The Celanese 6 s Dispute and Deduction Management Case:

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4/0/20 The Celanese 6 s Dispute and Deduction Management Case: Leveraging 6 s to Manage Disputes & Deductions and Improve Cash Flow Cross Function & Cross Business (FSS, Supply Chain, All Business Units) Mark Walker Global Credit Manager Celanese Corporation Celanese Corporation Facts Celanese is a global technology and specialty materials company with products holding leading positions in the industries we serve worldwide HQ Dallas, Texas with 7,600 employees globally Operations primarily located in North America, Europe & Asia 202 net sales totaled $6.4 billion, 2/ outside the US 4 segments: Acetyl Products, Advanced Engineered Materials, Consumer & Industrial Specialties 8 plants & facilities operating in 8 countries

4/0/20 6 s - Breakthrough Strategy Phase 0: Define Scope and Boundary Define Defects Team Charter and Champion Estimated $ Impact Leadership approval Phase I: Process Measurement Map process and Identify Inputs and Outputs Cause and Effects Matrix Establish Measurement System Capability Establish Process Capability Baseline Phase II: Process Analysis Complete FMEA Perform Multi-Vari Analysis Identity Potential Critical Inputs Develop Plan for Next Phase Phase III: Process Improvement Verify Critical Inputs Optimize Critical Inputs Phase IV: Process Control Implement Control Plan Verify Long Term Capability Continuously Improve Process 6 s Dispute Resolution Definitions: What is an invoice dispute? Any reason a customer disagrees with or doesn t pay what we have invoiced. Project Description: The volume of items and dollar amount of AR tied up in disputes are a large contributor to working capital leakage. With many sub-processes, hand offs and disconnects visibility and understanding, control, standardization, and meaningful and consistent metrics are desperately needed. Time to resolution is also a major contributor to leakage as well as customer satisfaction. Process Description: Identification of dispute (deduction, call, non-payment, etc.), circulation of information and documents, investigation, propose resolution, approval of resolution, execution of decision, clearing customer account, communication of results, measure. Metrics: Dispute Reduction Trend, Open Dollars/Items, Resolution Timeliness, Dispute Team Members: Core Team: Credit, Collections, Cash Application, Customer Service, Sales, Business (Approvers), SOX. Ad Hoc: Logistics, Master Data, Quality, Legal, Billing Coordinator, Tax, IT (BPS). Champion: A champion must have a stake in the process/outcome Project Results: Defects in this process are driven by upstream process defects. Lack of metrics, process clarity, understanding, control, hand offs and time to resolution are all causes for breakdown. This project will address all of these areas. Anticipated/Actual Savings: Beware of Soft V. Hard Cost Savings Key Highlights: A) Reveal the benefit of metrics and value add back to the business. B) Reduce working capital and past due dollars. C) Add control and accountability to the process. 2

4/0/20 6 s Dispute Resolution What is required: A streamlined process with clearly defined roles and responsibilities, time lines and metrics will reduce errors that cause exceptions and increase invoice accuracy. It addresses internal challenges and bottlenecks such as obtaining crossfunctional cooperation, overcome process inefficiency, ensuring timely access to information and succeeding with limited resources. Impact to AR of Disputes: Higher DSO Accrual/Expense Impacts EBITDA Higher deductions/ write offs Customer satisfaction Increased transaction costs Price increase process impact Cost of disputes: Hinders productivity improvement potential Requires human intervention Represents 5-20% of all business transactions Reduced customer satisfaction as issues do not become apparent until after the fact Current structure allows disputes to multiply exponentially Slow response and resolution time Delayed discovery time Volume of disputes, correlated to response, resolution and discovery time Limited follow up and post resolution communication with customer 6 s Project - Metrics Baseline Goal Entitlement Units Metric Dispute Trend 50 0 % Metric 2 Open Dollars.5MM 0 $ Metric Open Items TBD 0 Items (#) Metric 4 Resolution Timeliness <0 <5 Days Metric 5 Dispute Types (Defects) All All Items This process is 00% non-values added. As much of the process must be eliminated if possible. Up & downstream processes cannot be improved without meaningful actionable metrics

4/0/20 High Level Process Map Fishbone (C&E) Diagram Customer Dissatisfaction with Invoice/Dispute Resolution at Celanese Lack of control Past Dues Lack of Empowerment Accounts not reconcilable 4GetPaid Intergration Chasing Resolution Ad Hoc System High cost to process CE invoices Customer Dis-satisfaction Time To Resolve Low priority Training/Understanding FSCM Workflow AR over stated Process waste on resolution Collection Difficulty Different Standards No Standards Broken among businesses 2 None to low Accommodation (amount) credit Lost price increase Slow to address issues No SLA/business rules Multiple owners Poor Communication Lack of Ownership Lowest priority process Different contacts (across businesses, across region) Internal & external customer Broken among region AR Overstatement Opinion Control Procedure Multiple processes Confusion Lack of control Lack of proactivity Accrual Time to resolution extensive Poor Metrics Lack of standard Multiple hand offs Lack of clear understanding Lack of Transaparency No metrics defined No visibility of Up or Lack of Accountability Down Stream defects No measure of customer No set procedure satisfaction, SLA s... Lack of proactivity No Control Trends Leakage Inability To Identify and Resolve Customer Invoicing Disputes Lost Sales Audit Position Impact High Low Easy 2 Implementation Hard 4 4

4/0/20 Findings Average AR Balance $5MM, Highest $8MM Best in class $500M-$MM Average 75 Days to Clear Best in class 5 days No Consolidated/Standardized Processes or Ownership Non-priority, many bottle necks/hand offs No documented roles, responsibilities, processes or procedures No metrics or KPIs < sigma process Price Dispute Example Once we started measuring: Pricing is 80% of disputes 90% are credited due to age or to accommodate customer Concept/Assumptions: Customer Buys Material at $.00/# & Orders 00,000# s Based on Ave 75 days to close Quarterly Price Increase of $.0/# Becomes Opportunity Cost: Invoice = $0,000 Lost Sales/Margin $,000 Metrics: Measure rate of price increase to dollar value, number and amount of disputes by customer. What if increase cycles are shorter? 5

4/0/20 Project - Summary Key Improvements: Control over the process with agreed actions and timelines Reduce cycle time from issue identification to closure Remove risk of loss, customer abuse & price increase loss Reduced volume of discounts Improved resolution of customer accounts, thus service Metrics and tracking Path forward & unresolved issues: Next step: Socialize and gain concept approval Team structure, size and skill set needs and placement Connection with product quality process Possible Future Projects: Dashboard: global, region and business comparison Obtain true meaningful data and metrics to identify and address upstream defects How to eliminate the entire dispute process, proactive/prevention Project is global, cross business and cross functional in scope Recommendation Assessing Resource Needs Establish Dedicated Team, Core Competency Team Leaders, Team Members How Many? Permanent V. Project Resources Back Log, Current Trend, Future Goals Set, Review, Publish and Post Job Descriptions Clear Roles & Responsibilities Address SOX and SOD s Employ Change Management, Include All Stakeholders Set Metrics and Communication Package Begin Process Improvement Efforts Immediately 6

4/0/20 Outcome End-to-end Process/Procedures Documented & Established Metrics and Communication Portal Developed Stream Defects Coded and Reported Pricing Project Established Customer Satisfaction Survey New Lean Events Scheduled FTE Saving In 2 Months Back Log & Cycle Time Reduced Increased Cash Flow, $4MM /2 Day Global DSO Savings Questions? 7