Sun Chemical, a $3.5 billion supplier of printing ink, pigments and other specialty chemicals in Parsippany, N.J., ambitiously moved from 150 disparate systems to a single enterprise-wide application of SAP, went from 69 banking relationships to just one, and consolidated treasury activity into a single global cash operations center, all at the same time.
With all the SAP functionality available, including treasury and risk management modules, the company set some lofty goals. Consolidate business with one bank to achieve maximum efficiency and lower fees. The choice was Citigroup Global Transaction Services. Then, as advised by consultancy e5 Solutions Group, improve AP and AR automation across the enterprise. Build an efficient liquidity structure. Improve internal controls, which included bringing an outsourced shared services center in-house. To craft a global cash operations center, treasury methodically merged regional operations into one center in Cincinnati. With one bank, one template and one cash operations center, huge payment files could move through host-to-host connections.
To span its global business, a core project team of Sun Chemical treasury and IT people, along with Citi and e5 representatives, traveled from country to country. They proposed a standardized treasury template and patiently, from 2006 through 2011, rolled out that solution region by region, explains Kathy Zevola, director of treasury and finance. Deviations were allowed only when the need was clear. North America was first, followed by Western Europe, Central and Eastern Europe and then Latin America.
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The result was a lot of automation. All treasury payments and 95% of vendor payments are now automated, along with a majority of receivables reconciliations and 95% of bank reconciliations. Bank fees were cut by 33%. Interest expense is down significantly now that 90% of global cash is concentrated daily in a single notional cash pool in London to improve liquidity and reduce borrowing.
"Prior to the current solution, Sun Chemical relied on manual electronic banking solutions and used many banks globally, which required enormous resources to manage," says Jeff Berger, vice president of finance and treasurer. "Treasury recognized the need for a customized solution that would meet local requirements, yet deliver global control, visibility and efficiency."
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