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IBS Center for Management Research

Dow Chemicals’ Customer-centric E-Business Strategy

This case was written by P. Mohan Chandran, under the direction of Vivek Gupta, IBS Center for Management Research. It

was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either

effective or ineffective handling of a management situation.

2004, IBS Center for Management Research. All rights reserved.

To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: [email protected]

www.icmrindia.org

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“Our focus is making sure we’re a sustainable growth company. The best way you can do that is

to be very productive, very customer-focused and create an organization that delivers new ideas.

We’re taking the company strategy and aligning our IT investments with it.”1

- David Kepler, CIO & VP, e-Business, Dow Chemicals.

“At Dow we recognized early on that the Internet had the potential to become the primary

communication channel between the company and many of our customers, shareholders and

suppliers. Our approach was to go beyond using information technology just to simplify the 'buy-

sell' process and look at global integration of information technology into all our processes.”2

- Dennis Lauzon, President & CEO, Dow Chemicals (Canada).

AWARDS FOR CUSTOMER-CENTRICITY

US-based Dow Chemicals (Dow) is a leading „science & technology‟ company that produces

chemical, plastic and agricultural products. The company is the world leader in the production of

plastics, chemicals, hydrocarbons, herbicides and pesticides. For the fiscal ending 2002, Dow

reported revenues of $27.6 billion. With operations spread over 170 countries, Dow produces

products that cater to the requirements of many industries, including food, transportation, health &

medicine, personal & home care, and building & construction.

With more than five million visits per year, Dow‟s website (www.dow.com) was one of the

company‟s most important customer communication tools. The website provided 24/7 access to

news and information on Dow‟s businesses, manufacturing facilities, corporate operations,

financial reports and product technical data. Dow was recognized as one of the most customer-

centric companies in the chemical industry, and one that used IT and internet enabled technologies

to serve its customers. The company received several awards for its proactive application of

IT/internet for providing better customer service (Refer Exhibit I for the awards won by Dow).

In 2000, Dow was third among the Fortune 100 companies and was the only chemical company to

be listed in the „Global Top 10‟ in providing electronic customer service. For this, the company

received the „Swift-E Award for Excellence in Electronic Customer Service‟ from California-based

Brightware, a leading vendor of CRM software. In 2001, InternetWeek placed Dow among the „top

100 e-business companies‟ in the US for effective use of internet in enhancing customer and supplier

relationships. The US President honored Dow with the „National Medal of Technology‟ in 2002 for

its innovative technological initiatives and its impact on the chemical industry and society. All these

awards and recognitions bear testimony to Dow‟s customer-centric culture.

1 As quoted in the article titled “Transformation Isn‟t Easy,” by Robert Preston and Rutrell Yasin, posted

on www.internetweek.com, July 20, 2000. 2 As quoted in the article titled “E-Business & Internet Redefining Dow,” posted on www.dow.com,

May 22, 2001.

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Emphasizing the importance Dow attached to customers, Mack Murrell (Murrell), Global Director,

Dow‟s Corporate Customer Interface Initiative, said, “We believe that if we center all of our

thinking – organizational, cultural, procedural, and technological – around the customer, we will

create the kind of breakthrough thinking we need to achieve our vision of being the easiest

company in the world to do business with.”3

BACKGROUND NOTE

Founded in 1897 by Herbert Dow, Dow Chemicals began commercial production of bleach in

1898. The company diversified its line of business in 1935 and ventured into the production of

plastics with the launch of Ethocel ethylcellulose resins. Dow‟s stock began to be listed on the

New York Stock Exchange from June 1937.

Since its inception, Dow‟s management has placed a major emphasis on developing strong

customer relationships. The company‟s customer-centric values, as laid down in its mission

statement, (Refer Exhibit II) reiterated Dow‟s focus on its customers. Dow worked closely with its

customers to gauge their present and future expectations from the company. This enabled it to

fulfill customer demands and sometimes even exceed their expectations. Explaining the

importance of customer intimacy, Charles Churet, Commercial Director of Dow said, “Customer

intimacy and market intimacy put you in a better position to understand the latent needs of your

existing and prospective customers. Customer knowledge enables you to understand where you

can innovate and develop solutions that capture greater value than the sale of products alone.”3

Over the decades, Dow witnessed significant growth and by 1964, its revenues crossed $1 billion.

By 1980, Dow‟s revenues exceeded $10 billion and by 1995, the revenues crossed $20 billion.

After witnessing significant revenue growth till the late 1980s, the company faced the problem of

stagnant revenues in the 1990s. In 1998, Dow‟s annualized revenue growth rate over the previous

ten years was less than 0.5 percent. The top management of Dow felt that it had to find ways to

overcome the negative implications of the commoditization of its core chemical products business.

In its efforts to increase the revenue growth, the management made fresh attempts to improve

Dow‟s relationship with its customers.

In the late 1990s, Dow decided to focus on achieving improved levels of customer service and

customer intimacy by redefining its image as a more „customer-friendly‟ company. The company‟s

mission statement reflected the transformation in its image from a product manufacturing company

to a science and technology solutions company (Refer Table I).

Dow decided to use IT extensively to improve customer service. The company viewed customer

service as the holistic responsibility of all departments in the organization. Elaborating on the

importance of using IT to integrate various departments to deliver effective customer service,

Luciano Respini, Vice-President of marketing and sales for Dow, said, “An effective sales process

extends throughout an organization – well beyond the boundaries of the traditional sales function.

People working in areas like logistics, finance, technical services, production planning and EH&S

(Environment, Health & Safety) have as much of a role to play in fulfilling the needs of our

customers as those employed within customer service, marketing or the sales function itself. Only

by adopting a consistent process across the entire organization can you ensure these diverse groups

are effectively integrated, properly aligned and entirely clear on the critical part they each play in

building great customer relationships.”4 In order to imbibe a stronger customer focus throughout

the organization, Dow launched the „Six Sigma‟ program in September 1999 (Refer Exhibit III).

3 From the book, Taking Care of eBusiness, by Thomas Siebel, page 179.

4 As quoted in the article titled “The Dow Chemical Company Named Inaugural Recipient of the Miller

Heiman Sales Excellence Award,” posted on www.dow.com, April 28, 2003.

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Table I

Dow’s Mission Statement

MISSION

To constantly improve what is essential to human progress by mastering science and

technology.

The mission statement can be broken into three components:

Constantly Improve – This concept is bedrock to Dow‟s culture and has been since Hebert

Dow first said, “If you can‟t do it better, why do it?” It underscores our drive to become an

ever better and bigger company.

Essential to Human Progress – The products we make find their way into products that

provide people the world over with improved lifestyles. All of us at Dow must understand

and take pride in this. We must also use this concept to further connect Dow with the

external markets we serve. When we think in terms of the markets we serve, we become

more outside-in focused and we can better seek growth opportunities.

Mastering Science and Technology – We must put our science and technology to work to

create solutions for our customers and for society.

Source: www.dow.com.

THE SIX SIGMA INITIATIVE

The Six Sigma initiative was considered a logical extension of Dow‟s quality policy, (Refer Table

II) which aimed at exceeding customer expectations. Through this program, Dow wanted to

achieve excellence in product quality as well as customer service. The management implemented

the program throughout the organization by training 1,000 employees, who were designated as

„black belts.‟ Black belts were responsible for ensuring strict quality control standards in

manufacturing and other business processes. They had to identify quality-related problems using

specialized statistical tools and techniques (like statistical quality control and statistical process

control). Through the Six Sigma program, Dow provided an assurance of quality to its customers

(Refer Table III).

Table II

Dow’s Quality Policy

Quality Performance is a commitment to excellence by each Dow employee. It is achieved

by teamwork and a process of continuous improvement.

We are dedicated to being the leader in providing quality products and services which

meet or exceed the expectations of our customers.

Quality management plays an important role by assuring that the company can produce and

deliver the quality products and services expected by its customers.


Another important objective of implementing the Six Sigma program was cost reduction. Michael

D. Parker (Parker), former President & CEO of Dow, estimated that the implementation of the

program would yield cost savings of $1.5 billion. Dow regarded Six Sigma as a transformational

tool that could make the company‟s culture more customer-centric. Kathleen M. Bader (Bader),

who headed the Six Sigma initiative, said, “Six Sigma is a cultural change program that accelerates

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perfection. Some companies are using it as an incremental change approach; at Dow it‟s a

transformational tool. Six Sigma makes common sense the enemy. Rather than accept what you

think you know as fact, you go back and prove it.”5

Table III

Six Sigma – Focus on Customers

Quality Assurance

Dow is one of the few premier companies that focus on customers as the basis of Six Sigma

efforts. Our objective is to create customer loyalty based on six sigma level quality. The desired

outcome is unparalleled business excellence.

Customer Focus

Dow views its product and service quality as being defined by its customers. Dow works closely

with its customers to understand their businesses and their expectations. This close working

relationship helps Dow to better meet its customers‟ expectations today and to anticipate and

meet their future needs.


In the late 1990s, Dow‟s top management announced the acceleration of its e-business initiatives

to make the company more customer-oriented. The company launched the SAP program across all

its operations, standardized 40,000 Windows desktops and provided access to its 2-terabyte Oracle

data warehouse by integrating all its workstations. Explaining Dow‟s customer-centric e-business

strategy, Dennis Lauzon (Lauzon), President and CEO, Dow Canada, said, “Our overall approach

and strategy with respect to e-commerce and information technology has centered on initiating

business growth, fostering customer loyalty and creating internal operating efficiencies. Ultimately

this reduces customer costs and makes it easier, faster and more convenient for our customers to

do business with Dow.”6

DOW’S E-BUSINESS STRATEGY

When Dow launched its website in 1994, it was one of the first companies in the chemical industry

to create an online presence of all its brands, products and services. By 1999, the site was being

accessed by 1.6 million unique visitors, and the figure increased to 3 million in 2000. Dow

upgraded the site continuously and also widened the range of services offered, to include e-mail

marketing, online customer surveys and feedback and virtual trade shows.

In 1999, Dow employed nearly 700 customer service representatives, 50 telesales personnel, 110

inquiry support agents and hundreds of other technical support personnel, to work both on the field

and in call centers. Dow‟s main customer channel was its sales force that comprised of over 1,400

salesmen worldwide. An important element of Dow‟s eBusiness strategy was the “customer

interface initiative,” that aimed at integrating the company‟s various customer service and support

channels including the internet, call center, field sales offices and telesales. This would enable

seamless customer interaction with Dow.

Dow‟s top management faced several challenges while implementing its e-business strategy. The

first challenge was to significantly change the way the company conducted its business. This

required a sense of urgency and seriousness among employees and a need for overcoming

5 As quoted in the article titled “Dow Chemical,” by Michael McCoy, posted on www.pubs.acs.org,

June 18, 2001. 6 As quoted in the article titled “E-Business & Internet Redefining Dow,” posted on www.dow.com,

May 22, 2001.

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organizational inertia. The second challenge was to successfully initiate organizational and

process-related changes needed to function as an e-business organization before implementing any

technological change. And another major challenge was technological implementation and

integration with the existing processes.

Selecting the technology supplier was an important factor for the successful implementation of the company‟s e-business strategy. Dow‟s criterion for selecting a technology supplier was the supplier‟s market leadership. When implementing its e-business strategy, Dow adopted three core principles – think big, start smart, and scale fast. (Refer Table IV). The company then started installing the IT systems necessary to execute its strategy. Dow adopted some vital technologies for its new operations, „MyAccount@Dow,‟ Elemica and DowNET.

Table IV

Core Principles of Implementing E-Business

Think Big: Starting with a market-driven vision, the company considers all e-business possibilities and evaluates all strategic alliances that are in line with its growth objectives.

Start Smart: Prior to implementing new e-business initiatives, Dow executes pilot programs to test fresh ideas, incorporate customer feedback into the design process and minimize the risk of disruption.

Scale Fast: Technologies that demonstrate value to internal and external customers are aggressively leveraged by Dow across all of its global businesses and markets.

Source: Taking Care of eBusiness, by Thomas Siebel, page 186.

‘MYACCOUNT@DOW’ – AN EXTRANET SERVICE

In late 1999, Dow introduced a unique extranet service for customer-focused order management system called „MyAccount@Dow.‟ The extranet service enabled the customers to communicate and interact with the company in a quicker and easier way. Dow also provided online access to certain services like order entry, order status, placing multiple orders, accounts history, online payment information, safety data sheets, reporting, online collaboration, electronic certificate of analysis (eCoA), product details, and technical data and support (Refer Exhibit IV).

MyAccount@Dow offered personalized services, providing product-related and customer-specific information. Transaction-related services were offered through a special account that could be accessed after registration and was protected by a password. Registered users could conveniently access, review, update, and modify service requests. They could also browse the knowledge databases of the company.

Using MyAccount@Dow, the customers could order materials directly from their ERP system to Dow‟s SAP system. This expedited customer service since the customers did not have to make telephone calls or send e-mails to Dow‟s sales or customer representatives to place an order. MyAccount@Dow was integrated with all customer-facing channels, and this enabled it to record all customer interactions in an online customer register. Consolidation of all customer interactions across multiple channels was regarded a great achievement for Dow in customer relationship management. Explaining the benefits of the service, Murrell said, “Even a year ago, the left hand didn‟t always know what the right hand was doing. In the future, when a customer calls Dow for service, we will know the customer‟s service history and order status before we even pick up the phone, based on the caller ID. And that information will be the exact same information that the customer can access on MyAccount@Dow, so even while we‟re on the phone we‟ll be able to say, „We‟re happy to help you, but if you have this problem after five o‟ clock, let me show you another way to get the same answers.‟”

7 Thus, the customer was able to find out information and

solutions even after office hours, through MyAccount@Dow.

7 From the book Taking Care of eBusiness, by Thomas Siebel, page 184.

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By mid-2000, the ERP systems of nearly 50 MyAccount@Dow customers were linked to Dow‟s

SAP system. Linking the customer‟s ERP systems with Dow‟s SAP systems was a very

specialized job that depended on the individual customer‟s choice and requirement. The extent to

which the customer required a linkage between its production and planning systems, and Dow‟s

order entry systems determined its choice. Moreover, the synchronization of back-end applications

(like SAP) with e-commerce applications (like MyAccount) was very difficult. Analysts

appreciated Dow‟s efforts since they felt that such integration could have been accomplished

successfully only with common systems, which most players in the chemical industry did not

possess. By June 2001, MyAccount@Dow service had over 5,000 registered users worldwide.

Ever since its launch, Dow made regular enhancements to MyAccount@Dow, some of which

included, facilitating orders of several items (order entry flexibility), improving customization

levels of business and customers, real-time collaboration, integrating customer feedback on quality

and introducing improved reporting and downloading functions. Live information sharing was also

made possible through the „web meeting‟ feature of „MyAccount@Dow‟ browser. The site also

offered on-demand tendering and payment of bills through the „easy pay‟ feature. Dow constantly

upgraded the extranet site to cater to its diverse customers and provide them information on

company-specific queries. By 2002, MyAccount@Dow had gained wide acceptance around the

world, with nearly 3,400 companies in over 42 countries actively accessing the account.

ELEMICA – B2B e-MARKETPLACE

As part of its e-business strategy, Dow together with seven other companies developed Elemica, a

global business-to-business (B2B) e-marketplace, with an investment of $150 million in July 2000.

Elemica acted as an independent chemicals and plastics industry exchange that enabled online

buying and selling of chemical and plastic products. Dow could establish a contact with several

customers and vendors in a standardized manner since Elemica served as an integrated hub for

information dissemination for all its members (buyers and sellers of the products).

Dow‟s primary goal was to empower customers in carrying out their business. Customers who

opted for Elemica could access ERP connectivity and trade with Dow or any other network

member of Elemica. Explaining the role of Elemica, Andrew Liveris (Liveris), Dow‟s President

said, “At Dow, we are aggressively building our e-business integration capabilities to better

address customer needs and capture value from supply chain efficiencies. We recognize the value

that Elemica delivers through reduced transactional costs and streamlined business processes both

on the buy-side and the sell-side of our business.”8

Elemica enabled easy order processing and supply chain management for its members. It offered a

range of products, which facilitated the restructuring and integration of business processes for

members to accomplish cost savings. Elemica also enabled organizations to consolidate and

expand ERP connectivity globally through an integrated electronic link in its network. Elemica‟s

membership rose from 22 in end 2000 to about 150 by mid 2003.

DOWNET – GLOBAL COMMUNICATION NETWORK

In 2001, Dow partnered with leading global IT vendors like EDS and Cisco to develop the world‟s

first global voice-over internet protocol (VoIP) communications network called DowNET. It

provided a solution that enabled convergence of voice, data, and video technology.

DowNET transcended all geographic and accessibility barriers and offered mobility and flexibility

to its users. It enabled sending and receiving electronic mails, fax documents, voice and video

messages, and accessing files and local area network (LAN) services, round the clock, from any

8 As quoted in the article titled “Dow Successfully Executes Its First Global ERP-Integrated Buy/Sell

Transaction via Elemica,” posted on www.dow.com, June 11, 2001.

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part of the globe. DowNET also provided customers with enhanced customer service and

transaction opportunities through effective communication. Efficient system maintenance &

support, high dependability and successful execution of Dow‟s e-business strategy was made

possible through the integration of different processes into one network. Explaining the functions

of DowNET, David Kepler, Chief Information Officer (CIO) for Dow said, “DowNET essentially

allows us to integrate everything into a single-source, real-time communications solution. It opens

up new doors, shatters conventional communications boundaries and will result in significant

business advantages for Dow. Our new technology solution allows employees to bring the

connectivity of their offices on the road, as well as connect customers, employees and offices in a

more efficient, powerful and global manner.”9

DowNET provided a solution to several problems impeding corporate communications. It

eliminated the complications involved in maintaining multiple computer networks by

synchronizing them into a single, common, controllable solution. DowNET significantly increased

the data transmission speed. The possibility of operating multiple network applications at the same

time was also enhanced. Kepler said, “At Dow, we are integrating e-business into everything we

do. Solutions such as DowNET offer us the ability to create value from the inside out. That results

in better customer service, increased employee satisfaction and enhanced industry leadership.”10

THE BENEFITS

Dow derived several tangible and intangible benefits through the implementation of its e-business

strategy. The company was able to increase its revenues (Refer Exhibit V) as well as enhance

customer service. By applying e-business technology to integrate and improve its business

practices, Dow significantly improved the effectiveness of customer interactions with the

company.

Dow‟s IT initiatives such as MyAccount@Dow and Elemica brought substantial benefits for the

company. Dow‟s sales in the fiscal 2002 via MyAccount@Dow were more than $1.6 billion. In

2002, it attracted more than 12,000 external site visits each month. Approximately 3,400

companies in more than 42 countries were active users of MyAccount@Dow. Elemica also

benefited Dow greatly. Apart from strengthening Dow‟s relationship with customers, it:

Improved operational efficiency by increasing speed, reducing costs and achieving greater

accuracy in order entry and fulfillment.

Ensured safety and reliability in deliveries and reduction in supply chain costs by avoiding

redundancy in the supply chain and the stocking of excess inventory.

Dow conducted more than 3,600 transactions in 2002 through Elemica, with companies like Air

Products, Atofina, BASF, Bayer, Ciba, Cognis, Degussa, HB Fuller, Proctor & Gamble, Rohm and

Haas, Sherwin-Williams, Univar and Zeon on the sell-side; and with Atofina, BASF, Bayer, BP,

Celanese, CHEMCENTRAL, Ciba, Cognis, Crompton, Degussa, DSM, Dupont, Rhodia, Shell,

Solvay and Specialty Minerals on the buy-side. By the end of 2003, Dow expected to receive

electronic orders from more than 80 customers, and to send orders to more than 50 suppliers

through Elemica.

In spite of the initial successes, Dow‟s management felt that they still had a long way to go.

Describing their ultimate goal, Parker said, “As we continue our transformation from a product

company to a science and technology solutions company, we aim to delight customers to such an

extent that they never want to look elsewhere for a better supplier.”

9 As quoted in the article titled “Dow Sets Standard for Global Business Communications: EDS and Cisco

to Create Breakthrough Information System,” posted on www.dow.com, June 7, 2001. 10

As quoted in the article titled “Dow Sets Standard for Global Business Communications: EDS and Cisco

to Create Breakthrough Information System,” posted on www.dow.com, June 7, 2001.

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QUESTIONS FOR DISCUSSION:

1. “At Dow, we are aggressively building our e-business integration capabilities to better address

customer needs.” In the light of the statement, explain how Dow Chemicals implemented its e-

business strategy. What benefits did the company reap after implementation?

2. Dow was recognized as one of the most customer-centric companies in the chemical industry.

Explain how the company used IT and internet enabled technologies to enhance customer

satisfaction?

3. “We aim to delight customers to such an extent that they never want to look elsewhere for a

better supplier.” What other technologies must Dow adopt in the future to achieve its aim of

delighting customers?

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Exhibit I

Awards and Recognitions for Dow Chemicals

Year Awards & Recognitions Criteria

1999 PC Week's Fast Track 500 Dow.com ranked on the list of Internet technology innovators by PC Week.

InformationWeek 500 Named #1 in the chemical industry and #26 overall on the listing of the 500 most innovative IT users by InformationWeek.

2000 eWEEK Fast Track 500 Recognized as a leading global e-enabled company and one of the top manufacturing companies using "e"

InformationWeek 500 Ranked #1 in the chemical industry and within the top 90 overall, in this ranking of the 500 largest and most innovative users of information technology.

CIO-100 Award The award recognized Dow as an organization that exemplifies the highest level of operational and strategic excellence for innovation and improved business performance through the use of customer-oriented practices.

2nd Annual Ranier Web Index

Ranked Dow among the Top 20 companies of the Fortune 100 companies surveyed for the fastest response time to online customer inquiries.

InternetWeek 100 Effective use of the Internet to enhance business operations.

Swift-E Award For Excellence in Electronic Customer Service

Ranked third among the top 10, and is the only chemical company to place in the top 10 listing.

2001 Salomon Smith Barney CIO of the Year Award

Expertise in IT systems & strategy including Dow's standardized, global ERP system, PeopleSoft for human resources and Siebel for Customer Relationship Management (CRM), as well as the Dow Workstation.

CIO-100 Award For demonstrating positive performance through innovative solutions to improve business practice, service and relationships with partners and clients.

InternetWeek 100 For its use of the Internet to improve relationships with customers and suppliers, for its involvement in e-marketplaces and its use of the Internet to enhance its bottom line.

InformationWeek 500 For its innovation across its e-business operations.

2002 InformationWeek 500 Ranked #1 in the chemical industry and #14 overall, the InformationWeek 500 recognized Dow as one of the largest and most innovative users of IT.

CIO 20/20 Vision Award One of 40 individuals recognized, Dave Kepler, corporate vice president and CIO, was among the first to receive the CIO 20/20 Vision Award, an award designed to acknowledge business leaders for their use of technology as a resolution for a business or organizational challenge.


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Exhibit II

Dow’s Customer-centric Values

Integrity: We believe our promise is our most vital product – our word is our bond. The

relationships that are critical to our success depend entirely on maintaining the highest

ethical and moral standards around the world. As a vital measure of integrity, we will ensure

the health and safety of our communities and protect the environment in all we do.

Respect for People: We believe in the inherent worth of people and will honor our

relationships with those who let us be part of this world. Our customers are our partners in

creating value; their loyalty is our greatest reward. Our respect for people also extends to

the consumers whose lives we touch. We will strive to answer people's most vital needs: for

food, water, shelter, transportation, communication, health and medicine.

Unity: As one company, Dow‟s impact on the world is far greater than the impact of any

one of its parts. We will work together, building relationships to create ever-greater value

for the customers and consumers we serve.

Outside-in Focus: We believe that growth comes from looking at opportunity through the

eyes of customers and all those we serve. Taking an "outside-in" view ensures that our

efforts are always relevant and that our unique talents are applied to "real world"

opportunities. We will see through the eyes of those whose lives we affect, identifying

unmet needs and producing innovative and lasting solutions. We will bring to this task all of

our experience and knowledge as the unique individuals we are.

Agility: At Dow, we believe our future depends on speed and flexibility – mental,

emotional and physical. Responding resourcefully to society's fast-changing needs is the

only road to success. We will meet the forces of change with power and grace. We will

make course corrections that demonstrate flexibility as well as courage, and that highlight

our ability to keep ourselves aligned with a world in motion.

Innovation: We believe that meaningful, productive change – solving problems – only

comes by looking at challenges and opportunities from new angles and exercising our

curiosity. In the name of innovation, we will make science a way of living. We will not only

master the science of the physical world, but the science of the mind and heart. Our job is to

unlock answers that make a fundamental difference to people's lives. We will use

technology to help lead society forward. We will conceive, design, engineer, and execute

solutions that remove barriers to human potential and productivity.


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Exhibit III

The Six Sigma Philosophy

The Six Sigma philosophy states that there is a direct relationship between product defects and

customer satisfaction. The fewer defects, the happier the customer. Defect free products are the

key to customer satisfaction and loyalty. The purpose of Six Sigma is to stop variations in

quality at the earliest possible point by attacking variation during design of products and

processes.

What is Sigma?

"Sigma" is a letter in the Greek alphabet and is a statistical measure that tells how much a

product, service, or process varies from perfection. Based on defects per million opportunities

the higher the sigma value, the better the quality.

Sigma Level Six Sigma

Defects Per Million

1 690,000

2 308,000

3 66,810

4 6,210

5 233

6 3.4

To put this in perspective, a measure of one sigma would equal 170 misspelled words per page

while a six sigma would equal one misspelled word in a library. The impact of poor quality on

sales is just as dramatic. A two sigma level equals 30% - 40% of sales, rendering a company

non-competitive. Six Sigma defects are <10% of sales and makes a manufacturer "world class".

It is the focus on quality that is a direct benefit to the customers, as quality is an element that

influences buying decisions. Six Sigma establishes acceptable ranges of performance and

critical customer requirements that can be measured and directly related to the output of the

business process.


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Exhibit IV

Details of Services under ‘Myaccount@Dow’

Order status

Provides users a fast reference point for order summary information, providing customers the latest updated record. This feature also tracks and searches for information contained in orders placed within the past 3 months, offering different sequences for reports.

Order details

Displays confirmed delivery dates, shipped date and price and offers downloadable COA information. Price information is only made available if this feature is requested at set-up time.

Drop Box The drop box stores documents for 60 days. The drop box is especially valuable for customers who frequently share documents with their employees and Dow via e-mail or fax. Users can choose either the business drop box, which can be opened by anyone with account access, or the personal drop box, which can only be opened by an individual. Users can send an e-mail notification of a sent file to anyone with access to a specific drop box.

eCOA Direct Search

Users can conduct a direct search for Certificates of Analysis using a variety of such criteria. COA‟s are also available for specific orders in the „Order Status‟ and „Order Details‟ sections of „MyAccount@Dow.‟ Users can access the COA in PDF format by clicking on the COA number. COA‟s are also available for specific orders in the „Order Status‟ and „Order Details‟ section of „MyAccount@Dow.‟

MSDS & Product finder

Material Safety Data Sheets (MSDS) & Product finder allows users to retrieve MSDS and other product related information. Users can easily search for MSDS using a variety of criteria. Information is available as PDF files, or in plain text for downloading to a cell phone, PDA (e.g., Palm) or handheld computer.

Literature library

Literature library allows users to search Dow‟s library of product related documents. Each business determines the content of the Literature library, which may include technical support documents, case histories, guidelines, brochures, newsletters, frequently asked questions, etc. Users can choose to view a document online, or request for it to be e-mailed or faxed. Documents are listed by title, type, file size, available language and the geography to which the information applies.

Web meeting

Web meeting enables users to share presentations without the hassle of uploading files to a server, and participants can jointly view or edit any document electronically regardless of resident software. Users also have the ability to run and share any software application with other meeting attendees, which provides highly effective demonstration, and training sessions.

Contact Us Via „Contact Us,‟ users can create an e-mail regarding a specific order that is automatically sent to the appropriate Dow Customer Service Representative.

Easy Pay Easy Pay allows for a two-tiered approval of invoices for companies requiring invoices to be approved by one party (Invoice Approver) and authorized for payment by another (Payment Authorizer). Customers of more than one Dow subsidiary or affiliate, may see several Dow companies listed. Highlighting a recipient and choosing „Select,‟ reveals all outstanding invoices for that recipient. A dropdown menu allows items to be reviewed in multiple currencies and the item Display Screen allows sorts by document number, P.O./Site ID, Total Value, Discount Date, and Final Due Date. A Product Sort option sorts items alphabetically by description. Clicking on the Document Number initiates downloading of the invoice. All documents are available as PDFs.


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Exhibit V

Dow’s Annual Income Statement

(In $ millions)

Year ending December 31 2002 2001 2000 1999 1998

Sales 27,609 27,805 23,008 18,929 18,441

Cost Of Goods 23,780 23,652 18,262 14,302 13,799

Gross Profit 3,829 4,153 4,746 4,627 4,642

Selling & Administrative and

Depreciation & Amortization Expenses 2,729 3,015 2,599 2,521 2,561

Income After Depreciation &

Amortization 1,100 1,138 2,147 2,106 2,081

Non-Operating Income -948 -1,018 -535 491 424

Interest Expense 774 733 507 431 493

Pretax Income -622 -613 1,105 2,166 2,012

Income Taxes -280 -228 -823 766 685

Minority Interest 63 32 -65 69 17

Investment Gains/Losses 0 0 0 0 0

Other Income/Charges 0 0 0 -5 -6

Income From Cont. Operations -405 -417 217 1,326 1,304

Extras & Discontinued Operations 67 32 0 0 0

Net Income -338 -385 217 1,326 1,304

Source:www.zacks.com/research/report.

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Additional Readings & References:

1. Dow Names David Kepler To New Position of Vice President — Electronic Business

and Commerce, www.dow.com, February 16, 2000.

2. Preston, Robert and Yasin, Rutrell, Transformation Isn’t Easy, www.internetweek.com,

July 20, 2000.

3. Dong, Darren, Dow Chemical: A Business to Business Model, http://e-redlands.uor.edu,

August 22, 2000.

4. e-Business@Dow Delivering Results, www.dow.com, 2001.

5. Six Sigma Quality Process Benefits Customers of FilmTec, www.dow.com, January 10, 2001.

6. Omnexus Enhances Site for European Users, www.dow.com, March 19, 2001.

7. Tullo, Alex, Dow Will Cut Workforce by 8%, http://pubs.acs.org, May 7, 2001.

8. E-Business & Internet Redefining Dow, www.dow.com, May 22, 2001.

9. Dow Sets Standard for Global Business Communications: EDS and Cisco to Create

Breakthrough Information System, www.dow.com, June 7, 2001.

10. Dow Successfully Executes its First Global ERP-Integrated Buy/Sell Transactions via

Elemica, www.dow.com, June 11, 2001.

11. McCoy, Michael, Dow Chemical, http://pubs.acs.org, June 18, 2001.

12. Dow Received CIO-100 Award, www.e-chemmerce.com, August 15, 2001.

13. Strategic Alliance Creates Winning e-Business Channel For Global Chemical and

Plastics Industries, www.dow.com, December 4, 2001.

14. Siebel Thomas M., Taking Care of eBusiness, Doubleday, 2001.

15. Building Blocks For Success – 2002 Year in Review, www.dow.com, 2002.

16. Dow's Liveris Outlines Keys for Performance Chemicals Businesses' Future Success

Terms Business a 'Powerhouse' in Specialty Chemicals Sector, www.dow.com,

March 20, 2002.

17. Dow's New Water Soluble Polymers Business Unit Exemplifies Dow's Focus on Growth,

Specialties, Globalization and Customer Focus, www.dow.com, March 20, 2002.

18. The Journey of Elemica: An e-Commerce, www.dow.com, April 9, 2002.

19. E-Business: Redefining Business Process in the Chemical Industry, www.dow.com,

April 25, 2002.

20. CIO Magazine Recognizes Kepler for Visionary IT Leadership, www.dow.com,

October 1, 2002.

21. Marketplaces, http://pubs.acs.org, January 13, 2003.

22. The Dow Chemical Company Named Inaugural Recipient of the Miller Heiman Sales

Excellence Award, www.dow.com, April 28, 2003.

23. Elemica Becomes ONCE Member, http://biz.yahoo.com, September 10, 2003.

24. Microsoft Releases BizTalk Server Toolkit for Elemica, www.eyeforchem.com,

September 23, 2003.

25. Awards & Recognitions Archives, 1999, 2000, 2001, 2002, www.dow.com.

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26. About Dow, www.dow.com.

27. History, www.dow.com.

28. Introduction, www.dow.com.

29. Success Stories, www.dow.com.

30. Connecting with Dow, www.dow.com.

31. Innovative IT, www.dow.com.

32. www.sealedair.com.

33. www.chips.navy.mil.

34. www.cio.com

Books Referred:

1. Thomas M. Siebel, Taking Care of eBusiness, Doubleday Publishing, 2001.

Related Case Studies:

1. Ford‟s E-Business Strategy, Reference No. 902-032-1.

2. Executing E-Business Strategies – The GE Way, Reference No. 903-014-1.