Danone is a global consumer goods provider, founded in Barcelona and now headquartered in Paris. This industry-leading multinational corporation has a customer base of more than 1000+ food distributors, consisting of both small mom-and-pop stores and major retailers, like Walmart and Amazon. With similar global businesses moving towards a shared services approach for their operations, Danone was already a step ahead – preemptively identifying the biggest obstacles it would face in the transformation of its shared services and coming up with a plan on how to best manage these challenges.
Establishing an SSC requires a lot of thought and meticulous planning for several variables, be it infrastructure, budget, policies, etc. While the primary motivation for establishing an SSC is to reduce costs, organizations often end up inadvertently increasing their overall expenses, thanks to inefficiencies, poor planning, and other unexpected challenges.
What are some of the main challenges that organizations face while adopting a shared services approach?
For businesses like Danone, with operations in multiple countries, an SSC often uses different service providers in each country for different functions, such as scanning, banks, e-invoicing portals, ERP systems, etc., because most providers don’t operate globally. This lack of standardization across multiple lines of business (LOBs) results in staff following different processes. This happens with supplier payments or invoicing, for example, which require different formats depending on the ERP system or the country in question. Businesses need an agile process in place that integrates with their ERP systems across multiple geographies.
With siloed systems in place across multiple LOBs and different geographies, there is often a lack of visibility, which is necessary for global control and governance. Businesses need a single source of truth for tracking KPIs to identify focus areas for improvement.
With most global businesses operating under a typical shared services model, prioritizing cost reduction over customer satisfaction has only led to diminished customer retention. The inability of A/R teams to partner across their organization and interact or work with each other in real time results in a poor customer experience over the long run.
Danone’s shared services enterprise faced several challenges related to redundancy. Before automation, almost 100% of Cash, Collections, Credit, and Deductions work was performed manually. That meant the analysts had to go through the entire cash application process with precision to handle specific errors.
At Danone, 85% of the overall disputes resulted from trade promotion deductions and required 100% manual intervention. With 90% of the deductions found to be valid, a substantial manual effort was needed to identify and process the 10% of deductions found to be invalid. Delay in deductions resolution due to the lack of automation also increased the DDO to more than 45 days.
Danone was looking for a technology partner with an intelligent solution that was easily deployable and customizable with the flexibility to integrate with their existing systems.
The objective behind automation was:
Danone partnered with HighRadius to automate their end-to-end A/R setup, integrating the siloed systems they had in place. With the first phase of implementation in North America resulting in a noticeable reduction in overall costs as well as improved revenue and working capital impact, Danone expanded its scope to its six SSCs in Europe.
The key features constituted:
The pain of manual and error-prone cash application that negatively affected downstream processes, like deductions and collections, was no longer experienced.
With HighRadius’ cloud solutions, Danone achieved the following results:
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HighRadius Cash Application Software enables the end-to-end automation of the cash application process that covers major benefits such as AI-enabled data capture for remittances, auto-linking of payments with open invoices, cost-cutting on lockbox fees and easy compatibility with any system due to its ERP-agnostic Saas infrastructure. Apart from the major benefits that it has, there are some key features which can not be missed out, some of them are Email Remittance capture, Discounts and Deductions Handling, Check Remittance Capture, Web Remittance Capture, Invoice Matching, and RDC & Mobile Payments.