[ 3:01 ] Marisol Hernandez (Facilitator) –
Sorry about that, everyone; we will begin getting started with today’s presentation. Welcome to Shared Services Tech 2021, and thank you for joining the session. My name is Marisol Hernandez, and I will be your facilitator. All participants will be on mute. If you have a question, please enter it in the Q&A section below your attendee screen. The recording of today’s session will be available next week. If you would like a PDF of today’s presentation, please visit the Shared Services Tech LinkedIn page; you will find the presentation there. With that being said, I will now like to welcome everyone to the discussion How Cargill improved working capital with digital transformation across 70 business units. Lesson for GPOs by Gunther Smets. In today’s session, we have our speaker Gunther Smets Global Operations Lead to Credit Cash at Cargill. Gunther has been at Cargill for 15 years with various roles in the financial risk area as an EMEA Counterparty Risk Lead Global credit manager forex and commit commodity risk, and since at and for the past year has been the Credit-To-Cash Process Manager prior to Cargill, he was been with 6 years with ABN AMRO, and he has a master’s in statistics and Applied Economics and Ph.D. in philosophy. Gunther, Thank you for being here today. And I’ll hand it off to you now.
[ 4:40 ] Gunther Smets –
Thank you, Marisol. I hope I am audible to everybody. Can you just validate that? If I’m audible?
[ 4:50 ] Marisol Hernandez (Facilitator) –
Yes, you are audible.
[ 4:53 ] Gunther Smets –
Perfect, very good, okay, thanks and welcome everybody, and thank you for the introduction as well, Marisol, so over the next, let’s say, 20 minutes or so, I’ll take you through a few slides that helped bring the story come to life on how Cargill went through our digital transformation, but also process data technology transformation within there, what are some of the challenges, and the opportunities where we are right now. And some of the things going forward as well. We have a few additional classes as well, tomorrow, and the day after tomorrow, where some of the topics that I’ll touch on today and will go deeper as well. So if there might be some residual questions that we wouldn’t be able to address today, and that we might be able to address them in the coming days as well. So without further ado, I’ll first start with giving a little bit of an overview as well about Cargill itself. So Cargill is an agricultural industry company, the largest family-owned company in the world. We have 150,000 employees across 70 different businesses located in 67 different countries, as well. So very sizable, but also a very fragmented organization, which is equally an opportunity, as it was one of our main challenges as we went through this as well. So as I already referred to it, is what we’ll go over today is what was specific on the Cargill story, how we went from where we were towards more focus on operational excellence in Accounts Receivable, as well as some final observations and key takeaways that we would have, and then we’ll have some time to address some of the questions that we might have as well. So the first thing that we did on our journey started about 6-7 years ago when Cargill decided to be an integrated operating company that was very process-driven. And as part of that journey, the first element was saying, How can we start leveraging our scale? And how can we have a shared service component for some of our finance processes within there? So at that point in time, Cargill started with six Global Shared Service Centers, as you can see on the map right now. So we have covered North America out of and Central America, out of Costa Rica sacristy, we have Uberlandia, Brazil for Brazil, and then the rest of Latin America is covered out of Rosario, Argentina, the whole of Europe, Middle East, and Africa is covered out of Sofia, APAC and but also as a Global Capability Center for our Cash Application process is in Bangalore, within the Credit-To-Cash base. And then, China, Taiwan, South Korea, Hong Kong, and Singapore are covered out of Nanjing, China. So this is our Sixth Global center for Credit-To-Cash; this represents around 1000 people, so full-time equivalents across those 6 centers, as we have them right now. But I’ll come back to that in the later slides as well. So this was the first element of what we did to make sure that we could start from a very fragmented placement strategy to more of a centralized placement strategy across the different centers that you have here. Now, at the beginning of our audit of the cash landscape, we even have a slide that goes into it and a little bit deeper. This is just to illustrate what the level of fragmentation was where we started from, so we had 5 different enterprises. within them, we had each of them, 20 different business groups, we had 28 different JD Edwards instances, which to a certain extent, is still the case, and five different SAP instances, we have over 90 different proxy Credit- To-Cash applications that grew over time in there, because each of those business groups as we had them, had the ability to decide what their own process design was, what their own placement was, what their own tech landscape was. So creating a very disparate landscape is so very suboptimal if you want to be an integrated operating company that is process-driven. So from that element, what we started then also to do was saying, what are some of the challenges that are facing us so what’s the disadvantage of our structure, it also had advantages buying local and fragmented you had the proximity towards your customer base, you had the agility to be very fast onto certain demands, you had the local elements that at a very high cost, and not necessarily for shared customers or Global customers that we would be able to generate the right service model that we would need. So, as a result of that, we had less control over Credit and Accounts Receivable outcomes. The aggregation purely from a data perspective, for us as a simple concept to have a Cargill aging was a painstaking effort that took us four weeks to just pull together one aging on a global basis at the early days as well. The fact that we had non-standard processes across all of those business units also meant that customers had a different kind of customer interaction with us as well and different credit decisions, different approaches, so there wasn’t one Cargill; there was a wide variety of Cargill for our customers as well. So the voice of the customer was a very important component of a challenge that they said, Cargill as a concept doesn’t resonate with us, we only see different business units, and the third component was that we had very limited visibility or reliable data. We didn’t have any master data, or certified data sets, or certified metrics to have a compatible basis apples to apples across on how we were actually performing over it. So these were three of some of the main challenges of what we had within the Credit-To-Cash area. Now at the very start, but we also set a saying it would be solving for those immediate challenges, that’s table stakes, that’s a minimum requirement. But our top quartile position of everyone to go towards to evolve into reality, across enabler, a growth catalyst for our business, a revenue generator, but also making sure that we can deliver on significant working capital impact as well to the overall organization. So to be able to achieve those very ambitious goals that we set ourselves at the beginning of that journey, we looked at this model of the different elements of what we needed to address. So the first step was in there is what we, which I already addressed in there already showed with a map of the global shared service centers that we have is to look at our operating model. It was very fragmented, and to a certain extent, still is, but let’s say 80% – 90%, better of where we started, is our roles or responsibilities. It was the activities that were spread out, not only business by business but also across different roles. So we wanted to clarify on what are the roles and responsibilities within the organization at the back of a service taxonomy as well. We want to simplify it so that it’s clear on where accountability and responsibility resides, and we also want to scale, which is our shared service model, that we leverage our total scale with the activity placement, that’s there. The second thing is as well as saying, well, we want to have a digital environment. And to translate that for us and saying, well, we can’t live in 28 different JD Edwards environments, but the 90 proxy systems and the 6 different SAP instances, we need to come to a one-stop-shop. How can we have a one-technology landscape? And how can we then make sure that we get linked that towards our operating model overall? How do we digitally interact with our customers and with our vendors also going forwards as well? The third component is, which we learned very much at the start as well, you see more opportunities or challenges. And we were even again fragmenting out our efforts on what we wanted to tackle to have a strong governance model that we could focus on. Where do you get the biggest bang for your buck, how you can prioritize how you have a heat map of opportunities, how we can start introducing business process mining as well to identify where we need to focus on from a people side, process data or technology so that we focus on those big-ticket items that will facilitate the rest of it as well. And then by doing those basic, foundational things, by having our operating model or digital finance, making sure tha
t we continuously improve what our landscape is, we can actually become a catalyst for growth, we can focus on overall business performance through insights. And one of the sessions of the following days. It’s one of the specific topics and what this actually means as well, that we become a partner instead of purely a service provider.
[ 14:32 ] Gunther Smets –
A key focus on talent and talent moving it from transactional towards future-ready talent, instead of moving it to focus from one activity to another activity, look at a program approach, looking at insight to actions, looking at Digital Savviness of our organization, but equally on a growth mindset of our teams as we have it, but then also making sure which is linking in with our digital finance We equally modernize the core. So how do we continue to invest in our one-stop shop where everything sits on top as well. So these 6 areas are the top focus areas that we have as Global Process Ownership, but equally as a Global Operational Leader within Cargill, as an organization as well. So from here, we went on our journey towards operational excellence within our accounts receivable landscape. Just to recap, we had all of our different organizational models, all of the variations of where we came from. What we want to go towards is end-to-end alignment from an organizational model. We want to have just one Cargill data platform with a certified data set with certified metrics, where we can mine one version of the truth, that we have standardized processes across all of our businesses on a global basis as well, that we had just had a one-stop-shop one integrated receivables management technology. So that’s really what our goal is, across those items. Now, translating that into it sounds great, but how do you then move from a more theoretical model or an academic model towards a very tangible model and start translating and implementing some of those changes as well. So across processes, people, data, and technology, I’ll dive into each of those items, somewhat so that we can give it a little bit more flavor. So to start out with the process, where we identified within the process itself is that we say. First, you need to have a strategy; what. The do you want to achieve with the process itself? So what is it? If we look at it, for credit management, establishing? What are the capabilities that we want to drive with credit management Overall, we want to automate more than 50%, we want to make sure that we also drive insights to the rest of the organization, especially within the pandemic situation that we’re currently still in a Global basics to provide those proactive insights or receivables on credit risk across the board as well. So based on what are the strategic objectives, we identify what the right opportunities that we have in there are. And then, based on the opportunity assessment, we’re going to see what’s the business case and the business case is both on efficiency and on effectiveness. So efficiency would be on a run rate. So how do we reduce the run rate of our total organization in Credit-To-Cash? And then the other side, that would also be on effectiveness, which is, what’s the process, the voice of the process of the number of transactions that we have, the number of overdue that we have for your current root cause analysis. And based on that, we can have the right prioritization, identify a roadmap, and then ongoing control as we follow a Lean Six Sigma methodology across the board.
[ 18:13 ] Gunther Smets –
Now on the people’s side, next to hiring in, of course, the hiring process of having the right skill sets identifying for each job, and for each role that we have in the organization that’s linked to the service taxonomy, we have a global job catalog taxonomy, which is consistent across the full scope that we have in there next to that, it’s equally on how do we onboard those people? So what is the Learning Academy within the job within the organization with a stakeholder framework that people work with? And then ongoing? It’s identifying through a methodology that we call skill and development matrix? And what are the skills? And what are the capabilities that we need for each of those for each of those roles by the individual to continue to develop? How do we measure them? So, where are people right now? Where do we want them to be? What is their development path? And then how do we score them as part of their performance management going on, going on whereas well, we follow a very traditional 70-20-10 kind of mix 70% this is learning on the job with 20% is learning through waters and then 10% is is more the academic or the certification programs that we would be running like a Lean Six Sigma program, for example. Going into data, the data itself where we started is having certified data sets so customer master data, finance master data, vendor master data, material, master data, and having those certified data sets within a Cargill data platform that we set within there, but then equally from there, as We went through migration roadmaps or operational performance on a day to day basis, it’s making sure that we have a baseline. And the baseline is something that we discovered is tremendously important to understand, but also to manage expectations going forward, as well as saying, what was the point that we started from? And from there, set those targets on where we want to be? And then do a root cause analysis and say, What’s the gap? What is really, are we treating only the results? That’s there? Or are we reading too much correlation, and we’re not looking to the causality of what the issues are that we are seeing from an overall performance element within there, based on those elements have a continuous tracking and reporting as well, both again, on efficiency and effectiveness, having the right kind of communication model with all of our different stakeholders to make sure that we align from an end to end perspective as well on continuous improvement. So it’s really going through all of those different stages throughout as well. On the technology side, as well, is, and I’ll talk a little bit more about the technicalities of it. We don’t necessarily have a slide on it, I believe, but we had the 28 different JD Edwards instances, the multiple different SAP instances, the way that we approached the overall is we have one central SAP instance for accounts receivable management. And therefore, we leverage SAP receivables management where we only switched on that module, and all of our SAP instances link into there. At the very start, we also asked on ICP and saying isn’t there a way to make it up agnostic and two, together, actually with a Highradius than we, we focused on leveraging the substitute system within the SAP receivables management tool to bring in JD Edwards data to SAP web services and to the attuning layer to have it in the substitute system. So by doing that, together with a Highradius accelerator that we still have as an on-premise solution that we have in there, we were able to create a one-stop-shop. So basically, every single SAP instance plus the JD Edwards insistence link into a single instance of SAP receivables management, on which we have the Highradius accelerators, that then give us all of the capabilities that we have in there as well. Now that the middle one actually is also user-friendly, solutions are something that we continue to invest in through upgrades to a persona-based approach as well, to make sure that you have more of that intuitive and user-friendly solution that would be in there. And that we also have digital customer solutions that we can start plugging into some of our landscape as it is right now.
[ 23:03 ] Gunther Smets –
So what did we achieve? Already at the back of this is we started out with a very high number of FTEs, we had around 1700 FTEs for Cargill, on a global basis, if you add everything up, I have a fragmented landscape because it was a lot of duplication, a lot of manual efforts on not a digital footprint. So that’s really what our baseline was where we started. So towards the thousands, of where we are right now, which is not necessarily of where we want to be going forward to small, there’s still a value case to be had over the next two to three fiscal years, purely from efficiency as well. Now, what it also, and we’re quoting here at $1 amount of $400 million of working capital improvement, which is an opportunity doesn’t mean that it’s an actual bottom-line gain. It’s more about freeing up overdue dollars that we had on a very sizable portfolio and reducing that in a sustainable way, but also making sure that we are getting paid for the working capital that we put into the markets as well. So moving towards a risk-adjusted return on capital and a risk-based pricing approach, having the right sizing, and having the right pricing allowed us to address some of the concerns at the back of the pandemic to have some financial relief on the market for some of our key customers as well. But at the same time, as well as at the same time, it also strengthened our control environment as we had it here. Now we moved from across the board, and I think natively, we had around 10% of automation; we’re now getting closer to overall 50% overall automation for CTC. In some processes, that percentage is higher than the level of automation that we have versus others. So there is a bit of a difference in where we are at maturity, and we want to increase that with another 20% of automation over the next 2-3 fiscal years within there, as well. So final thoughts and key takeaways as well, before we go into, and I see that in a chat, some of the questions are already popping up. So before we go into those sections as in the questions as well. So key recommendations, or some of the things that we learned was, what is the Find the foundational blocks, so really looking at people is not only on putting into a shared service model, but making sure that the end to end operating model interacts with each other with the right roles and responsibilities within there. And the right accountabilities within the total organization. Monitor the process, understand what the process and what the baseline is, so this is really with the focus on where do you start from. It gives us a tremendous amount of value to be able to go back and say, okay, but it’s not where we want to be. But look at what the progress is that we made, or on the other side also measure and say, How big is the performance dip at the back of some of the changes that we are doing as well focus on automation of the transactional processes. But also eliminating automating the easiest way of automation is stopped doing it. And we’re really looking at what is the value within the organization. But then also looking from value adds that we need to have more future-ready skill sets. But in some of those elements as well, we’re in the transactional processes, we either stop doing them, or we focus on automating them, and then moving from reactive to proactive for those elements, which is very much a key enabler as well for our working capital targets. We used to, so we have a smart collection strategy set up that starts with a predictive model to see what is the ability and the willingness to pay. We have score models on the credit side. We leverage our dispute, root cause insights as well as we go forward. So these are some of those key things of what we see. So it’s all-around people process data and technology as we have it here. So that brings us to questions as well. So I do believe that we still have around five minutes for questions. So I’ll try to address as many as we can.
[ 27:30 ] Marisol Hernandez (Facilitator) –
Hello, yes. So, Gunther, I will read out the questions to you in a seamless process, and then you can answer appropriately. The first one was, building a portfolio approach and a service slash process change, catalog formulation, part of your initiative. And how easy or hard was it?
[ 27:53 ] Gunther Smets –
Yes, we do have a roadmap, which we call our PDT strategy. And that’s really outlining what the key initiatives spaces are on our heat map of opportunities? What is the driving roadmap that PDT is something that we refresh every single quarter? Or that we review it and say, is it delivering on the value of what we that we had, within the that we were expecting out of the different initiatives, and are the metrics that we assigned to them. Are they moving in the direction of what you wanted as well? What was the second? Half of the question? Sorry?
[ 28:32 ] Marisol Hernandez (Facilitator) –
Um, the second part was,
[ 28:35 ] Gunther Smets –
Was it easy or was it hard? I wish it was easy. But I would be lying if I said that. That was the case. Change management within the organization is a very interesting dynamic because you’re moving something, but the company is as old as gargles, are you moving so for something that’s already there for decades and decades, and you’re taking away local control, which is already always a sensitive thing to do. From Credit-To-Cash, you have customer interactions, so you impact your customer relationship, or sometimes customer and business results at the back of it, as well. And that’s why that roadmap and having the visibility and having the methodology and having the baselines and really being data focused on what we’re continuing to prove is also critically important. It’s created a uniform language, a language of moving it away from the anecdotal into a data-driven discussion. And that really helped us to drive through some of the complex change discussions that we continue that we had and continue to have as well. So I hope to have answered that question somewhat.
[ 29:45 ] Marisol Hernandez (Facilitator) –
Great, okay. And now we’re going to move on to the second one. The second question reads, what was the timeline of 1700 to 1000 FTEs and 400 million working capital.
[ 30:00 ] Gunther Smets –
For the first part from 1700 to 1000, that took us 6 years. So that’s 6 years, over the last 5 years, almost getting to six. But let’s say 5-6 years that we had that reduction, the working capital improvement is actually only over the last two fiscal years of what we had in there to make sure that it’s sustainable. So that’s the timeline.
[ 30:25 ] Marisol Hernandez (Facilitator) –
Got it, Okay, And for time sake, we will answer one more question, and all of the questions will be sent in a follow-up for those that we could not answer on the live session. Sure, the next question was, excuse me, does the Highradius accelerator mean that it is a kind of data unifying later to get all JDE A/R data into a single SAP platform instance? And does it mean that the SAS element of Highradius Excuse me, Um, like the Cloud Collection Application, was not used?
[ 31:03 ] Gunther Smets –
Yeah, no, it’s two different things. It’s when we worked with SAP when we turned into an SAP shop, we asked them and said, Can you help us leveraging the substitute system, which is a theoretical element that was there in every single SAP instance. So it’s called a substitute system; it was actually SAP themselves that directed us in the direction of Highradius and saying, well, they already have some experience, you can partner with them. But that has nothing to do with the tools that Highradius offers onto the market itself. For the moment, we still felt that it was really to facilitate us. The way that it works is you’ve got; you take your JD Edwards, you go through an opportunity layer from the attuning layer, you go into an Oracle staging area, from there from the Oracle staging area, you go into the substitute systems who enter your substitute client of the sap instance within their bit technical, but that’s high level, how it works. The accelerators mean that we are using for credit collections dispute management on-premise accelerators with Highradius for the moment. But as we continue to evolve, there is the opportunity that we would move towards the Cloud Solutions from Highradius as well. But as it stands today, it’s still an on-premise accelerator and not the Cloud-Based solutions, but that might change in the future.
[ 32:27 ] Marisol Hernandez (Facilitator) –
Got it. Well, thank you, Gunther, for leading today’s session. And thank you, everybody, for joining our session. That is all the time we have for today’s Q&A, but we will follow up with those answers that we were not able to answer today. If you have any additional questions regarding the topic, please connect with the presenters, and we will follow up, or you can also feel free to reach out to me. Also, don’t forget to check out the Shared Services Tech LinkedIn page to obtain a copy of today’s presentation and join the discussions with all of your fellow attendees today. The next session that we will have available for today is how dot one and Highradius Collection Cloud will drive the success of your O2C transformation. And we’ll begin at 9:45 am Central Standard Time.
[ 33:19 ] Gunther Smets –
Thanks, everybody. Hope to welcome a few of you again tomorrow. Thanks.
[ 33:23 ] Marisol Hernandez (Facilitator) –
Thank you, everyone. We’ll see you soon. Bye
