Published: January 01, 2000
“Our Global ERP project was an undertaking of critical importance for our company and we were looking for the best in terms of treasury management support. Our decision to work with Bank of America was based on our long-standing relationship and first-hand experience with its leadership in pioneering treasury management services and deep commitment to cutting edge technology solutions.”
Taehyun Kim, Senior Manager, Global ERP Task Force, Corporate Treasury, Samsung Electronics Co., Ltd.
In April 2004, Samsung embarked on a five-year project focused on standardising rules, data and processes across all Samsung entities globally. Specifically, Samsung was looking to integrate all of its disparate systems into a single global Enterprise Resource Planning (ERP) platform based on SAP R/3, a company-wide platform designed to co-ordinate all resources, information, and activities associated with business processes such as payments and billing.
An integral part of this project was to optimise Samsung’s treasury operations by linking SAP to SWIFTNet, the company’s choice for a platform-neutral global electronic banking network. Specifically, Samsung’s objectives included: consolidating its numerous banking communications into a single channel using SWIFTNet (joining SWIFT under the SCORE model); and standardising the company’s electronic messages to the SWIFT standard ISO message format.
Samsung selected Bank of America to advise on and implement its treasury management initiative based on the bank’s leadership in technology and proven track record with Samsung. Bank of America’s mandate was twofold: to assist in achieving Samsung’s objective to integrate all entities into a single global ERP system, which would be linked directly to SWIFTNet; and to support the company’s goal of standardising its electronic message formats for Bulk and Ad hoc Payments, FX Confirmations and Bank Statement Retrieval (Information Reporting).
Previously, Samsung’s Regional Treasury Centres (RTCs) compiled payment files and sent them to their respective partner banks using a variety of different formats and methods. The banks, in turn, received the bulk files and disbursed payments regionally or locally. Each Samsung company handled its own EDI (Electronic Data Interchange), cheques, and internet banking for ad-hoc and other discrete local payments. This meant that for regional bulk payments, payments data needed to be compiled by the RTC from standalone ERP systems used by the different Samsung companies. The RTC then had to release the consolidated data to the designated regional partner bank for general disbursement.
For local payments, each company maintained different channels for various locally disbursed payments, which made it challenging to maintain consistent rules, master data and processes across the various Samsung entities. Samsung recognised there was room for further improvement, specifically around reducing duplication, increasing automation and achieving a greater degree of standardisation.
The broader initiative to consolidate Samsung’s ERP systems into a single global ERP system, the availability of the SWIFT SCORE model, and growing acceptance of ISO message formats such as XML ISO 20022 meant that these improvements could now be achieved by linking the new SAP system directly with SWIFTNet, enabling Samsung’s treasury to process each entity’s bulk and ad-hoc payment needs through SWIFTNet using standardised ISO message formats.
Key payment processes such as Accounts Payable proposal, payment confirmation, payment initiation and payment status check can be subject to straight-through processing (STP) in SAP, thereby significantly reducing duplication, increasing automation and significantly enhancing the consistency of processes. [[[PAGE]]]
FX confirmations had previously been done manually, with treasury using the deal slip generated in the ERP to confirm the transaction over the telephone and finalise by exchanging confirmation letters. The drawback to this approach was that Samsung’s headquarters, which was responsible for monitoring and managing the risk of these transactions, did not have full visibility over them. The new process, which allowed Samsung to confirm FX transactions automatically via SWIFT with Bank of America and other banks by exchanging MT300 messages, gave headquarters greater visibility into the FX confirmation process, less manual effort was required and the confirmation process was more rapid. Furthermore, the solution could potentially be expanded to other transaction types in the future.
Before implementing the new technology infrastructure, end of day bank statements from each of Samsung’s banks had to be routed through the designated regional partner banks through a multi-bank information reporting process. This process was deemed complex and potentially susceptible to delay and the occasional loss of data. A new simplified retrieval process allows Samsung to receive electronic end of day bank statements (MT940) directly from all counterparty banks through SWIFTNet and has the flexibility to be extended to receive interim bank statements (MT942).
Taehyun Kim, senior manager, Global ERP Task Force, Corporate Treasury, Samsung Electronics Co., Ltd. explains,
“Bank of America has been a critical partner in this process. Like Samsung, Bank of America adheres to Six-Sigma principles in the way its products and services are delivered to the market. All of its branches are ISO 9001 certified and this gives us confidence that they will consistently deliver the level of excellence we require. This was clearly one of the bank’s key strengths in the implementation process, and we are certain this level of excellence will extend to the on-going servicing of these new processes.
Bank of America clearly understood our objectives and their implementation of the new payment, confirmation, and retrieval solution was standardised to fit our unique needs. We especially appreciated their ability to deliver exactly to our specifications on time, every time.”
The successful implementation of a custom-made treasury and payment optimisation solution will bring Samsung the following benefits:
“Throughout this project, Bank of America has demonstrated that it is a trusted long-term partner, able to adapt to our evolving requirements,” said Taehyun Kim. “Bank of America’s consultative approach was critical in delivering the solution specifics, and the bank’s breadth of global expertise and reach meant our preferred site for launching the new system, Hong Kong, proved to be a good decision.”
Samsung’s new treasury and payments infrastructure is now in place in Asia, having been implemented in Korea, China (including Hong Kong SAR), Japan and Vietnam and also in 17 countries in Europe. Samsung is currently rolling out the solution to the countries in the Americas, targeting to finish by the end of August 2009. With the support of Bank of America and other partner banks, Samsung intends to complete the entire global roll-out by the end of 2009.
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