GPO or A Travelling Salesman

Highradius

Speakers

Gunther Smets

GPO Order to Cash, Cargill

Transcript

Gunther Smets:

So let’s make this very interactive and very dynamic. So I’m just gonna take the clicker and then I’m gonna come back down here and then let’s see how that works. Okay. So the intent of the presentation is really to go over and say what’s being Cargill’s journey on how we went from a very decentralized organization to a centralized organization and the salesmen reflect wearing this in a transformation journey. You were talking to a lot of people because a lot of people are stuck in their ways on how they are doing things they’ve been doing it for decades on a row and then all of a sudden you want to implement a shared service model and you want to bring in new technology and everybody say well that’s not gonna work for me.

So it’s moving that towards a more transformational journey and how we bring people along on that journey within the strategy itself. So that’s where the title came from. Mine too far with the clicker. Or is it switched? All right. That’s better. Yes. Very good. So. Just a brief introduction to Cargill itself. So one hundred and fifty thousand employees worldwide in 70 businesses, 67 countries, agricultural and business across a lot of different kinds of businesses in there as well. So the intent is just to illustrate a bit on what is the journey that Cargill is on.

How does the global process owner approach how that works? So what is that and what does a global process owner do and what are the change and transformational impacts that we are doing right now? So where we come from, so where we started this Cargill. We had those over 60 different kinds of organizational models that we’re all delivering on the different processes within the credit to cash based on itself. So that led to over 400 different kinds of process variations, so different ways of doing the same thing. We were also not really customer focused.

Gunther Smets:

So a lot of our customers are shared across the different businesses. So you could have different interactions with different kinds of outcomes depending on what business that you worked with. So that was really that state as well. We have over 50 different ERP systems. So there is not one Oracle or one SAP. So it’s a wide range of 50 different versions. And we have six thousand five hundred people within the finance of which in my space there is 1200 in the credit to cash. And the last component in which we are still very much struggling with as well is how do you create the master data.

How do you create clean data to start operating with us because that’s a mean challenging element. So that’s where we come from now where we’re going towards and we’re about three years down on this journey if we want to have an end to end to line organizational model. And I’ll go into more detail on what that means from a people aspect. Looking at one integrated receivables management solution. So on the technology side and there is a presentation tomorrow on specifically on the technology side on what we are doing, then one Cargill data platform.

So we are which I’ll talk about as well tomorrow. We are creating one data link within an
Hadoop environment where we are pulling all of the information into one size and then have a visibility layer that sits on top of it. So with power that’s there. And then standardize processes, so our end to end focus really is an end to end process focus, focusing on people process data and technology. So, from a global process owner perspective, within finance focusing on credit to cash where this is the quadrant that we have and that we work with on a day to day basis.

So on the people’s side, we define where we do what kind of work. So where do we leverage a shared service center? But it’s not only a lift and shift towards a shared service center model it’s also looking at how can you leverage a more regional approach instead of a business approach or how do we have finance for North America, finance for Latin America, a bank and so on. We’re also looking at roles & responsibilities and capability. So how do you create finance for the future with the capabilities that you need in the future?

Gunther Smets:

So how do you go from a more accounting driven background in a lot of those elements to a technology-driven background to data scientists more towards predictable financials as well? And clear rolled her responsibilities. There was a lot of overlap between the different kinds of roles that you had. We were stepping on each other’s toes continuously within everything that we did as well. Then on the process side is from the iterations that we had over 400 different kinds of iterations that we had in there. How do you move that towards a business process framework? So how do you go to an end by standardizing what you need to do but still creating sufficient uniqueness the differentiation between necessary and unnecessary uniqueness between the things that we do in Cargill as well?

Having process documentation which wasn’t really the case. It’s something very simple something very tangible but a lot of the knowledge was legacy knowledge in people’s heads who were there already for 20 years 30 years and if you then had somebody else joining the company they had to learn from scratch and the main one of the main elements that we always had when we start migrating and saying, Yeah but a shared service doesn’t know my business. And the main reason for that is because of that embedded knowledge that sits with so many people because you don’t have a standardized process everything is based on an exception and everything is in the minds of people.

Nothing is documented as such. So that’s a bit I’m sure that sounds familiar as well. So how do we start measuring? How do we have sort of the metrics as well? So how do we compare ourselves? What does good look like? Before you start standardizing to support something you need to understand what is good. What am I aiming for? So we started defining different kinds of KPIs and different kinds of metrics. We used Hackett as well to benchmark versus the market and see where we are and then define that top quartile journey. So, How can you improve those metrics as you continue?

Gunther Smets:

The data element. As I said that’s a weak point. It really is. If you look at all of the different systems that we have with all of the different kinds of methodologies that we have. How do you then have a unique customer for example purely to say because that customer exists in six different SAP solutions into 28 different JD Edwards solutions with all different trends references, so how do you create one golden customer account out of that is a bit of a challenging component as well? So that’s really what we’re focusing on, what one of the key priorities is as well with the technology. So we’re on the technology side. What we did wrong before. What we learned for is we started from technology and then we went into the process and thought that the technology is your silver bullet solution that’s going to fix everything for you. You implement SAP and your life is going to be brilliant. It doesn’t work like that. If you don’t have the process standardization first or you don’t look at how your organization from a people aspect is set up first, you will fail on the technology side.

So we’re now looking at how you have the right transformation from a people site. How do you have the right process standardization? How do you make sure your data is ready and then look at the capabilities that you need to be able to drive technology going forward as well. So I’d not have the technology drive the rest of the organization. So from that aspect, we revamped finance altogether. So it’s not only a view on saying, it’s all about shared services and we’re going to lift and shift our people towards a shared service organization.

So what we are doing is looking at the total finance organization and putting it in a few key components. So we’ve got that global process organization as one puzzle piece that’s gonna be a key enabler. But then we look at the global finance platform so that a central finance SAP which we’re implementing right now then we’ve got CBS finance. So that is our Cargill business services. So how do we make sure that we’ve got that ready from an end to end perspective as well? And then our regional AND organization.

So whatever we had we retained activities within the region but also reorganized it from an end to end more specific domain. So we’re moving from a generalist towards an expert model so instead of having an accountant who sits in the region who does a bit of everything. We now have different domains. But I’ll touch on those in a second. So our shared service approach where right now, we are around 70 percent of all of the credit to cash activities who are in our shared services with an end state that we’re looking at for around 85 percent.

Gunther Smets:

We’ve got six global shared service centers of which the largest one is Sarkozy Costa Rica where there are around 400 credits to cash people located there. They service North America, so the U.S. and Canada. And they also serve as a part of the Latin American space. We’ve got Uberlandia, So in Brazil servicing Brazil itself. We have Rosario, so that’s more for the Southern Cone based in Argentina. So Sofia covers all of EMEA, so Europe, Middle East, Africa. We’re looking at it right now to see if we need an additional center within Africa or we’re going to also cover it out of Sofia.

So they’re a little bit slower on that journey. Bangalore in India is servicing everything from apac with the exception of what we do in China, Korea, Taiwan and Singapore which we do out of Nanjing. So the end to end concept of what we have is if you look at that rotation or whatever you want to call it you’ve got the CBS organization. So the shared service organization mainly focuses on all of the components that you would have in the execution of the process but also a lot of data analytics and starting to bring some value to add activities as well. So it’s not only transactional. You’re looking at it. So it’s in your engine, it’s your back office engine of what you drive.

They are enterprise and geography agnostic. So some of the activities within credit to cash will have on a global basis within Bangalore for example. But we still have a regional footprint as well and they work for every single enterprise. So you can shift around activities as well. So if you would look for example at order hold or release processes on how we work directly with our customers as well we go with the sun. So that means if we’ve got one center that stops working it’s automatically picked up by the next center and so on.

So that means that you’ve got 24/7 service which is the element to make it global and not regional specific as well you really leverage your scale in that way. The ANF organization, ANF stands for accounting and finance FRM stands for financial risk mitigation or financial risk management that we have in there and that is set up in each of our regions. So we have a regional approach where we’ve got the financial risk management group for North America and it’s split into three pieces where you’ve got the credit organization, where you’ve got foreign exchange and you’ve got commodity risk.

So in Cargill, we’re very much driven by the commodity risk but in cargo, So they have three verticals within that organization. They’re regional specific. So they only work for North America or only work for EMEA or only work for North America. However, they are enterprise agnostic. So they were for the whole of our businesses within that region as well. So really with the focus to be customer-oriented and not business by business by business. So that’s really the focus. And the third component just to tie it together because we still have our enterprise view as well our go to market model as we’re looking at food ingredients, bio industrials and agricultural supply chain protein services.

Gunther Smets:

So different kinds of go to market model and for each of those we have an enterprise credit lead and that enterprise credit lead looks at the total risk portfolio for that enterprise, they are enterprise-specific but region agnostic? So they have a global role but specifically on an enterprise. So which means that we’ve got the CBS organization whose both enterprise and geography agnostic, We have the Ephram organization who is enterprise agnostic but region-specific. And then we’ve got the enterprise credit lead who is enterprise-specific but region agnostic. So that’s what gives us the three different lenses of what you need to have an end to end service model within there.

So, If you then look at activity placements where do we do what? And we will have this model now fully implemented by May 19. So that’s our fiscal year run like that is on the CBS side but in credit to cash, they have all credit management, collections, cash app, dispute management, invoicing and contract management is all done out of those centers with the intent of going 85 percent of all of those activities being placed there. Where they sit within the organizational elements as we started from a global process organization was really just a traveling salesman going to convince, while we had a mandate but sell the basic principles as well to every single region every single business. We’re now combining that as well from a service delivery perspective. So as a global process manager within credit to cash and in both the process architects within that organization as I do with the operational side within the different centers as well, which allows us to accelerate certain things you don’t need to, you’re not silo-based. You can move from a strategic perspective directly into operationalizing a lot of those components as well. So it gives us a lot of traction and a lot of speed on it. Same with the FRM organizations were financial risk management organizations.

Gunther Smets:

So we look at counterparty risk or credit risk is where we can have a regional customer approach dedicated to them. So how we can move forward on a lot of those things we take effect. So we have foreign exchange risk within each of the regions right now where we have like a hedge desk that can work directly with the Treasury as well. And we look at it not from business to business because we were hedging just to a flat to a zero position where now because you have more expertise you can actually play the market a little bit more because you have dedicated people to it.

Before we didn’t we didn’t have those expert roles. So you think of a very risk-averse approach at the back of it. The commodity risk position is how do we? We have a lot of our growing commodities that are also futures so that we handle both the future and the flat position at the back of it. So what we do within the Ephram organization is making sure that our position reporting that we have on all of our inventories that it’s always up to date and there are a lot of regulatory compliances which are actually being increased significantly.

So they’re really focused on all of the compliance risk within the commodity space. So that’s their focus. And then we’ve got the enterprise credit needs that were already referred to before. So that’s how. Yeah yeah.

Audience:

You have a customer. So who approves, is it CBS for that customer or FRM.

Gunther Smets:

It goes with a threshold. So what you’ve got is initially you’ve got the CBS organization who will approve up to a certain threshold and then it will go to the FRM organization as your second escalation level. And then it will go to your enterprise credit leaders as a third.

So it just flows through web-based on the threshold as well. If you would have a credit assessment or a credit limit approval in the beginning. What you will have as well is that we’re looking at auto approvals. So it just flows through the system without anybody approving. Another element that we’re looking at right now is saying do you really need to approve a credit limit based on an amount threshold. In theory, what you want to do is approve a credit limit based on what the risk profile is of a customer.

Do you really need to have 20 different approvers to approve? Honestly, you probably don’t. But it’s where we spent the most time on assessing it because it’s a high rate or high, Yeah, a very high limit. It’s a very substantial amount. So we want to have it more risk event-driven way where you’re looking at saying what’s the actual risk profile of a customer and then have their approval cycle tailored to that element is just instead of a risk-based, risk amount based approach. So on the CBS organization or because the previous just going one step back, this is how we are running the operation side.

So now we run the day to day activities that you need to do, but we still have a lot of that transformational journey that we still need to do. So how do you transform versus where you are right now or where you were for the last one hundred and fifty years towards something new as well. And you need to have an organizational concept that drives that because if you have your operational organization drive your transformation then basically it’s gonna disrupt them. Every time that they’re spending on transforming they’re not working with your customers, they’re not collecting money and they’re not assessing credit.

Gunther Smets:

So we have a transformational site of the organization as well which is linked in three pieces again. So what you’ve got is within the CBS service organization. We’ve got a continuous improvement group. So a CI Group. So mainly they’re like a black belt six segments that are focusing on a lot of those activities as well where we are working with automation anywhere to do a lot of the RPA sort of bolting process automation. While we went live in the first year, last year was the first year we went live with 60 bots approximately and will accelerate that journey as well.

We don’t look at RPA as an as a target solution or as an end state solution and just a tool in our toolbox for something that you say well you’re on the roadmap for in two years and time to go on to SAP. That means that your RPA is gonna have an earned back period within there. So you scale up and you scale down. The ability to do all of the Lean Six Sigma. So a lot of kaizen events that we do within that approach. So that’s what they handle. The middlebox. That’s me. So we define what the strategy is, what our efficiency initiatives. So we’re looking at the ending. So for the moment credit to cash both in the regions and in the CBS is around 1200 FTEs, by 2023 there will only be 800 and that’s not by outsourcing it. That’s purely by our automation, standardization journey that we are doing. So that means in general for our total finance organization from the start about three years ago to the end in five years an eight-year time window we will have on our efficiency target around one hundred and sixty million dollars.

So we already delivered 80 million dollars. We’re going to deliver on another 80 million dollars over the next four years approximately. So then within the region, because you want to have again end to end as well, that we’ve got the process improvement on me, which is really looking in a lot of that transformational or change drivers that we would have within the business itself. So how do you drive a lot of your migrations? That’s still there. Because we’re now in the beginning to gain a lot of momentum and a lot of speed that was lifted and shifted to a strong mandate, just go through the business you need to shift it. If we didn’t do it like that it would never have happened because then you come into a consensus culture and you start debating and discussing and it’s never gonna happen. So however now considering that we’re already close to 70 percent. We’re going more in the transform and shift you have more complex activities as well. Process Improvement domain will help us with that plus they will help us also with bringing that technology roadmap behind. So it’s really looking again from that end to end perspective with the same principles.

Gunther Smets:

So how do you have operational excellence and how do you transform towards your organization as well. So this is a lot of detail on that slide, but we lifted and shifted a lot of that approach to our shared service centers purely based on how we lifted and shifted them. So if you had our cocoa business who said I’m moving 20 after each, then you had like this small island of cocoa people that we’re shifting into the shared service center. So, in theory, you didn’t change that much. So what we did right now is simplify that shared service model to really make it process-oriented.

So the concept behind it is that you have the different SAP processes regardless of what it is which are different layers where you have your pyramid and saying for every 60 spans of control, I need the senior team manager, that team manager will do a one to 15 a one to 20 approximately. Then you’ve got a team analyst who’s your subject matter experts who can work on projects but some high-level activities in there and then you’ve got your juniors and so on within that in the depth of your organization. They’re the ones at the bottom.

So the AR analysts and the systems and control are because you are still interfacing with your businesses as well. So the AR analyst is the one who looks across everything and will look across the cash application look collections and so on just to bring one narrative from one story to your business stakeholders from a commercial aspect as well and saying, this is how it looks like for your business. This is what we’re doing about it and this is how we’re driving it forward as well. As systems and controls, That’s really because we have such a big aggressive timeline, a lot of technologies that we want to have like a train, the trainer, segregation of duties, role set up, config set up as a dedicated role within each center just to have that focused on it.

Gunther Smets:

So as well. So that’s how our overall shared service model is working. Now a big thing and there’s even more on this light than on the previous one is, How do you keep governance going on? because everybody’s got to say and in Cargill is a very people consensus-driven culture. So how do you make sure that you have a decision element that you can really move forward as well? So what we did is we set up process councils with all of your different kinds of stakeholders. For us, this has been a great accelerator purely because you bring the right people on the right topics together with clear artifacts, clear goals with clear meeting elements onto it and saying. So the main element is the first one is our operating committee where we’ve got the global process managers and their architects, the tower leaders. So from an operational side, we need bi-weekly, what do we do? We look at our productivity dashboard on what’s coming our way, what’s going well, what isn’t going well, we’ve got power by dashboards with all of the metrics and we just look at what’s on the Reds and the yellows, the greens we don’t care about they’re going well. So we’re looking at what’s not going well and that’s what we discuss every two weeks. Then the process governance committee that’s looking at metrics targets and operating model.

It’s really the finance saying okay we’re changing the way that we’re working so how can we have better roles and responsibilities set up as well within the different kinds of aspects. So how do we make sure that everybody understands what their role is? And the reason to exist is spinning cargo. Where do you fit? How do you matter? That’s basically what the process Council does. The technology committee is to make sure that with all of our IT stakeholders with our architects within that environment that we continue driving by capability and that we don’t drive by customization or buying the new toy in the shop that we play with the toys that we already bought.

That’s the key concept that we have in there. And then every year we have a strategy session and say what’s the market doing, what are we doing, what’s the delta between the two. And are we still moving forward in the right direction? So those are by having these consistently done. You also are able to just have one strategy and not 500 strategies going on at the same time. So that’s the main element to it. This is purely to go and say, How do you then continuously improve?

Gunther Smets:

So we’ve got ideation, we use SAP ideas to value as a pipeline to work. And that is how do we then go into different categories. So what is technology? What is automation? What is it guys an event? We evaluate within the process counsel and prioritize what we’re going to do. Because you can’t do everything at the same time. And then we have a delivery where it goes into that transformational organization to make sure that you have that delivery going well and then ongoing monitoring as well through the health dashboards that we have for the different initiatives.

So that would be there. What we’re bringing in here that’s the last, the final slide by the way that’s really focusing on the aspect of visualizing it. So to have an operating system we’re in here, we’re building that every single new employee can go on it and they say this is my job. This is what I need to do. And it will just bring you within and say okay this is what happens before you do your job. This is what happens after your job and so on. So this is the visualization tool of everything that was before.

So that’s how it would work. And I got the time signature but it was the last slide. So it was. Yeah. Yeah.

Audience:

You knew that all. On your own Captain. What did you select? Like a partner.

Gunther Smets:

So instead of a BPO that we did as Cargill. Well for quite a few reasons that we did it because we did have historically BPOs as well. So for example, before we worked with EXL and OPI for some of our cash application activities we saw that we can accelerate actually faster if we have it than a captive organization.

Plus what we also see, which is my personal opinion on what I want to do in credit to cash. If you look at it from a BPO perspective you’re looking at it from a cost center lens. I’m looking at it from a revenue lens. So what I’m saying is, Well at one point in time for a lot of our customers who are very small size to medium size to large size, they’re actually looking or potentially could look at Cargill that we could offer their services for them. So we already see that also within the I.T. space instead of I.T. doing I.T. for Cargill. They are also doing digital nutrition or developing products for our customers. And you can actually become a revenue driver in some of those aspects as well. So for us, it’s also a future state investment and saying how we can have an end to end solution for our customers not purely on a product based element but also on a surface-based element. You’re going to tie your customer to you for the longer term as well. You own your own data which is probably one of the biggest important currencies that you have going forward as well, which is something that we want to continue as leveraging Cargill as well and saying how do we leverage our data and look at it as a product and not only as a critical thing that you need to survive and to do all of your activities, but also to make sure that you actually have that as a currency on how you go to the market and how do you work with your data which is easier or better if you do that as a captive. Those were the main drivers.

Audience:

I have a question? You have all the systems. So you mentioned the six shared service centers that you have around the world and before then you said about a lot of systems you have as SAP.

Gunther Smets:

We still do.

Audience:

Yeah, so how do you handle these from the shared service centers, say in Costa Rica as we supported we have 4 different systems.

Gunther Smets:

We give them 4 different screens. In some cases sometimes we really do.

Gunther Smets:

Well for the moment it’s still very system driven that they have people that you segment by the system that they don’t need to navigate from one system to another. But we are making all of our approach to receivables management and are making our way to ERP agnostic. So we are actually bringing oracle data within our SAP environment.

So we have got the layers, so the translation layer that brings non-SAP data in an SAP format within your receivables management and that we use the HighRadius accelerators to work on all of those processes as well. So we are not in the cloud, we don’t use any of the cloud solutions, we still use all of the accelerators in there because that’s actually bringing us quicker towards the future capabilities than just putting in the cloud right now. So it allows us to go faster.

Gunther Smets: So let's make this very interactive and very dynamic. So I'm just gonna take the clicker and then I'm gonna come back down here and then let's see how that works. Okay. So the intent of the presentation is really to go over and say what's being Cargill's journey on how we went from a very decentralized organization to a centralized organization and the salesmen reflect wearing this in a transformation journey. You were talking to a lot of people because a lot of people are stuck in their ways on how they are doing things they've been doing it for decades on a row and then all of a sudden you want to implement a shared service model and you want to bring in new technology and everybody say well that's not gonna work for me. So it's moving that towards a more transformational journey and how we bring people along on that journey within the strategy itself. So that's where the title came from. Mine too far with the clicker. Or is it switched? All right. That's better. Yes. Very good. So. Just a brief introduction to Cargill itself. So one hundred and fifty thousand employees…

What you'll learn

  • Learn how to drive an overall finance transformation project and manage the expectations of different stakeholders
  • Find out how Cargill migrated 3600 finance employees in 3 years into six global centers
  • Learn how Cargill achieved a single Accounts & Finance landscape

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