Transcript GBSFI Roadmap 2010-2012

Success Story of Arla Global Financial
Shared Service Centre in Gdańsk
by Alan Aleksandrowicz
CEO of investGDA
Gdansk Economic Development Agency Ltd.
17 July 2015
Oni wybrali
Pomorze
They
are
already here
Wybrani
inwestorzy
Arla Foods facts …
Arla Foods is a cooperative owned by
approximately 7,200 Swedish, Danish and
German milk producers
Turnover 2010: DKK 49 bn. (≈€ 6.54 bn)
No. of employees 2010: 16,215
Milk intake 2010:
…from ownership: 6.174 billion kg
…totally: 8.713 billion kg
Arla Foods has production facilities in 13
countries and sales offices in a further 20
countries.
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3
Turnover by products
Total DKK 49.0 billion (≈ € 6.54 bn.)
Others 9.0%
Butter and spreads 13.5%
Ingredients 12.8%
Fresh products 40.2%
Cheese 24.5%
Arla Foods 2010
17 July 2015
4
Turnover by markets
Total DKK 49.0 billion (≈ € 6.54 bn.)
Value markets
10,6%
Growth markets11,9%
Holland
4.0%
Finland
4.4 %
Denmark
16.8 %
Sweden
20.8 %
Germany
6.2 %
UK
25.3 %
Arla Foods 2010
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Our core markets
UK, Denmark, Sweden, Finland, Holland and Germany
• Helsingfors
• Stockholm
• Århus
• Leeds
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
• Nijkerk
6
Strategic focus areas
Expand core markets
3 global brands
(Arla®, Castello®, Lurpak®)
Double product development
budget
Develop sales of whey proteins
Reduce CO2 25 % (2020)
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Information about Arla Foods – globally
GBSFI Structure
GBS Finance
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Corporate Finance
Accounts Receivable (AR)
Accounts Payable (AP)
Closing & Consolidation
General Ledger (GL)
Solution Owner (SO)
Fixed Assets accounting
In-house cash mgt. (IHC)
Global Master Data (GMD)
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Financial governance (policies)
Financial planning (target
setting)
Management reporting (EMG)
Projects
External Reporting
Tax computation
Business Group Finance
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Only GBSFI
in scope
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17 July 2015
Financial planning (KPI definition)
Business controlling
Management reporting (BG)
Projects (drive and staff)
Internal control
Performance measurement
Cost management
8
- Previous organisation
Previously GBSFI had 189 FTEs located with half in Viby, Denmark and
roughly one quarter in both Leeds, UK and Stockholm, Sweden.
GBSFI
Director
Secretary
 Stockholm
 Leeds
Denmark
Sweden
Manager
UK
Manager
SO/IHC
Manager
AP team
19 FTEs
AP team
10 FTEs
AP team
15 FTEs
SO
4 FTEs
AR team
14 FTEs
AR team
10 FTEs
AR team
17 FTEs
IHC
3 FTEs
GMD team
19 FTE’s
FIN team
18 FTEs
GMD team
5 FTEs
FIN team
36 FTE’s
90 FTEs
Current GBSFI Organisation
FIN team
15 FTEs
38 FTEs
17 July 2015
Kilde: Arla Project 7 Project Information for Management
53 FTEs
 Viby
8 FTEs
GBSFI Director
Managers
Team Leaders
Clerks
Total
1 FTE
17 FTE
7 FTE
164 FTE
189 FTE
9
4
Organisation GBSFI
GBSFI
Lise Lotte Tinning
 Stockholm
 Leeds
GBSFI-DK
Lise Lotte Tinning
AR-TL
VMER
GBSFI-SE
Anna Ekqvist
AR/GL-TL
HEHE1
GL-TL
JNANS
GBSFI-UK
Lynne Findlow
GBSFI-PL
Arne Sørensen
Group Financial
Accountant
NEOR
See separate chart
GL-TL
KATW
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17 FTE
15 FTE
 Gdansk
GBSFI-SO
Claus Buus Søgaard
9 FTE
GBSFI Organisation
AR-TL
SALM
27 FTE
 Viby
121 FTE
VP
1 FTE
Directors
4 FTE
Managers
10 FTE
Team Leaders
9 FTE
Clerks SO = Solution Owners165 FTE
Total
189 FTE
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Organisation GBSFI Gdańsk
GBSFI
Director
Arne Sørensen
Chief Accountant
Ewa Paziewska
 Stockholm
Operations & Service
exec. Assistant & Fac. Admin
Reception
AP
AP Manager
HR
HR Manager
HR Specialist
AR
AR Manager
Finance
GL Manager
AP DK
AR Nordic
GL - DK
AP SE
AR UK
GL - SE
AP UK
 Viby
 Gdansk
GMD
GMD Manager
GMD Quality
GMD Operations
GL - UK
InHouseCash
17 July 2015
 Leeds
Documentation
Internal Controls
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Shared Services
– Overview of activities and key deliverables
From a sound as-is baseline to the design of a new high level operating
model. This is accelerated using good practice examples and Deloitte’s
experience.
Assess Feasibility
5/11
3/12
10/1
Scope
& Plan
As-Is data collection
and interviews
To-Be
Workshop
6/12
As-Is process
documentation
Kick-Off
29/10
Christmas
holidays
Develop To-Be Captive Model
Vision
Workshop
6/11
Validation
As-Is
14/11
Develop To-Be
Outsourcing
Model
Location study
6/11
43
44
45
12/11
46
Develop Business Case &
Implementation Roadmap
5/12
47
48
49
50
51
52
2007
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Kilde: Steering Group_05112007_Final
1
2
2008
KEY:
Steering Group Meetings
Workshops
12
AS-IS Situation
– Process Overview including sub-processes
Accounts
Receivables
(AR)
Accounts
Payables
(AP)
Global Master
Data
(GMD)
In House
Cash
(IHC)
General
Ledger
(FIN)
Statutory
activities
Business
Controlling
Other
Credit
Management
Receive
invoices (pa.)
Customer Opening
Master data
Master data
Compliance
Management
reporting
Insurance
Credit control
Rec. invoices
(PDF/EDI)
Customer Maintenance
Banking daily
tasks
Closing the
books
Annual
external rep.
Budgeting/
forecasting
Fleet
management
Invoicing
Trans. with
purch. orders
Customer Closing
Banking
periodic tasks
On going
journal entr.
Decision
support
System
development
Recon. &
sundry
Trans. without
purch. order
Vendor Opening
Back office
Balance sheet
recon.
Project and
Business dev.
Manager
tasks
Cash
application
Payment
Vendor Maintenance
Interface
transmissions
Training
Credit + debit
note mng.
Vendor
remind.recon.
Vendor Closing
Product
costing
Other
Cash collect..
and dunning
Period close
and rapp.
Material Opening
Travel &
Expenses
Period close
and rapp.
Workflow
master data
Material Maintenance
Intercompany
invoicing
Material Closing
Fixed assets
17 July 2015
Kilde: Arla Project 7 Project Information for Management
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Comparison and Recommendation
Current
situation
Captive
Outsourcing
Recommendation
The recommendation was based on a list of assessment criteria
Quality and control
Savings
Agility
Timeline
Exit strategy
17 July 2015
Kilde: Arla Foods Selecting the right solution Copenhagen 2009
Arla Foods is well-positioned
to select either an
outsourcing or a captive
solution going forward.
However, based on the
comparison it is
recommended to proceed
with a captive solution.
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- Implementation road map
An ambitious implementation plan has been developed with a first golive in November 2008 and completion of all migrations mid 2009.
9/4
Board Meeting
Project Management
Change Management and Communication
Standard Operating Procedures
Training and Knowledge Transfer
Organisation Design
Site Selection
Facilities & Infrastructure
Operating Model
DK (AR/AP)
1/11
SE (All)
1/2
UK (All)
1/4
DK (Rest)
Jan Feb Mar Apr
May Jun Jul Aug
2008
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Kilde: BM 09 04 2008 Projekt 7
Sep Oct Nov Dec Jan Feb Mar Apr
1/7
May Jun Jul Aug
2009
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1
Location
– Approach and summary results
• SSC specifications
• Location criteria
• 62 cities
• Recruitment pool size
analysis
• Scalability assessment
• Selection of proxies
• Joint team decision
• Ranking 5 critical criteria
• Ranking on indicative team
member cost
• Joint team decision
Initial search area
9 Optimal Cities
• + 10 covered by proxy
6 Back-up Cities
• + 6 covered by proxy
• Analysis 27 important
criteria
• Net Present Cost analysis
• Risk analysis
• Joint team decision
Initial screening
Out of current scope
Long List analysis
LONG LIST
SHORT LIST
3 Combination leaders
3 Cost contestants
2 Business Case locations
3 Executive site visits
locations
Next steps
Executive site
visits
Due diligence
Negotiations
Final decision
Implementation
preparations
Desktop study
17 July 2015
Kilde: Arla Project 7 Project Information for Management
Fieldwork
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Location
– Locations reviewed
Foundation
62 Key cities for potential consideration
Candidates for initial search area
Initial search area locations
Long List locations
Step 1
Filter out regions with inadequate
recruitment pools for a 130 FTE SSC in 1
year
Riga
Short List locations
Gdansk
23 cities meet and exceed the threshold criteria
11 cities present a potential recruitment risk
28 cities countries seriously fail
Step 2
Scalability assessment for a
potential SSC scope increase
to 250 FTE in 4 years
18 top cities to investigate
11 cities present a potential recruitment risk
5 locations can be eliminated
Vilnius
Poznan
LodzWarsaw
Wroclaw
Prague
Brno
Nitra
Budape
Debrece
st
n
ClujNapoca
Step 3
Selection of
Proxies
Sofia
Buchare
st
Varna
6 top cities acrossShort
4 countries
to investigate
List locations
4 cities that present a recruitment risk
17 July 2015
Kilde: Arla Project 7 Project Information for Management
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Location
– Initial search area – trade-off graph
125
Cost + 20%
120
Cost + 10%
Warsaw
Relative 'fit' with location criteria/'Quality' (average=100)
115
Gdansk
Quality Contestants
Leaders
Lodz
Wroclaw
Poznan
110
105
Prague
Brno
Riga
100
Vilnius
95
Bucharest
Budapest
Nitra
Cluj-Napoca
90
Quality - 10%
Debrecen
Cost Contestants
85
Sofia
80
Quality - 20%
Varna
75
140
130
120
110
100
90
80
70
60
Relative annual employment cost (average = 100)
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Kilde: Arla Project 7 Project Information for Management
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Location
– Long list – Relative risk analysis
All locations potentially feasible from operational viewpoint, but at
varying degree of risk
Risk analysis - diversion from
average performance
Varna
Riga
Vilnius
Lodz
Gdansk
Poznan
ClujNapoca
Higher
Medium
Higher
Lower
Lower
Medium
Higher
Political/Macro economic environment
Labour availability
Availability of job/process skills
Language capabilities
Labour regulations and practices
Labour attitudes
Operating environment
Infrastructures & accessibility
Wage cost
Wage inflation
Scalability risk - 150 FTE
Scalability risk - 250 FTE
Tentative risk conclusion
17 July 2015
Kilde: Arla Project 7 Project Information for Management
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- Location
Gdansk, Poland is found best in meeting a combination of
qualitative and cost parameters but fully substitutional back-ups
exists.
Gdansk
The objectives has been to identify an optimal
location for the new Centre in terms of operational
quality and labor arbitrage.
62 cities in eastern Europe have been evaluated.
7 top cities in 5 countries have been investigated in
detail
• Gdansk, Poznan and Lodz in Poland
• Riga and Vilnius in the Baltic's
• Varna in Bulgaria
• Cluj-Napoca in Romania
Gdansk came out as best combined quality and cost
leader with the lowest risk.
A number of site visits to Gdansk has confirmed the
original assumptions.
• Gdansk is the sixth-largest city in Poland
with over 455.000 citizens, and serves as
the nation's principal seaport as well as
the capital of the Pomeranian (800.000+
citizens).
• Gdansk is also an education centre with
over 100.000 students.
• Existing SSCs and BPOs: Nordea, Zensar
Tech., Transcom, Reuters, First Data
Corp., GE Money Bank
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Kilde: Arla Project 7 Project Information for Management
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7
Standard Operating Procedures
Process documentation objectives
-Understand as-is processes are being carried out in the UK
-Approve global processes and local exceptions applicable for the UK
-Plan process changes (quick fixes)
-Prepare list of long term process improvements
SOP
17 July 2015
Kilde: Project 7 Journey.ppt
HTG
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Longer training and experience will match job
complexity
In addition, the sequence of events will ensure a timely ramp-up of
capabilities up to go-live
On-the-job
Experience
Training and Knowledge Transfer activities
Target Group:
-10
Week:
Polish Backfillers
1
-9
BF
-8
-7
4F
-6
-5
1 4F BB
WS
Gdansk Acc. (6+2W)
1 4F BB
WS
17 July 2015
Kilde: Training-Strategy.ppt
-3
BF
Gdansk Acc. (8W)
Gdansk Acc. (4W)
-4
NL*
TTT
1 4F
-2
Processes
Complexity
Job
level
(more)
-1
AW
BF
8 weeks
AW
WS
6 weeks
AW
KT
4 weeks
AW
KR
2 weeks
Senior accountant
Accountant
Junior
Accountant
(less)
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Non-financial benefits
• Fully operational HR dept, with intimate knowledge of
all Arla HR tools. (Dialogue, Our Leadership etc)
• HR dept which can handle all recruitment without
external support from e.g. Addeco
• Improved controls environment
• Available office space
• Complete and fully operational IT setup
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Improved controls environment
All processes (About 780)
documented on MWP
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Improved controls environment
• Internal controls
integrated part of process
documentation
• All processes reviewed at
least once a year
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Conclusions
Implementing the SSC has developed a number of valuable assets
in the form of infrastructure and competences for Arla Foods.
Used wisely they can contribute to significant and sustainable
(opposite P100) cost savings in the near future:
• Proof of offshore SSC concept in Arla Foods – it can be done
• Full transition methodology & deliverables to be used in other
areas of Arla – we know how to do it
• Current capacity available: 70 seats. Add to this opportunities
for 3rd party outsourcing from Poland, and extended opening
hours at Gdansk office
• Improved controls environment and full documentation
• General higher skill level among employees
• Easier to make process and systems improvements from one
location rather than three – e.g. one AP manager to decide best
practice
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