Global steel producer reduces business risk

IBM Enterprise Content Management software speeds credit approval and eases regulatory compliance

Published on 13-May-2013

"With the IBM software, we can automate workflows and store all the customer applications and related content in a central repository. When we approve credit, the system publishes the required documents in the government website." - Manager, corporate information systems, global steel producer

Customer:
A global steel producer

Industry:
Industrial Products

Solution:
Enterprise Content Management

Overview

This vertically integrated company mines, manufactures, distributes and recycles metals and steel products. It employs more than 10,000 people in multiple countries and serves approximately 30,000 customers around the world.

Business need:
To comply with new government regulations, this global steel producer needed to tackle inefficiencies and the lack of visibility in its manual, paper-intensive credit application process.

Solution:
Using IBM Content Manager and IBM® WebSphere® software, the company digitizes credit application and related documents, stores the images in a central repository and links them to automated workflows.

Benefits:
The company processes credit applications more quickly and transparently, closing business deals faster and easing compliance with regulatory mandates.

Case Study

This vertically integrated company mines, manufactures, distributes and recycles metals and steel products. It employs more than 10,000 people in multiple countries and serves approximately 30,000 customers around the world.

Preparing for a new regulatory mandate

In 2009, the Australian government enacted the Personal Property Securities Act (PPSA) to create greater transparency, consistency and clarity in identifying interests in personal property. This new federal law governs the taking, registering and enforcing of security over personal property other than land or buildings. The PPSA also mandates capturing interests not subject to formal registration, such as leases and retention of title clauses under a line of credit arrangement. To give organizations time to prepare, the legislation was targeted to take effect in October 2011, replacing more than 30 agencies administering registrations with a standard national approach and single Internet-based Personal Property Securities Register (PPSR).

The law meant that this global steel producer must register a security interest in the PPSR over any tangible property or intangible goods held as collateral when providing commercial credit to customers. If not appropriately registered, the interest and security could be lost through a subsequent transaction. Further, the company risked becoming an unsecured creditor if the customer went bankrupt. There were also risks from noncompliance with the law, including fines ranging from AUD8,000 to AUD35,000 per incident for publishing misleading financial statements.

The company faced a major challenge in preparing for compliance with the PPSA. It was not simply a matter of building a workflow for registration searches and recordings on the PPSR website. The company needed to tackle inefficiencies in its entire process for extending credit to new and current customers. The pending PPSA offered an opportunity to create transparency, enable monitoring and automate key workflows.

Examining the credit approval process

The existing process was highly manual and paper-intensive. A new customer, or an existing customer seeking a higher credit limit, filled out a paper application. A scanned version of the application was emailed to a staff member responsible for researching credit risk. Upon completion, the risk documents were emailed to the appropriate credit manager for approval or denial. If approved, a customer account would be established in the master file to enable order fulfillment. There was no systematic approach to handling commercial credit applications and no visibility into the process.

The company had an internal service level agreement (SLA) commitment of 48 hours from when a customer submitted an application to when the account information was added to the back-end ERP system. It was virtually impossible to track whether the company was meeting this SLA target and if not, why.

Without visibility, there was no way of knowing how long an application took to complete or where it was at any point in the process, from submittal to commercial credit evaluation to approval. Employees clogged their emails trying to find information and documents. Often, critical data was missing or inaccurate, further delaying the process. Potential customers had no idea if they were going to get credit so they could actually buy steel.

The risk was twofold. Inconsistent, manual credit approval processes could result in losses because of bad debt and fines for noncompliance with regulatory mandates. Further, slow processes could mean losing potential customers to competitors offering faster turnaround on credit applications.

Managing documents centrally and automating approval workflows

The company was already engaged in upgrading the corporate accounts payable (AP) system using core components of the IBM Enterprise Content Management (ECM) solution. Encompassing commercial credit processes was a natural extension of the platform.

The project team created a central IBM Content Manager repository for imaged credit applications and related documents. Previously, documents were stored in shared drives only accessible to certain stakeholders. Now one set of documents is all that’s required.

Next, the team members built automated workflows for key credit approval and recording activities by attaching the document images to back-end ERP transaction-based processes. For activities where straight through ERP processing did not exist, the team used IBM WebSphere Process Server software to create the tasks to which images were sent.

Dynamic profiling capabilities in IBM WebSphere Portal software enabled the team to present these workflows through personalized web experiences. Depending on the individual or group role, the software was programmed to display different data, allow various tasks and support a range of administrative rights.

Employees now log in to a WebSphere Portal software view and appear to work in a single integrated application. In reality, they are logged in to multiple systems and interacting directly with ERP applications and data, as well as document images retrieved from the Content Manager repository. They access the information in the context of what they are doing and do not need to be concerned with what system is involved.

Making compliance automatic

One of the workflows created was to automate registration searches and recordings on the PPSR website. During the build process, the workflow was refined to help ensure tokens were recorded systematically. When the company records a security interest, it receives a token back from the government verifying the action. If, for some reason, the company returns the commercial credit to the customer or the customer goes elsewhere, the automated workflow requires finding the token, putting it back in the system and taking it off the PPSR. By eliminating the need for human intervention in such a routine process, the automated workflow mitigates risk of noncompliance.

Accelerating sales and lowering the risk of lost business

In addition to complying with regulations and making it easier for audits, the IBM solution helps compress the sales time at the beginning of the cycle—extending credit. With a single version of required documents, a transparent credit approval process and automation of the key workflow, customers find out quickly where their applications are in the process. The system identifies missing or inaccurate data and notifies the responsible staff member for prompt attention.

Task monitoring is built into the process. For example, if the credit manager hasn’t addressed an application activity in the allotted time, the system sends an email alerting him to complete the task or delegate it to someone else. In addition, the IBM software automatically creates standard approval letters, further expediting response to customers.

Managers know exactly how long it takes to complete the credit approval process. They can see what tasks were processed and the actual time it took. They also have an accurate picture of rejections based on valid credit risk, as opposed to data errors.

Extending ECM platform capabilities in the short term

Going forward, the company plans to further extend the ECM solution to enhance self-service capabilities on its website where customers can access their steel test certificates (for chemical and mechanical analysis), invoices and statements. Currently, much of this information is stored in the company’s ERP systems.

Also in the planning stages is Phase 2 of the initiative to create master file records for customers and vendors automatically across all ERP systems. The company already has this capability in place for about one-third of the business. The next big step is to automate address book processing across the organization, be it payables or receivables. Phase 2 will create the workflow in the ECM system to call the required business function, set and populate the data fields and create the account numbers. It will no longer be necessary to key in that information manually to any company ERP address book application. With the projected completion of Phase 2 by year-end 2012, the company expects to free up the time of six to seven employees to focus on data analysis and integration as the company continues to grow.

Finally, by moving the entire AP automation process to the ECM platform, the company estimates it can save AUD200,000 annually in fees currently paid to an external contractor to scan and record documents once the AP department posts and processes them. With the ECM solution, all documents will be scanned up-front, processed in motion and stored for retrieval in the Content Manager repository. This project is expected to begin in the third quarter of 2012.

For more information
To learn more about IBM Enterprise Content Management offerings, please contact your IBM marketing representative or IBM Business Partner, or visit the following website: ibm.com/software/ecm

Products and services used

IBM products and services that were used in this case study.

Software:
WebSphere Process Server, WebSphere Portal, Content Manager

Legal Information

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