How Danone Cut Cash App Costs by 75% with AI

Jacob Whetstone:

I won a contest in our class, and my job was right before the commercial break I’d say something like “Stay tuned for the weather” and then I would cut it. So I was so excited I was trying to tell my kids about this, and they were like, “Oh! We wanna see it on the news!” and I was trying to explain to them that we don’t have a VCR to play the recording of it, and that went way over their heads. So the fact that you can YouTube me and that experience they didn’t get it, but that was my claim to fame.

So, I’m going to go over an experience that we had at Danone when we brought on cash application and automated it and were able to see great results. So we’ve done it with a couple of different companies that we’ve brought in. So, I’ll talk a little bit about Danone, which will talk about our structure, and how we’re set up and our shared service organization. Also, go through some of the challenges that we have, the solution that we implemented that drove these excellent results for us, and talk about these results and then, of course, answer any questions that you have.

So, as we’re looking and we’re set up to do this, we had a lot of challenges with us – we had a lot of customers, we’re a ‘Shared Service Center,’ who are bringing in thousands of different customers. So very large customer base and we’re 100% manual. Also, as my Bio said, I started at the organization from a very entry-level position, and the time that I did it, we would apply cash, and we would have two screens – would have the remittance on one screen and SAP on the other screen and I would say – “Sir here”. I was the fastest in my department. I was so fast manually. And, I was accurate, so I’ve got both of those. But then a lot of them we had to do it for different steps, not just look at the remittance, you know, we had to go to the portal and download stuff, so it’s all just too time-consuming.

So, we had a 100% manual work and just a lot of large customer-base and a lot of portals to go through. The results like we said, we were able to increase the auto cash posting hit-rate to 95%, reduction of costs to 75% and be able to achieve No-Touch. So what we wanted to do was not just where a file would come in, and we would have to prepare the file and then submit it, but where we could get it to in-touch or whatsoever.

Jacob Whetstone:

So, just a little bit about Danone if you don’t know, we’re a health food company bringing health through food to as many people as possible. Like I had mentioned, we’re a Shared Service Centre, so what we do for ours, in North America, Danone is one of the more iconic brands we have, so Danone Yogurt we just bought the White Wave and we have integrated that business in too, and White Wave makes silk milk which I think one of their bigger companies, Danone Waters which are the makers of Avion, Danone Nutritious Medical food company, so altogether we do a Shared Service Centre which is at North America. So we handle all the credit evaluation, cash application, collections deductions management all that stuff within our department.

I guess it went a little bit out of head, but that’s where we are. I think there are some of the things that we can include, I think this number, I should have updated this number a little bit, but we have within over 54 people throughout our department. We have separated between what they do, cash application, and all different features. Don’t know why the number 21 came in.

So I just saw that, but it should be 54, that is what we have as we process those. So some of the challenges that we have, I am sure that these challenges everyone has and everyone goes through. We have a lot of different payment formats, so stuff coming in electronically, whether it’s EDI, ACH, EFT, ACH, or Wired. The majority of our customers that we have are the large customers who work with Walmart, grow and target and a lot of wholesalers, so for us, those wholesalers would distribute products to smaller customers, we did not have to worry about that. For those smaller customer base, a lot of dollar amount was coming through electronically, not so much of the check. We have a large volume of the check, still coming in, as far as quantity-wise, and on the other side, remittance came from multiple different sources. In contrast, through the web portal, email, EDI, you know bank files just always different remittance sources coming in. So we have multiple payment sources as well as multiple remittance sources.

Jacob Whetstone:

You know I talked about this little bit in the intro, but again just where the biggest complexities we had, was that large customer base and we are both doing so. What we handle in our Organization is both the United States and Canada, so it is across those two different countries. So it’s also working with different currencies. Those two different countries have some uniqueness about there I think I pretty much talked most of the points. So really, the complexities have been able to have different formats and handle all that piece of it. So Yeah, I don’t know “if” I am supposed to ask this question or not, so I apologize and I see most of these, so in your company, which of the following remittance sources require maximum analyst time to process, so if you think about some of the different ways that they get remittance, what causes the most time in yours.

So what can be automated and what couldn’t. So for us again, when I was a specialist, to meet the web portals as a convenience or ways to have customer’s information all in one place, it still requires someone to go in and log in with user name and password and go in download each one and see it. So you think the web portal is pretty sophisticated but actually put us back a little bit by those customers who have the web portals. So just another way to look at it with these multiple sources you have got the payments coming in and the remittance coming in. We had to aggregate all that, all those different pieces. You have to link the payments, the remittances run out, at the same time coding in different ways. You wanted to try again in front of it. And being able to say okay, this deduction is coming in. It looks like this, and it started with this code.

We know what’s related to this deduction, so how can we code that. We take the time to realize that and decode that as well as all these other manual processes. We’re slowing it down even more and of course, matching the payment to the invoices. So we estimated it took us roughly 128 hours per week to process the electronic payments, which was a majority of them and then 128 hours to process the check payments, which was the smaller both quantity and dollar amount.

Jacob Whetstone:

So, you know those delay is not being able to process faster. It slows down the whole deduction cycle being able to have the specialist process deductions, get the information back to the company to figure out if their promotions or other things that they are doing are making money. So, I guess the overall point is that, and I am sure a lot of people have experienced this or experiencing it. Just a lot of different manual processes that bug down everybody’s time and the whole system. So you realize there’s a great need for automation and be able to have our people focus on more value-added activities. So, some we could do to try to eliminate all those manual processes with accuracy. So, even though I was fast and accurate, more so anybody else, according to me, I would still be wanted to be able to eliminate so often still mistakes. It’s something that I could, I tried to erase in the computer and lost use to that so something very accurate, fast but also eliminated our costs. So the expectations that we had and we are calling this the single source of truth, so for us, we have one main system, and that’s our ERP system which is the SAP, so no matter what other system do we brought on, we needed to integrate back and forth with SAP.

Jacob Whetstone:

That’s where we pull all the financial statements and everything from, so we needed that one source of truth, so we needed it. Away from that, things would automatically go back and forth between the tools and maintain a single source of truth, and we didn’t want to build a lot of other different systems. On top of that, it didn’t integrate back or forth. We have tried to do anything manually to bring it all together. The other expectation that we had from this was easy to deploy and very flexible, so our parent company is located in France and I have an IT person here, so I don’t want to talk about that. Still, it is hard to work with it at times, anyway. And the fact that it was overseas made it even harder so we needed something that we didn’t have to rely on them much, something that we could implement that we didn’t have to involve there have their involvement delayed the appointment of it.

So we have minimal IT involvement. That was one of our requirements without making a lot of infrastructural changes towards over change or anything else bad something that we could easily customize and make it our own, and we felt that there were a lot of things that we had to deal with. Whether it was just our industry or business alone that we felt we needed to customize, so we don’t want an outer box solution, we wanted something that we could change a lot with that, so that was another requirement. And then, being able to train our resources, so we didn’t want a huge learning curve, you know, the team had to go through too. Yes, we were going to disrupt, we were going to change things, I wasn’t going to be able to do as fast as I wanted to and raise people, but we still wanted to be able to change things so that people could easily get the hang of it, be able to understand and get behind it.

I know there have been some other sessions about engagement on the employees. We wanted something that they could see that was very easy for them. We did not have to invest a lot of resources in training something that was super complicated. But then that was the only single user interface. So again, we did not want to have multiple systems where they would have to have SAP. Something else as well. Just really, one system is all they had to use. They were not expected to log-in to a lot of things to be able to get the information that they needed, so for all that, well, we came to something that was a cloud-based platform. So something that sat outside of that, it was in the cloud. Again low infrastructure cost because it was in the cloud, minimal hour IT involvement, it was all sitting with, with the vendors IT and servers, sort of things. So that’s where we came through to be able to meet those requirements to have that single source of truth, the data integrity, and being able to get what we needed to do and a good interface that our specialists could use.

Jacob Whetstone:

So again, this is where the AI comes into play. So this is supposed to show the stuff coming in there. So the remittance in our payments, the open invoices, the deductions cases what we know about that, being able to create that piece, it would run through the AI and be able to do these certain things for us. Perform those repetitive tasks, leverage the artificial intelligence, and again not a lot of supervision, so something that we could trust and again I talked about it before. I will talk about it again, we were really going for no-touch hit rate, not just the hit rate that would process things, we would still update it and then send it through, but really what could we do that we didn’t have to supervise it, we could truly trust a no-touch hit rate. So in being able to handle all the different formats we had used the coding, we used what we learned from our experience to code the deductions.

Being able to help out with that piece, and I said with us being a shared service, we also have different company codes. So being able to set up the system so that it can handle the different company codes, which did provide some challenge to us, as we had the same customer numbers. But within our SAP, they had different company codes. So being able to handle those and set it up so we could do that and then something easy to deploy. So we started with our shared service approach by having one business down. Then we brought another business on. Can we deploy this cash application module to all those other businesses quickly and hopefully learn from our old implementations to shorten that time frame? So, the solution that we had, and it’s quite obvious since we are at a HighRadius thing, but it was HighRadius.

So, we went with the HighRadius cash application, the cloud tool. So we used the cloud version of it. But again, so from us, we provide the bank files, and from our ERP system goes into the cloud. Our customer is providing information from banks, EFT, or Checks. The remittance information, it all goes in the middle of there, be able to process through the rules that we set up, been able to apply deductions coding and everything else, and been able to have our solution through HighRadius. So again, those are the different types we have. The email remittance, the checks, and the web portals. I’ll go into a little bit more in one of the other slides. Some of the differences there and why we highlight those. But that is what drove our attention to that automation is the type of remittance. The way it was coming through and some things that we could do.

With HighRadius, we can go in and write some rules. So if the customer deducts these numbers, you know, can we merge them together, does it make sense to that? It should be one deduction instead of two deductions because it all starts the same. And again, you know different customers, whether they code their deductions that can automatically tell what type of deduction it is. And then our master data, and I think ours is probably the worst, but I think everybody probably thinks there’s the worst too. But, our master data was screwed, so we had the invoices sitting on one level, we wanted the deductions sitting on the other level, so we needed a system. A lot of the systems that we looked at, they wanted us to have it all on the same level. Or it would be a lot easier to use if the invoices and the deductions were all sitting on the same customer’s account.

Jacob Whetstone:

So we had different accounts, and our master data was different, we needed something to be able to clear the invoice on one customer, but apply the deduction on another customer. So what roles can we set up, what kind of configuration we can do, so that we are closing out the invoice on our payer customer but applying the deduction on our planning customer, where we are going to clear the deductions. So this is what this slide is supposed to represent, that we just needed that customizable features to our products so that they can do something different because of our master data requirements. And then again might have talked about it before, just been able to scale it across the unit. So as we brought, we had it with Danone. We spend a lot of time implementing doing this and then as we brought in.

These other companies: Danone Waters, Canada, the other things, can we use leverage where we have learned, leverage where we have already set up. Being able to lower that deployment timing there and fast and accurately series all since we brought these all other businesses in, which is the time we are trying to prove and ensure that we can handle their shared services. So this was a great win for us as we can quickly and easily implement the Cash Application tool and then will be able to create results already from that as we expanded that across the different business units. So, now to the kind of results, that we had and these are some actual numbers. So, you know, as we brought in these different businesses we went from, I think those are supposed to be eight people. There are eight people down to two people.

So as we grew across the shared services, we implemented this. We were able to really reduce our head count down, to where now we have only two people who are applying the cash mainly for this, for bringing out wide ways, so it’s expandable, but we can bring it down to 2 people. So that’s what was from where our lot of savings came in from those resources been able to a lot of those tasks that were very repeatable, very manual, been able to use the systems to bring that in and make it a lot faster. You can see right from our businesses, and the one where we had our biggest impact was DCA for us is Danone in Canada. We brought them in January 2016 July, so they have no data for December 2016 because they were doing it 100% manual. They were doing in the old way in which I did, and I was and still told them I could beat them when I raised them. They were doing in the old way, where everything was 100% manual.

They had no automation what’s so ever, but then by August, Seven months later, we had a 95% no-touch hit rate. That’s when we are able to leverage all the rules everything else we built from bringing Danone on, Danone water’s on, as a DWAP’s to Canada where we had to bring them on in 7 months at this rate, 95% hit rate, a reduction in the overall hit count with them very quickly just a 7-month turnaround with them 8 months, so that’s where our biggest productivity came in. Was being able to use that technology and everything to have that.

Audience:

Yeah, so my name is Claire Seckinger from MasterCard. I’m curious in knowing what is driving the difference between the hit rates.

Jacob Whetstone:

Yeah so a lot of it is the quality of the data we are in and the customer mix. So the more customers that pay electronically and send their files in you know BAI2 and other things we can read better as those larger customers are larger within those different segments so that they are easier to process through, but a lot of it is the check customers. So somebody who has more checks customers and that’s a lot harder to automate that pieces of it and so some of these like data-view there are more heavy checks that other customers so that was bringing it down. Still, even with the check customers, we had some KPIs around our Cash Application people that did not just drive these hit rates by trying to improve our rules.

We wanted them to increase our hit rates by working with the customers, we challenge them to go out, very simply trying to change the customers from checks to EFT, but we also had them look at the quality of the scanned we got from the banks. We use Citibank for the most parts so that they have to see the Citibank for Citibank could give us a higher quality image for them, whatever scanned at a more top quality for them that our. In Canada, we use HSBC, and for whatever reasons, we have very, very high-quality images coming over when they scan the checks by HSBC. So the technology, we have to read those checks, those OCR.

They are getting fewer errors when trying to understand those checks. So a lot of customer mix, the remittance mix we get from those. And like I said, check the quality and other aspects of that is what drove those differences in that. But again, we tried the KPI not just on what we can do in the system, but what we can do with the customer to change these hit rates to bring them up as well. So yeah, a good question.

You get right now? Same, I’m flying through this, so I apologize. We’ll have some time for questions. But, yeah so what automation help us do, really it eliminates a lot of that remittance aggregation, going back in and trying to gather these things. I don’t think maybe one of the things I didn’t touch on a lot is we had those twenty-four portal customers that were slowing us down — so being able to have the technology that would go out there and get the backup for us, being able to have that ready to go so that we can be applied.

So we’re not having people go after that things, those things, you know, through emails, having the system go and read the remittance out of emails and get that all setup. So again, we’re just eliminating a lot of those tasks by using technology in AI to be able to do that for us. And yet, just having them process and post the cash, and again some files come that we would get files from HighRadius that would come to us, we would make some adjustments. So, when it’s posted in SAP, it was a very high hit rate. But we again wanted to switch that, so when the file came, we could even do better with that and change the customer do we didn’t have to touch it whatsoever. And again, all of our different customer’s codings for the deduction process with our shared service center, we have a lot of deductions. So anything we can do with the front-end to be able to help resolve those deductions faster in the back-end, we wanted that built-in.

And now there’s one that we’re learning as we go. So we have a Cash Application team that is separate from our Deduction team. So it’s really trying to get them to work together. That is, our Deductions team realizes customers’ behavior and their current deductions. They see certain things making sure that they collaborate with the Cash Application team so they can update roles, rewrite roles, change different things so that we can have that better coding because of the downstream effect that Deductions Specialist is better off because of that Cash Application specialist wrote the rule or understood it better to apply the deduction. Yeah, nice that I ran through that quick, but yeah, any questions? Right behind you there.

Audience:

I am Josh Lake from Brown-Forman. And the master data problem looks identical to what you just said; I’m pretty sure. But did you have to prepare your customer base as far as like file formats and that sort of thing, get that to work, did you have to adjust them and do you know, some of that leg work before you implemented it, like the ACH side.

Jacob Whetstone:

Like asking out customers to change anything?

Josh:

Yeah, change it, or I don’t know, conform a little bit.

Jacob Whetstone:

I think, if we saw that and where we could, but for the most part, we weren’t like successful in getting customers to change at all. So, for the most part, this is how we dealt with everybody. You just kind of have to deal with it. So I would say no, and in that aspect, we realize with especially with our largest one gets the most benefit from using this, so we were just able to use the system being able to work with HighRadius and figure things out. So we didn’t ask the customer to make a lot of changes. Instead, we made the changes to make it work.

Josh:

Do you have the deduction management tool?

Jacob Whetstone:

Yes, we have the cash app deduction one.

Audience:

Caesar from Lego, so as a global company, are you considering to implement the same for Europe and Asia?

Jacob Whetstone:

So yeah, now they are expanding, what other opportunities are out there, so they have ensured vendor or anything. They did have us, what the benefit we got from HighRadius to them have been some of the stories that we went through, some of them, the same type of thing we presented them as a global or global organization to see if that’s what we want to do. But they are looking to expand it outside of the US and Canada.

Audience:

Adion from Sepuro, you were saying like you continuously are writing rules for cash application, and even for the deduction, is your team having to do that in the HighRadius tool, or is IT going in SAP and maintaining those rules?

Jacob Whetstone:

So, it depends on the type of rule and what we are doing. There are some like we can go in and rise, so we have cash application agent, if that she saw that, she could go in and change the rules, in the admin function in admin module in the cash application module, others would have more complex. Then we actually just worked with HighRadius, and they would do it. But if it was just as simple as, you know some deductions were coming in, it looks like this. I want this to be coded with the reason code. We have greater control than some of the more difficult changes we had to involve other people.

Adion:

Are you the files like you mentioned, are you sending that directly to HighRadius or you first bringing that into SAP then sending it over

Jacob Whetstone:

Bringing it to HighRadius, so sending it from the bank directly to HighRadius then running it through their module and sending it back to us.

Susana:

Susana with Coke, my question, so you’ve been up eight months?

Jacob Whetstone:

For just them. We’ve been with HighRadius on this since 2014. We brought on this company. Canada has only been those that time frame is what we’re representing there.

Sana:

And from eight people, you went down to two into cash applications?

Jacob Whetstone:

Yes total off for the different businesses

Sana:

And the deductions, did you see any improvements in a reduction in headcount?

Jacob Whetstone:

So yes, overall, as we’ve gone through this, we were bringing in the shared service center from the multiple divisions. And so we, I mean, yes we didn’t have to bring in as many people as what the business before us had so we’d still have to add people as we brought these businesses in but they were fewer and fewer people because we’re able to see those efficiencies. So yeah, we got a lot of efficiencies through the deduction module with HighRadius, even as simple as being able to have HighRadius going in the backup for us, and eliminate that need was a huge time saver for us, so that’s where we got a lot more efficiency.

Sana:

Did you see a lot of improvement in the resolution of the deductions around that?

Jacob Whetstone:

You might be more accurate on that. So we’re overall we’re able to see it just because we had more information upfront and being able to see. I said a lot of this manual stuff where we are having multiple different sources multiple systems having it all just, and HighRadius helped out a lot or just a lot of us in that.

Sana:

And one last question on the tickets you create to make changes, using HighRadius, how fast is their turn around time?

Jacob Whetstone:

So it’s, I say I’m going to look. Yeah, that’s not bad.

Rachel:

Hi Rachel with ABEC. I’m not sure if I’m allowed to ask this question, but I’ll do, when you went through your vendor selection process – were there other vendors that you consider and will you share why you selected to go with HighRadius?

Jacob Whetstone:

So, I mean yes we looked at other different vendors, I mean a lot of the things with HighRadius were just the scope that they offered and then the customer. We were able to be customized to us. So, I mean, there were some other factors here. Still, one of the biggest ones was knowing that we had a unique business. Not seeing it in the presentations from the other ones that fit precisely and just filling which ones that we can work with more have established a perfect partnership with being able to make the changes that we need.

We felt that HighRadius was one of those, those better choices for us, and honestly, they have we thought that we’ve, we’ve been able to partner with them as we’ve had issues we’ve been able to get them resolved. You know, and when we first implemented a part of our process with HighRadius, it goes so well, we went back and did our re-implementation. They were instrumental in that because they wanted to see us successful as well, and so we’ve had great success just partnering with them, and I think that’s what we saw upfront and what drove where we went with HighRadius.

Rachel:

Just one other quick question. Did you have any security or data privacy concerns that you felt that you had to work through in working with a cloud-based solution like this? (At the beginning)

Jacob Whetstone:

Say I don’t know if it’s so many concerns and I’ll look to my fear to make sure, but we do have some requirements that cloud-based solutions have to be, so we need to make sure that they went through that process to meet all those security requirements. And once we felt that they met those requirements and checked off all the boxes that we have for them. Then we didn’t have any concerns after that.

Audience:

My name is Courtney Hall. I work with Coca-Cola, as well. One of the concerns that other people on the team noticed, not necessarily me, was making sure that HighRadius and your B-System SAP stay in sync. Like you don’t end up with, like, issues coming back and forth like how to, what is your validation is I kind of like a monthly process or a daily process, do you guys do?

Jacob Whetstone:

Yeah, I mean, so that is a concern for us being able to integrate back and forth. You know, so yes, we do watch those integrations. We have some reports or other things where you can see the fallout of those, so just being able to do it and our in our faces nightly so being able to see that, and we can see that on a nightly basis. What are some of those who have been able to do those reconciliations, but it’s setting up some different reports and things that will help, call it out for us to make sure that all matches.

Courtney:

And then did you guys integrate, like the deductions module, the resolution of any kind of adjustments or write-offs or whatever, from the deductions module back to SAP?

Jacob Whetstone:

Yeah, so we do all of our resolutions are made within the HighRadius deduction module. So regardless of whether it is, so we bring our promotion data in there as well. We can match the payment whether it is writeoff or cleared promotion, and it’s all done within HighRadius for us. For I guess our retail business is where we use another system but are we, the retail business is in the HighRadius. So, any resolution also goes back to SAP to close out those transactions.

Audience:

My name is Elisa. I’m from Dole packaged foods, maybe a similar type of business. So I was just wondering, you just said that all your promotions are in HighRadius. So do you have, do you work with brokers, and do they access HighRadius?

Jacob Whetstone:

So, we do not work with brokers. We have a direct sales force. We have a little bit where they did have some brokers, and we did permit access for some specific things. But for the most part, we have a direct sales force, so we do not have to worry about that.

Elisa:

Okay, you’re lucky!

Audience:

I’m Karen from Compass Group, and I have a question for you about the portals, you said you were using over using 20 portals prior. Are you still using those portals, and does one of them happen to be pay mode?

Jacob Whetstone:

Being what, sorry?

Karen:

Pay Mode from Bank of America?

Jacob Whetstone:

Pay Mode. Say that doesn’t sound familiar to me as a Pay Mode, Is that a portal we have? Okay, so yeah, this new business that we just recently, sort of, known by Whiteway foods and what I guess Whiteway uses pay mode. But yes, so we still use those portals, and honestly, that number is probably an old number now, the number of portals for different customers that have started using the portal now.

Karen:

And you’re still getting them a 100% rate.

Jacob Whetstone:

So I don’t think Pay Mode is not with Canada. So with Canada, one was a very high hit rate, and so that we don’t use Pay Mode with Canada. If you have more specific questions about pay mode, maybe we can talk about that. Yeah. Yeah, we can talk more about it.

Sylvia:

Hi, I’m Sylvia with Adobe. My question is for the invoice portals. Do you ever upload invoices, customer invoices?

Jacob Whetstone:

So, not at this time. We don’t do any, well, I mean don’t 100 % manually upload stuff. We are looking at what technology is out there that will allow us to automatically upload things to the portal, but we’re in the discovery stage of that right now.

Audience:

So from a GPS shared service perspective, how do you have your teams split up, like, you know, as far as the people to do your credit, your credit analysis your cash app deduction, and I mean how does it work for you, I guess?

Jacob Whetstone:

Yeah, so we have the cash application team as a separate team that adoptions team as an independent team or credit team, you know, very smaller, very credit light that is an independent team. In our collections team, we have different individuals that do the collections, but they sit within our deductions team and are broken up by regions. So the collector sits in that region, we have to speak with the sales team or leadership about an area as a whole. We can ask both the deduction related questions and collection related questions the same.

So that’s why we said that piece of it, but it’s different people. And a lot of that was still weak and easily KPI differently so that we had different KPIs just for the cash application team. I said, not just like increasing the hit rate. Both by working with the system and increasing the hit rate by working with the customer and the deduction team. They will have their own separate KPIs rather than anything combined. Then their priorities were competing were able to specialize a little bit more by having a different it. I think so far it’s been working good and that’s the approach we have.