Ciba Specialty Chemicals has become a customer-focussed business. Dean Palmer investigates how business intelligence software and CRM have helped bring this about.
Ciba Specialty Chemicals produces a wide range of chemicals and paints for a diverse customer base, from the plastics and automotive industries, to paper, packaging, fibres and textiles. The company has three operating divisions, and last year achieved a global sales revenue of 7.2 billion Swiss francs. The company operates in 38 countries and employs over 24,000 people worldwide.
One of its divisions, Ciba Colors, has UK offices in Macclesfield, and manufacturing plants in Paisley and Manchester. Ciba Colors’ core business is the development, manufacture and application of colour to a wide variety of blue-chip customers, each requiring their own specific colour effect.
The market is a very challenging one at present. Essentially, the company is a make-to-stock business, but 80% of Ciba Colors’ orders are delivered within 48 hours to the customer. In addition, 35% of current sales are of products introduced in the last five years – clearly, reducing lead times and achieving faster new product introduction are key business performance measures.
To support this type of operation, Ciba Colors must have accurate, up-to-date business information at its fingertips in order to make the right decisions, therefore staying ahead of the competition. This is where business intelligence software comes in.
Four years ago, the company had a diverse set of ERP (Enterprise Resource Planning) systems in place. Ciba decided it needed to move to a common platform with common data. This is when the company approached Silvon Software, a provider of business intelligence and analytical applications.
David Mason, UK marketing services manager at Ciba Colors, has been closely involved with many of the DataTracker implementations, as well as the initial selection process: “Originally, we were going to solve the problem in-house, but we quickly realised that we didn’t have the kind of expertise required.”
Mason continues: “From a shortlist of possible vendors, we selected Silvon’s DataTracker software, mainly due to its user-friendly interface, and Silvon’s understanding of our business needs.”
Working closely with Silvon, Ciba Colors has developed five analytic applications all based on the DataTracker software foundation. These systems provide daily (previously it was monthly!) accurate management information on key areas of the business: sales, global inventory, purchasing, performance measurement, and pricing.
As Mason explains: “Each DataTracker application is configured differently according to their purpose, but they all operate in essentially the same way…data is extracted daily from the BPCS [ERP] system and imported into the appropriate analytic application for users to access wherever they are located in the world.”
Although the original pilot implementation of DataTracker took 6 months to complete, Mason is confident this figure can be beaten in future Ciba implementations: “future roll-out of the software to other Ciba plants worldwide will take no longer than 2 months,” is his prediction.
The five analytic applications are already proving to be very responsive to Ciba’s requirements. Starting with Purchasing, DataTracker is being used to support the supplier negotiation process. The application contains the latest agreed prices and volumes which suppliers are paying for a particular raw material. Users can then view the shipping costs related to that supplier to calculate the best possible global price. The system also includes quoting information from each supplier, and other purchasing details necessary to make the right buying decision.
On the Sales side, Mason explains how DataTracker has become a key tool for sales managers: “BPCS is not strong on the sales analysis and so DataTracker has become the single source for latest sales information within Ciba Colors…we use it to look for patterns of sales history, to identify which customers haven’t placed orders.”
“Because you can clearly spot the sales gaps, we can use it as a defensive tool against competitors encroaching on our territory,” enthuses Mason. “Sales and marketing now have better guidance and technical support…via their laptops, they can even access the latest CAD drawings whilst on the road.”
Another area of the company that has benefited from the DataTracker implementation, is the Global Inventory operation.
Used mainly by sales and production staff, the global inventory application gives a complete global view of Ciba Colors’ inventory levels and availability, drawing data from all fourteen Ciba sites worldwide. This is essential when a local sales office has an emergency supply problem and needs to source product from somewhere other than their usual warehouse. Sales staff can identify very quickly product availability, and production staff can use the global view of inventory as a guide to what to produce next.
Terry Gorman, Ciba Color’s director of supply chain process and IT, describes the benefits of using DataTracker: “In the past, users would have to phone round or e-mail individual warehouses until they found what they were looking for. Now, DataTracker shortens the search by highlighting immediately which warehouse may be able to supply the particular material.” Gorman continues: “Everything is visible including customers’ virtual and consignment stock warehouses so that decisions can be taken on very accurate and complete information.”
DataTracker is also being used to measure business performance, particularly with respect to customers. Mason explains: “The Silvon application allows us to drill down to, and query, individual customers and even to individual product levels to identify supply chain issues that remain hidden behind the top tier figures.”
Mason also has plans to expand the use of DataTracker to measure not just internal company performance, but also suppliers and distributors: “Exception reporting provides a useful tool to highlight problem areas within your own company…but going forward, we are looking to set targets for optimum inventory levels and also to measure the performance of our distributors and carriers.”
Mason and Gorman both agree that DataTracker has brought many improvements over the BPCS system. The software is also not tied to any particular ERP vendor’s software, only to the underlying common data. Gorman believes this has important advantages given the declining role of ERP systems: “The more functionality that comes out of ERP and into better decision support software, the less important ERP becomes. We continue to respect the traditional transactional aspects of BPCS [and other ERP systems], but as a business intelligence environment it offers very little.”
Gorman predicts: “For companies wanting to change their existing ERP system, analytic applications could provide an invaluable bridge. This could even extend to removing the pressure to change ERP systems at all.”
Author: Dean Palmer