a quicker and easier way. Dow also provided online access to certain services like order entry, order status, placing multiple orders, accounts history, online payment information, safety data sheets, reporting, online collaboration, electronic certificate of analysis (eCoA), product details, and technical data and support (Refer Exhibit IV).
MyAccount@Dow offered personalized services, providing product-related and customer-specific information. Transaction-related services were offered through a special account that could be accessed after registration and was protected by a password. Registered users could conveniently access, review, update, and modify service requests. They could also browse the knowledge databases of the company.
Using MyAccount@Dow, the customers could order materials directly from their ERP system to Dow‟s SAP system. This expedited customer service since the customers did not have to make telephone calls or send e-mails to Dow‟s sales or customer representatives to place an order. MyAccount@Dow was integrated with all customer-facing channels, and this enabled it to record all customer interactions in an online customer register. Consolidation of all customer interactions across multiple channels was regarded a great achievement for Dow in customer relationship management. Explaining the benefits of the service, Murrell said, “Even a year ago, the left hand didn‟t always know what the right hand was doing. In the future, when a customer calls Dow for service, we will know the customer‟s service history and order status before we even pick up the phone, based on the caller ID. And that information will be the exact same information that the customer can access on MyAccount@Dow, so even while we‟re on the phone we‟ll be able to say, „We‟re happy to help you, but if you have this problem after five o‟ clock, let me show you another way to get the same answers.‟”
7 Thus, the customer was able to find out information and
solutions even after office hours, through MyAccount@Dow.
7 From the book Taking Care of eBusiness, by Thomas Siebel, page 184.
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
6
By mid-2000, the ERP systems of nearly 50 MyAccount@Dow customers were linked to Dow‟s
SAP system. Linking the customer‟s ERP systems with Dow‟s SAP systems was a very
specialized job that depended on the individual customer‟s choice and requirement. The extent to
which the customer required a linkage between its production and planning systems, and Dow‟s
order entry systems determined its choice. Moreover, the synchronization of back-end applications
(like SAP) with e-commerce applications (like MyAccount) was very difficult. Analysts
appreciated Dow‟s efforts since they felt that such integration could have been accomplished
successfully only with common systems, which most players in the chemical industry did not
possess. By June 2001, MyAccount@Dow service had over 5,000 registered users worldwide.
Ever since its launch, Dow made regular enhancements to MyAccount@Dow, some of which
included, facilitating orders of several items (order entry flexibility), improving customization
levels of business and customers, real-time collaboration, integrating customer feedback on quality
and introducing improved reporting and downloading functions. Live information sharing was also
made possible through the „web meeting‟ feature of „MyAccount@Dow‟ browser. The site also
offered on-demand tendering and payment of bills through the „easy pay‟ feature. Dow constantly
upgraded the extranet site to cater to its diverse customers and provide them information on
company-specific queries. By 2002, MyAccount@Dow had gained wide acceptance around the
world, with nearly 3,400 companies in over 42 countries actively accessing the account.
ELEMICA – B2B e-MARKETPLACE
As part of its e-business strategy, Dow together with seven other companies developed Elemica, a
global business-to-business (B2B) e-marketplace, with an investment of $150 million in July 2000.
Elemica acted as an independent chemicals and plastics industry exchange that enabled online
buying and selling of chemical and plastic products. Dow could establish a contact with several
customers and vendors in a standardized manner since Elemica served as an integrated hub for
information dissemination for all its members (buyers and sellers of the products).
Dow‟s primary goal was to empower customers in carrying out their business. Customers who
opted for Elemica could access ERP connectivity and trade with Dow or any other network
member of Elemica. Explaining the role of Elemica, Andrew Liveris (Liveris), Dow‟s President
said, “At Dow, we are aggressively building our e-business integration capabilities to better
address customer needs and capture value from supply chain efficiencies. We recognize the value
that Elemica delivers through reduced transactional costs and streamlined business processes both
on the buy-side and the sell-side of our business.”8
Elemica enabled easy order processing and supply chain management for its members. It offered a
range of products, which facilitated the restructuring and integration of business processes for
members to accomplish cost savings. Elemica also enabled organizations to consolidate and
expand ERP connectivity globally through an integrated electronic link in its network. Elemica‟s
membership rose from 22 in end 2000 to about 150 by mid 2003.
DOWNET – GLOBAL COMMUNICATION NETWORK
In 2001, Dow partnered with leading global IT vendors like EDS and Cisco to develop the world‟s
first global voice-over internet protocol (VoIP) communications network called DowNET. It
provided a solution that enabled convergence of voice, data, and video technology.
DowNET transcended all geographic and accessibility barriers and offered mobility and flexibility
to its users. It enabled sending and receiving electronic mails, fax documents, voice and video
messages, and accessing files and local area network (LAN) services, round the clock, from any
8 As quoted in the article titled “Dow Successfully Executes Its First Global ERP-Integrated Buy/Sell
Transaction via Elemica,” posted on www.dow.com, June 11, 2001.
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
7
part of the globe. DowNET also provided customers with enhanced customer service and
transaction opportunities through effective communication. Efficient system maintenance &
support, high dependability and successful execution of Dow‟s e-business strategy was made
possible through the integration of different processes into one network. Explaining the functions
of DowNET, David Kepler, Chief Information Officer (CIO) for Dow said, “DowNET essentially
allows us to integrate everything into a single-source, real-time communications solution. It opens
up new doors, shatters conventional communications boundaries and will result in significant
business advantages for Dow. Our new technology solution allows employees to bring the
connectivity of their offices on the road, as well as connect customers, employees and offices in a
more efficient, powerful and global manner.”9
DowNET provided a solution to several problems impeding corporate communications. It
eliminated the complications involved in maintaining multiple computer networks by
synchronizing them into a single, common, controllable solution. DowNET significantly increased
the data transmission speed. The possibility of operating multiple network applications at the same
time was also enhanced. Kepler said, “At Dow, we are integrating e-business into everything we
do. Solutions such as DowNET offer us the ability to create value from the inside out. That results
in better customer service, increased employee satisfaction and enhanced industry leadership.”10
THE BENEFITS
Dow derived several tangible and intangible benefits through the implementation of its e-business
strategy. The company was able to increase its revenues (Refer Exhibit V) as well as enhance
customer service. By applying e-business technology to integrate and improve its business
practices, Dow significantly improved the effectiveness of customer interactions with the
company.
Dow‟s IT initiatives such as MyAccount@Dow and Elemica brought substantial benefits for the
company. Dow‟s sales in the fiscal 2002 via MyAccount@Dow were more than $1.6 billion. In
2002, it attracted more than 12,000 external site visits each month. Approximately 3,400
companies in more than 42 countries were active users of MyAccount@Dow. Elemica also
benefited Dow greatly. Apart from strengthening Dow‟s relationship with customers, it:
Improved operational efficiency by increasing speed, reducing costs and achieving greater
accuracy in order entry and fulfillment.
Ensured safety and reliability in deliveries and reduction in supply chain costs by avoiding
redundancy in the supply chain and the stocking of excess inventory.
Dow conducted more than 3,600 transactions in 2002 through Elemica, with companies like Air
Products, Atofina, BASF, Bayer, Ciba, Cognis, Degussa, HB Fuller, Proctor & Gamble, Rohm and
Haas, Sherwin-Williams, Univar and Zeon on the sell-side; and with Atofina, BASF, Bayer, BP,
Celanese, CHEMCENTRAL, Ciba, Cognis, Crompton, Degussa, DSM, Dupont, Rhodia, Shell,
Solvay and Specialty Minerals on the buy-side. By the end of 2003, Dow expected to receive
electronic orders from more than 80 customers, and to send orders to more than 50 suppliers
through Elemica.
In spite of the initial successes, Dow‟s management felt that they still had a long way to go.
Describing their ultimate goal, Parker said, “As we continue our transformation from a product
company to a science and technology solutions company, we aim to delight customers to such an
extent that they never want to look elsewhere for a better supplier.”
9 As quoted in the article titled “Dow Sets Standard for Global Business Communications: EDS and Cisco
to Create Breakthrough Information System,” posted on www.dow.com, June 7, 2001. 10
As quoted in the article titled “Dow Sets Standard for Global Business Communications: EDS and Cisco
to Create Breakthrough Information System,” posted on www.dow.com, June 7, 2001.
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
8
QUESTIONS FOR DISCUSSION:
1. “At Dow, we are aggressively building our e-business integration capabilities to better address
customer needs.” In the light of the statement, explain how Dow Chemicals implemented its e-
business strategy. What benefits did the company reap after implementation?
2. Dow was recognized as one of the most customer-centric companies in the chemical industry.
Explain how the company used IT and internet enabled technologies to enhance customer
satisfaction?
3. “We aim to delight customers to such an extent that they never want to look elsewhere for a
better supplier.” What other technologies must Dow adopt in the future to achieve its aim of
delighting customers?
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
9
Exhibit I
Awards and Recognitions for Dow Chemicals
Year Awards & Recognitions Criteria
1999 PC Week's Fast Track 500 Dow.com ranked on the list of Internet technology innovators by PC Week.
InformationWeek 500 Named #1 in the chemical industry and #26 overall on the listing of the 500 most innovative IT users by InformationWeek.
2000 eWEEK Fast Track 500 Recognized as a leading global e-enabled company and one of the top manufacturing companies using "e"
InformationWeek 500 Ranked #1 in the chemical industry and within the top 90 overall, in this ranking of the 500 largest and most innovative users of information technology.
CIO-100 Award The award recognized Dow as an organization that exemplifies the highest level of operational and strategic excellence for innovation and improved business performance through the use of customer-oriented practices.
2nd Annual Ranier Web Index
Ranked Dow among the Top 20 companies of the Fortune 100 companies surveyed for the fastest response time to online customer inquiries.
InternetWeek 100 Effective use of the Internet to enhance business operations.
Swift-E Award For Excellence in Electronic Customer Service
Ranked third among the top 10, and is the only chemical company to place in the top 10 listing.
2001 Salomon Smith Barney CIO of the Year Award
Expertise in IT systems & strategy including Dow's standardized, global ERP system, PeopleSoft for human resources and Siebel for Customer Relationship Management (CRM), as well as the Dow Workstation.
CIO-100 Award For demonstrating positive performance through innovative solutions to improve business practice, service and relationships with partners and clients.
InternetWeek 100 For its use of the Internet to improve relationships with customers and suppliers, for its involvement in e-marketplaces and its use of the Internet to enhance its bottom line.
InformationWeek 500 For its innovation across its e-business operations.
2002 InformationWeek 500 Ranked #1 in the chemical industry and #14 overall, the InformationWeek 500 recognized Dow as one of the largest and most innovative users of IT.
CIO 20/20 Vision Award One of 40 individuals recognized, Dave Kepler, corporate vice president and CIO, was among the first to receive the CIO 20/20 Vision Award, an award designed to acknowledge business leaders for their use of technology as a resolution for a business or organizational challenge.
Source: www.dow.com.
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
10
Exhibit II
Dow’s Customer-centric Values
Integrity: We believe our promise is our most vital product – our word is our bond. The
relationships that are critical to our success depend entirely on maintaining the highest
ethical and moral standards around the world. As a vital measure of integrity, we will ensure
the health and safety of our communities and protect the environment in all we do.
Respect for People: We believe in the inherent worth of people and will honor our
relationships with those who let us be part of this world. Our customers are our partners in
creating value; their loyalty is our greatest reward. Our respect for people also extends to
the consumers whose lives we touch. We will strive to answer people's most vital needs: for
food, water, shelter, transportation, communication, health and medicine.
Unity: As one company, Dow‟s impact on the world is far greater than the impact of any
one of its parts. We will work together, building relationships to create ever-greater value
for the customers and consumers we serve.
Outside-in Focus: We believe that growth comes from looking at opportunity through the
eyes of customers and all those we serve. Taking an "outside-in" view ensures that our
efforts are always relevant and that our unique talents are applied to "real world"
opportunities. We will see through the eyes of those whose lives we affect, identifying
unmet needs and producing innovative and lasting solutions. We will bring to this task all of
our experience and knowledge as the unique individuals we are.
Agility: At Dow, we believe our future depends on speed and flexibility – mental,
emotional and physical. Responding resourcefully to society's fast-changing needs is the
only road to success. We will meet the forces of change with power and grace. We will
make course corrections that demonstrate flexibility as well as courage, and that highlight
our ability to keep ourselves aligned with a world in motion.
Innovation: We believe that meaningful, productive change – solving problems – only
comes by looking at challenges and opportunities from new angles and exercising our
curiosity. In the name of innovation, we will make science a way of living. We will not only
master the science of the physical world, but the science of the mind and heart. Our job is to
unlock answers that make a fundamental difference to people's lives. We will use
technology to help lead society forward. We will conceive, design, engineer, and execute
solutions that remove barriers to human potential and productivity.
Source: www.dow.com.
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
11
Exhibit III
The Six Sigma Philosophy
The Six Sigma philosophy states that there is a direct relationship between product defects and
customer satisfaction. The fewer defects, the happier the customer. Defect free products are the
key to customer satisfaction and loyalty. The purpose of Six Sigma is to stop variations in
quality at the earliest possible point by attacking variation during design of products and
processes.
What is Sigma?
"Sigma" is a letter in the Greek alphabet and is a statistical measure that tells how much a
product, service, or process varies from perfection. Based on defects per million opportunities
the higher the sigma value, the better the quality.
Sigma Level Six Sigma
Defects Per Million
1 690,000
2 308,000
3 66,810
4 6,210
5 233
6 3.4
To put this in perspective, a measure of one sigma would equal 170 misspelled words per page
while a six sigma would equal one misspelled word in a library. The impact of poor quality on
sales is just as dramatic. A two sigma level equals 30% - 40% of sales, rendering a company
non-competitive. Six Sigma defects are <10% of sales and makes a manufacturer "world class".
It is the focus on quality that is a direct benefit to the customers, as quality is an element that
influences buying decisions. Six Sigma establishes acceptable ranges of performance and
critical customer requirements that can be measured and directly related to the output of the
business process.
Source: www.dow.com.
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
12
Exhibit IV
Details of Services under ‘Myaccount@Dow’
Order status
Provides users a fast reference point for order summary information, providing customers the latest updated record. This feature also tracks and searches for information contained in orders placed within the past 3 months, offering different sequences for reports.
Order details
Displays confirmed delivery dates, shipped date and price and offers downloadable COA information. Price information is only made available if this feature is requested at set-up time.
Drop Box The drop box stores documents for 60 days. The drop box is especially valuable for customers who frequently share documents with their employees and Dow via e-mail or fax. Users can choose either the business drop box, which can be opened by anyone with account access, or the personal drop box, which can only be opened by an individual. Users can send an e-mail notification of a sent file to anyone with access to a specific drop box.
eCOA Direct Search
Users can conduct a direct search for Certificates of Analysis using a variety of such criteria. COA‟s are also available for specific orders in the „Order Status‟ and „Order Details‟ sections of „MyAccount@Dow.‟ Users can access the COA in PDF format by clicking on the COA number. COA‟s are also available for specific orders in the „Order Status‟ and „Order Details‟ section of „MyAccount@Dow.‟
MSDS & Product finder
Material Safety Data Sheets (MSDS) & Product finder allows users to retrieve MSDS and other product related information. Users can easily search for MSDS using a variety of criteria. Information is available as PDF files, or in plain text for downloading to a cell phone, PDA (e.g., Palm) or handheld computer.
Literature library
Literature library allows users to search Dow‟s library of product related documents. Each business determines the content of the Literature library, which may include technical support documents, case histories, guidelines, brochures, newsletters, frequently asked questions, etc. Users can choose to view a document online, or request for it to be e-mailed or faxed. Documents are listed by title, type, file size, available language and the geography to which the information applies.
Web meeting
Web meeting enables users to share presentations without the hassle of uploading files to a server, and participants can jointly view or edit any document electronically regardless of resident software. Users also have the ability to run and share any software application with other meeting attendees, which provides highly effective demonstration, and training sessions.
Contact Us Via „Contact Us,‟ users can create an e-mail regarding a specific order that is automatically sent to the appropriate Dow Customer Service Representative.
Easy Pay Easy Pay allows for a two-tiered approval of invoices for companies requiring invoices to be approved by one party (Invoice Approver) and authorized for payment by another (Payment Authorizer). Customers of more than one Dow subsidiary or affiliate, may see several Dow companies listed. Highlighting a recipient and choosing „Select,‟ reveals all outstanding invoices for that recipient. A dropdown menu allows items to be reviewed in multiple currencies and the item Display Screen allows sorts by document number, P.O./Site ID, Total Value, Discount Date, and Final Due Date. A Product Sort option sorts items alphabetically by description. Clicking on the Document Number initiates downloading of the invoice. All documents are available as PDFs.
Source: www.dow.com.
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
13
Exhibit V
Dow’s Annual Income Statement
(In $ millions)
Year ending December 31 2002 2001 2000 1999 1998
Sales 27,609 27,805 23,008 18,929 18,441
Cost Of Goods 23,780 23,652 18,262 14,302 13,799
Gross Profit 3,829 4,153 4,746 4,627 4,642
Selling & Administrative and
Depreciation & Amortization Expenses 2,729 3,015 2,599 2,521 2,561
Income After Depreciation &
Amortization 1,100 1,138 2,147 2,106 2,081
Non-Operating Income -948 -1,018 -535 491 424
Interest Expense 774 733 507 431 493
Pretax Income -622 -613 1,105 2,166 2,012
Income Taxes -280 -228 -823 766 685
Minority Interest 63 32 -65 69 17
Investment Gains/Losses 0 0 0 0 0
Other Income/Charges 0 0 0 -5 -6
Income From Cont. Operations -405 -417 217 1,326 1,304
Extras & Discontinued Operations 67 32 0 0 0
Net Income -338 -385 217 1,326 1,304
Source:www.zacks.com/research/report.
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
14
Additional Readings & References:
1. Dow Names David Kepler To New Position of Vice President — Electronic Business
and Commerce, www.dow.com, February 16, 2000.
2. Preston, Robert and Yasin, Rutrell, Transformation Isn’t Easy, www.internetweek.com,
July 20, 2000.
3. Dong, Darren, Dow Chemical: A Business to Business Model, http://e-redlands.uor.edu,
August 22, 2000.
4. e-Business@Dow Delivering Results, www.dow.com, 2001.
5. Six Sigma Quality Process Benefits Customers of FilmTec, www.dow.com, January 10, 2001.
6. Omnexus Enhances Site for European Users, www.dow.com, March 19, 2001.
7. Tullo, Alex, Dow Will Cut Workforce by 8%, http://pubs.acs.org, May 7, 2001.
8. E-Business & Internet Redefining Dow, www.dow.com, May 22, 2001.
9. Dow Sets Standard for Global Business Communications: EDS and Cisco to Create
Breakthrough Information System, www.dow.com, June 7, 2001.
10. Dow Successfully Executes its First Global ERP-Integrated Buy/Sell Transactions via
Elemica, www.dow.com, June 11, 2001.
11. McCoy, Michael, Dow Chemical, http://pubs.acs.org, June 18, 2001.
12. Dow Received CIO-100 Award, www.e-chemmerce.com, August 15, 2001.
13. Strategic Alliance Creates Winning e-Business Channel For Global Chemical and
Plastics Industries, www.dow.com, December 4, 2001.
14. Siebel Thomas M., Taking Care of eBusiness, Doubleday, 2001.
15. Building Blocks For Success – 2002 Year in Review, www.dow.com, 2002.
16. Dow's Liveris Outlines Keys for Performance Chemicals Businesses' Future Success
Terms Business a 'Powerhouse' in Specialty Chemicals Sector, www.dow.com,
March 20, 2002.
17. Dow's New Water Soluble Polymers Business Unit Exemplifies Dow's Focus on Growth,
Specialties, Globalization and Customer Focus, www.dow.com, March 20, 2002.
18. The Journey of Elemica: An e-Commerce, www.dow.com, April 9, 2002.
19. E-Business: Redefining Business Process in the Chemical Industry, www.dow.com,
April 25, 2002.
20. CIO Magazine Recognizes Kepler for Visionary IT Leadership, www.dow.com,
October 1, 2002.
21. Marketplaces, http://pubs.acs.org, January 13, 2003.
22. The Dow Chemical Company Named Inaugural Recipient of the Miller Heiman Sales
Excellence Award, www.dow.com, April 28, 2003.
23. Elemica Becomes ONCE Member, http://biz.yahoo.com, September 10, 2003.
24. Microsoft Releases BizTalk Server Toolkit for Elemica, www.eyeforchem.com,
September 23, 2003.
25. Awards & Recognitions Archives, 1999, 2000, 2001, 2002, www.dow.com.
DO NOT COPY
Dow Chemicals’ Customer-centric E-Business Strategy
15
26. About Dow, www.dow.com.
27. History, www.dow.com.
28. Introduction, www.dow.com.
29. Success Stories, www.dow.com.
30. Connecting with Dow, www.dow.com.
31. Innovative IT, www.dow.com.
32. www.sealedair.com.
33. www.chips.navy.mil.
34. www.cio.com
Books Referred:
1. Thomas M. Siebel, Taking Care of eBusiness, Doubleday Publishing, 2001.
Related Case Studies:
1. Ford‟s E-Business Strategy, Reference No. 902-032-1.
2. Executing E-Business Strategies – The GE Way, Reference No. 903-014-1.