innovation expanding order automation operational ... · pdf file− asc x12 and un...

Innovation

Operational Excellence

Financial Value

Expanding Order Automation Beyond B2B Nancy Fazzoni – Lead Architect, eBusiness Elemica Supply Chain Conference, September 2011

Agenda

Expanding Order Automation Beyond B2B - Elemica Supply Chain Conference - Sept 2011

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Dow Facts

Dow’s “Message Automation” Journey

Information Technology and Customer Groups

Order Automation Options

Dilemma: how to grow the automation numbers

The Elemica QuickLink Opportunity

Our Experience with QuickLink 2010-2011

Opportunity Pipeline and Implementation Recommendation

Summary of Benefits

Conclusion

Who We Are

Founded in 1897 by Herbert H. Dow in Midland, Michigan

Supplies a broad range of products and services to customers in approximately 160 countries

More than 5,000 products manufactured at 188 sites in 35 countries

Employs 50,000 employees worldwide

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Our Vision

To be the most profitable and respected science-driven chemical company in the world To passionately innovate what is essential to human progress by providing sustainable solutions to our customers

Our Mission


Dow’s Operating Segments

Coatings & Infrastructure

Electronic &

Specialty Materials

Plastics

Basics

Chemicals & Energy

Hydrocarbons

Advanced Materials

Performance Products Performance Systems

Performance Products & Systems

Health & Agricultural Sciences

Health & Agricultural Sciences


*Non-GAAP data; excludes certain items. See www.dow.com for more information.

2010 Full-Year Financial Performance

2009 2010

Sales (billions) $44.9 $53.7

Equity Earnings (millions) $630 $1,112

Earnings Per Share (GAAP) $0.32 $1.72

Earnings Per Share* $0.63 $1.97


www.dow.com

2010 Sales by Geographic Region*

North America

Sales: $19,427

Latin America

Sales: $6,153

Europe, Middle East & Africa

Sales: $18,464

Asia Pacific

Sales: $9,630

*2010 data; dollars in millions


What is the goal of the Olympic

Movement?

To contribute to building a

peaceful and better world by

educating youth through sport

practiced without discrimination

of any kind, in a spirit of

friendship, solidarity and fair

play.

Our worldwide partnership allows

us to highlight the depth and

breadth of our specialty products

and the important role chemistry

plays in sports and everyday life,

while pursuing significant new

revenue opportunities.

We are leveraging our global

network to deliver chemistry- and

technology-enabled solutions to

help achieve a more sustainable

footprint for the Olympic Games

and for communities in the host

territories.

Why is Dow

involved?

How is Dow

involved?

Olympic Partnership

It’s official …

Dow is a Worldwide Olympic Partner and the “Official Chemistry

Company” of the Olympic Movement through 2020.

Dow’s Message Automation Journey

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1980’s and 1990’s

− EDI in the traditional sense of the word:

Standards and VANs

− ASC X12 and UN EDIFACT

Automotive Industry was a big driver

Chemicals and Plastics partners dipped their toes into the

water

Retail/Big Box joined the fray

Large partners were the norm

Late 1990’s

− What is this thing called XML? And why should we care?

2000-2001

− Dow is a founding member of Elemica

− Dow’s first connection using Elemica (BASF and Dow)

Dow’s Message Automation Journey - continued


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2001 - Present

− Elemica’s team builds the capability and flexibility to connect

partners with others who use different message standards.

A partner can standardize their internal message sets to one format

Elemica provides the ability to manage a variety of “quirks” related to

business processes variances or differences of interpretation in EDI

standards.

− Dow grows its partner connections with Elemica

Dow moved to “switch” existing “e” partners connectivity from

mainframe EDI processing to Elemica’s technology (on-going)

All new “e” partner connectivity is completed through Elemica

Partners can still use their preferred message standard and Elemica

manages the conversion to and from Dow’s preferred format

2008-2009: Info Technology & Customers


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In 2008-2009, we reached two primary groups of customers via our “e” Tools.

− Elemica/EDI: (Strategic Customers = ERP2ERP)

The connectivity of choice for customers with high order counts

12% of Dow automatable orders globally

Longer time to implementation often reducing Dow “ROI” for

connections with fewer orders

Not all partners have the IT systems to connect automatically end to end

− My Account @ Dow: (Valued Customers)

Dow’s web-based tool for customers with smaller order counts who still

desire automation to the extent possible

6% of Dow orders globally

Benefit is self-service for the customer but may mean customer has to

access multiple systems to order from multiple suppliers.

However….existing IT solutions missed the large group in the middle


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Core Customers

− Represent the majority of the customer base

− Existing order automation solutions were less suitable.

ERP linkages to EDI or XML message transformation are not in place

Priority for customer is something other than order automation

Order volume too high for self-serve order entry via supplier’s web portal

A large percentage of this group places their orders via email or fax.

The dilemma: how to grow automation to include that large core customer group?


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Automation numbers using the existing connectivity options have stubbornly remained well below 20% overall

And yet….

− Automation brings value to Dow and to customer:

Better order and invoice accuracy

Response time reductions

Increased productivity to both customer and Dow

So, what other ways can we reach a higher implementation and order count?

In 2009, Elemica introduced QuickLink


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A fax and E-mail automation capability which allows a partner to increase order automation with small/medium enterprises (SME Customers)

− The QuickLink solution digitally “reads” customer’s fax and/or e-

mail orders (PDF, Excel, Formatted Word Documents)

− Using the customer’s format as a guide, Elemica’s team “maps”

the customer’s data into Dow’s standard (CIDX/idoc) order

message

− Elemica process sends the order messages to Dow’s system in

seconds just as with fully connected partners

− Dow returns the order response message in XML and QuickLink

creates and sends an email order response to customer

Customer faxed or emailed orders which were always manually entered could now be received, built, and confirmed automatically to the customer, within seconds.

Elemica QuickLink Opportunity at Dow


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Elemica QuickLink opened up a new, untapped global “opportunity” for automation

− At the time, ~60% of our orders (primarily from core customers)

were previously considered out of reach for automation

QuickLink can require significantly less implementation effort than ERP2ERP for both Dow and the customer.

− Because Elemica manages the “mapping” from the customers’

purchase order documents and uses Dow’s messaging format

This lowers the threshold for the number of orders required for a

positive “ROI” down to 100 orders per annum

Can generally be implemented in days

Opportunity Analysis on QuickLink


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“Market size” – Significant Potential

− ~60% of all customers orders were faxed or emailed

Technical fit with Dow I/T – Excellent

− Uses the CIDX XML standard messages and processes

Dow has already implemented with “fully connected”

customers

“ROI” – Good

− Pre-Assessment is Key to Success

Customer benefits – Fair to Good

− Limited impact to customer

Dow benefits – Excellent

Our Experience with QuickLink


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In late 2009, we ran a pilot with 5 email and fax partners

In early 2010 based on the pilot’s success, we chartered a team dedicated to implementing QuickLink opportunities

− Started with 2 individuals

− Implementations started slowly in 2nd quarter 2010

− Added 2 individuals to the team in 3rd quarter 2010

Team’s efforts are totally focused on orders and order responses


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Region Number of Customers

North America 42

Europe 28

Asia 1

Latin America 2 implementations underway

QuickLink Customer Count

QuickLink Orders (P2X) in 2011


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Orders via QuickLink in 2011 (Jan-July)


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10,500 Customer Orders received via QuickLink

− Largest growth to date is in our North America region,

followed by Europe

500 Customer Service hours saved

− Assumes an average manual order entry time of 3 minutes vs

the automated order

2010 Automatable Order Mix


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How Customers Placed Orders NA LA PA EU GLOBAL

Fax 15% 1% 23% 36% 22%

E-mail 41% 47% 7% 32% 31%

Telephone 4% 2% <1% 1% 2%

Other 16% 21% 64% 18% 28%

How Customers sent in their e-Orders

EDI 3% 9% 2% <1% 2%

Elemica 18% 2% 1% 11% 10%

MA@D 4% 19% 2% 2% 4%

2011 Automatable Order Mix (Jan-Aug)


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How Customers Placed Orders NA LA PA EU GLOBAL

Fax 12% <1% 23% 33% 20%

E-mail 42% 54% 9% 35% 34%

Telephone 3% 1% <1% 1% 2%

Other 16% 26% 64% 18% 28%

How Customers sent in their e-Orders

EDI 2% 11% 2% 1% 2%

Elemica 22% <1% 1% 12% 12%

MA@D 2% 8% 2% <1% 2%

Opportunity Pipeline


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Global “sales forecast” with hundreds of fax and e-mail customer opportunities across the globe

All opportunities are assessed for “good fit” with the automated process before proceeding to implementation.

− This “good fit” review is based on what we have learned over the years with our ERP2ERP implementations.

Our “pipeline of opportunities” is being filled weekly as opportunities are implemented

Tracking metrics are in place to measure our progress and improve the on-boarding process

“Lessons learned” categories are also in place serving as CIP to help improve the assessment and analysis process.

Implementation Recommendations


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Use a pre-qualifying checklist with your customer service and business team to determine good fit opportunities.

Actively engage your customer service reps and sales reps throughout the implementation through continued communications, updates, training.

Positively manage the resistance to change within your service organization

When you run into an apparent roadblock, ask questions, questions, questions. Seek to understand.

− Remember that what on the surface may appear to be a “poor fit” can be an opportunity to remove a barrier or improve a process

− BUT, sometimes it is a “poor fit” so move on……

Keep a “lessons learned” log so you can add to the qualification checklist or the “things I wish I’d known before I tried that” list.

QuickLink – Customer Benefits


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Customer can send orders at any time of day and 7 days a week

Decreases vendor’s response time for customer order confirmations

Reduces potential for vendor key stroke errors

Reduces potential for order entry delays due to vendor CSR

workload, meetings, absences.

No need for customer to manually fax orders

For email, customer simply changes email address for vendor

orders

For customers with multiple ordering methods, QuickLink can

present an opportunity for process standardization

QuickLink – Dow Benefits


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Improves Dow’s order entry accuracy

Orders can be received and confirmed 24/7

Increases overall Dow order-to-cash productivity

Increases usage of existing eBusiness infrastructure and

technology

Can lower implementation effort and costs as focus is

specifically on the order and confirmation process

Conclusion – Elemica QuickLink


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QuickLink is well positioned between ERP2ERP and Dow’s web-based self service offerings

The solution works well and delivers value to Dow and our customers

Dow is investing further in this capability

We now have a valuable automation offering to reach our CORE Customers