Dongming Petrochemical: Transforming management of personnel, finance, and assets through cloud migration
Explore Dongming Petrochemical’s journey with SAP
Shandong Dongming Petrochemical Group Co. Ltd. (Dongming Petrochemical) struggled with disconnected processes and data that stood in the way of global expansion. By implementing SAP S/4HANA Cloud Private Edition, SAP SuccessFactors solutions, and SAP Ariba solutions, it has enhanced its HR, finance, and material assets management processes while creating a modern foundation for continued business growth.
| Industry | Region | Company Size |
| Oil, gas, and energy | Heze, Shandong, China | >8,000 employees |
inventory accuracy.
faster monthly closing cycle, from 5 days down to 3 days.
faster supplier onboarding process, from 60 days down to 20 days.
General Manager of Digital Intelligence Center, Shandong Dongming Petrochemical Group Co. Ltd.
Replacing traditional models to keep up with enterprise innovations
Founded in 1987, Shandong Dongming Petrochemical Group Co. Ltd. (Dongming Petrochemical) has evolved into a group-based chemicals enterprise. Its subsidiaries cover production, operations, services, and engineering design across a wide variety of chemicals sectors. However, traditional management methods reliant on personal relationships and manual processes contrasted with the company’s commitment to innovation—and stood in the way of growth.
Dongming Petrochemical has more than 8,000 employees spread across five major production bases, supporting every aspect of the petrochemical supply chain. Over time, mismatches between personnel and their roles, misalignment of compensation for specific roles, and a lack of transparency in talent recruitment took a toll on HR management and the employee experience.
Inefficiencies also bogged down financial management. Core financial closing processes relied on Microsoft Excel spreadsheets. The company also faced internal settlement issues common in the chemicals industry. Diesel and gasoline, for example, are sold externally but also serve as raw materials for chemical production internally. Dongming Petrochemical struggled to clearly differentiate and price these products, creating an “efficiency black hole.”
The supply chain is crucial to achieving the group’s revenue target of Y300 billion (US$41.79 billion), but as with HR and finance, management of the company’s supply chain was a struggle under the weight of outdated technology. Purchasing specialists relied on experience and a list of suppliers from their predecessors, leading to high prices for key equipment. With unclear division of responsibilities, purchasing specialists were also tasked with contract execution, creating heavy workloads and a lack of focus on strategic procurement.
General Manager of Digital Intelligence Center, Shandong Dongming Petrochemical Group Co. Ltd.
Driving digital transformation with SAP SuccessFactors solutions and more
To modernize its business, Dongming Petrochemical worked across its enterprise to enable digital transformation with SAP solutions. Led by the group president, the project brought together a hybrid team that included the company’s business leadership and IT personnel to drive modernization efforts in parallel across company functions.
Dongming Petrochemical began its transformation with cloud-based human capital management using the SAP SuccessFactors HCM suite to help build a more transparent and unified foundation for recruiting, training, retaining, and promoting talent. By leveraging the best practices and standardized processes of the SAP SuccessFactors Recruiting solution, Dongming Petrochemical updated its outdated recruitment model, which relied on existing relationships and referrals. Implementing a traceable talent acquisition process enabled recruiters to more quickly review large volumes of résumés, significantly improving the HR department’s recruitment efficiency.
Dongming Petrochemical also uses the Social Media Integration service for China for SAP SuccessFactors Recruiting. Through this localization service, the company smoothed integration between SAP SuccessFactors Recruiting and mainstream local recruitment platforms, providing a convenient and intuitive experience for both candidates and internal employees to access self-service portals.
SAP SuccessFactors solutions have made it easier for the company to implement clear standards and processes across HR, from recruitment through payroll and beyond. The SAP SuccessFactors Payroll solution has become a powerful tool for the company to further reduce costs and improve efficiency. Using the solution, the company redesigned the compensation structures for all functional departments across the group, addressing two issues at once: mismatches between salaries and positions, and high error rates in manual payroll calculations.
With SAP S/4HANA Cloud Private Edition, Dongming Petrochemical bridged the data silos between its subsidiaries, establishing clear and accurate internal settlement standards for the first time. By adopting cloud ERP along with localized payroll and financial and treasury solutions for China, the company can better manage and analyze its production and operational data. Now, the actual material consumption and energy usage is reflected during the month-end closing process. This not only improves the accuracy of financial statements but also provides a solid data foundation for lean management, supporting decision-makers in making more scientifically sound and rational business decisions.
Using SAP Ariba solutions, Dongming Petrochemical upgraded to a modern procurement model where suppliers can self-register and tenders are published and collected online. The company has integrated SAP Ariba solutions with four major domestic e-commerce platforms.
General Manager of Digital Intelligence Center, Shandong Dongming Petrochemical Group Co. Ltd.
Improving efficiency and accelerating innovation with SAP solutions
Dongming Petrochemical created a tightly integrated technology strategy with SAP solutions, modernizing HR, finance, and operations for nearly Y1 billion (US$13.7 million) in cost savings the first year. The company achieved over 70% integration of finance and operations through SAP S/4HANA Cloud Private Edition. After integrating business and finance, Dongming Petrochemical reduced its monthly financial closing cycle from five days to three days while achieving 100% inventory accuracy. Additionally, it plans to further reduce the financial closing time to 48 hours and intends to implement compliance reporting and budget management functionality.
Dongming Petrochemical is the first local petrochemical enterprise in China to adopt SAP Ariba solutions. With SAP Ariba solutions, the supplier onboarding process, which originally took several months, is now approximately 20 days, and the full procurement cycle is down by two-thirds. As the company transitions from decentralized procurement to centralized sourcing, the roles of procurement specialists are more clearly defined and effective. The new and transparent procurement process reduced the company’s procurement costs by as much as 90% in some categories—while improving the quality of production.
By managing personnel, finance, and materials in the cloud, Dongming Petrochemical not only improved management efficiency and control but also brought profound impact to the company’s innovation and transformation. The company has successfully shifted from a traditional management model reliant on the experience of senior workshop staff and department heads to a modern, process-driven, data-supported management system.
Driving greater efficiency and transparency with AI and Big Data
Dongming Petrochemical is focused on embedding digital delivery capabilities into the design of each new business venture from the start. By 2025, the company expects to see a series of advanced factories begin operations. It looks forward to continued collaboration with SAP in the next phases of its business growth. As part of its ongoing digital transformation, the company plans to explore innovative applications for new technologies such as AI and Big Data in its petrochemical business.