BASF AG: Project "Early Scanning"

Client	BASF AG, Germany
Project Name	Early Scanning
Systems Integrator	IBM Global Services
Products	PROSAR-AIDA, PROKEY
Publications	Success Story (PDF)
The Company	BASF AG is the world′s leading chemical company. In its five business segments (Chemicals, Plastics, Performance Products, Agricultural Products & Nutrition and Oil & Gas), with around 82,000 employees on five continents BASF AG posted sales of €37.5 billion in 2004. BASF AG maintains business relationships with customers in more than 170 countries and supplies approximately 8,000 products from its five segments to a wide range of industries worldwide. Major customers for BASF AG products come from the agricultural, automotive, chemical, energy and construction industries. Important sectors also include the health, nutrition, electrical/electronics, textiles, packaging and paper industries.
The initial Situation	About 2,000 to 3,000 invoices arrive at the Accounts Payable department (AP) at BASF in Ludwigshafen (Germany) every day. All invoices were manually sorted, filed and assigned to the respective company employees who then verified the invoices, checking for example if the quantity stated corresponded with the quantity ordered. The AP data was then entered into the booking system before the payment of all invoices could finally be authorized. Only after receiving a bar code were the invoices scanned and archived (see process steps fig. 1). Fig. 1.: Process before the "Early Scanning“ project -> Click here to see fig. 1. About 60% of all invoices (approx. 340,000 documents per year) were still handled manually. The other documents were processed by Electronic Data Interchange (18%) and via other electronic interfaces.
The Challenge	BASF identified the following objectives and criteria to opt for an automated invoice data capture solution: reduction of processing time (1-2 days versus 4 days), improvement of data quality, higher degree of transparency in the entire process as well as an accelerated flow of information, automatic deadline monitoring for workflows & automatic assignment of tasks by SAP workflow, improved systems integration and reduction of process costs (personnel). The “Early Scanning” project was in two phases and the conception stage started in November 2003. Following the requirements of BASF’s AP department to implement the project into the existing infrastructure, a competitive mass test involving five vendors was organized with BASF Antwerp. Achieving the best test results, IBM Global Services was awarded the contract to automate and improve the company’s AP processes using Paradatec’s OCR/ICR freeform technology PROSAR-AIDA.
The Solution	The next step was then to firm up a solution and architecture concept together with the BASF departments. PROSAR-AIDA recognises the type of document through content-based analysis (classification) and performs the extraction of all relevant data. Paradatec’s correction tool PROKEY is used to manually correct any uncertain data if required (see fig.2). The scan and workflow functionality required for this operation is Kofax’s document imaging platform Ascent Capture. Fig. 2.: PROSAR-AIDA data capturing -> Click here to see fig. 2. There are several steps that need to be taken before the archiving process and the data transfer into the SAP system can be carried out. At first the documents are scanned and imported into the “Early Scanning” process in a digitized form. Then, the first stage in PROSAR-AIDA, the classification of document types, is finalized through the manual correction of any uncertain pages in PROKEY. The second OCR/ICR stage uses PROSAR-AIDA to perform the extraction of the relevant invoice data, followed by reconciliation of the recognised data with AP master data out of the SAP system. In a final inspection characters and fields that were not recognized or identified as uncertain are now validated and edited with PROKEY. Field accuracy rates for this stage are consistently high. The validation and archiving process is completed as soon as the images are transferred to the IBM Content Manager and the validated data is exported into the SAP system. Now all documents can be automatically processed through to completion or if necessary, routed to the appropriate person for processing. Fig. 3.: System architecture -> Click here to see fig. 3. After the software had been implemented into the existing system in April 2004 and work on the rule tree was completed with the cooperation of the experienced AP team at BASF, the new automatic invoice processing system went live in July 2004.
The Bottom Line	Oliver Bieder, manager of the BASF project team, described the advantages of this automatic invoice processing as follows: “We shifted most process steps from the desk to the screen. Via early scanning we are able to avoid errors which occur for example when typing in figures, and of course the electronic way is much faster than the manual data entry.” (Quotation: Ulla Biernat, “Früh gescannt – schnell geprüft“, published in: BASF information July 2004). Fig. 4.: Process after the "Early Scanning“ project -> Click here to see fig. 4. Qualitative improvements are achieved because typical mistakes arising from manual data entry are now avoided. Most of the data is transferred automatically, accurately and at very high speed into the workflow. Since the start of production the system has been successfully running and achieved an 85.7% automatic data recognition rate (incl. line items). “Early Scanning” allows same day processing of a large proportion of invoices (reduction of process time: 3 days). An automatic assignment of tasks, as provided by the SAP workflow, is now possible and the particularly labor and cost-intensive transport of original documents between the different stations is no longer necessary. Because of the successful running production in Ludwigshafen the system was also implemented at BASF AP in Antwerp (Netherlands) in December 2004 and from the beginning of this year freight invoice control has also been included in the process. After these successful implementations BASF AP plans to make this a worldwide standard for AP at the BASF company.