Integrated Business Solutions (IBS) in SCM Service offering for “next generation” shared service center approach Transform to the power of digital In recent years, consolidation possibilities emerged with a global perspective where one saw American companies as pioneers and European companies as followers of the trend Development of Service Function Scope and Delivery Models Development of Service Function Scope Development of Delivery Models 2014 Operational services and support Consolidation of operational business processes (e.g. Documentation, master data management,...) and bundling in either captive SSCs or selective BPO Classic Support Functions Outsourcing of IT services (IM / AM), BPO for Accounting / Payroll, Captive SSCs for additional support functions Components Reduction of vertical integration by sourcing of components or assembly groups Industrialized services Workforce optimization Core competence optimization Global balancing Global and connected world Desire for much lower labour costs Offshore / Rightshore Availability of skilled workforce Capture and transport knowledge Nearshore Demand locations Demand restrictions Onshore 1980 Having learned from classic shared service centers, the scope of consolidated service functions is now widened to operational business, focusing on highly standardized transactional processes Source: North Carolina State University, New York University, Capgemini Research Copyright © 2014 Capgemini Consulting. All rights reserved. 2 IBS can be seen as a “next generation shared service center” approach with a widened up positioning to create a service delivery unit for transactional parts of the supply chain IBS positioning and purpose Relation to operative business Specific Transactional Value-add Business area Business area / operations specific tasks with high local component Mostly transactional, regular activities Necessity for local input / programs 2 General Transactional Partner / Shared Services Rule based, high volume, operative focus High process intensity High standardization, effectiveness and efficiency 1 Integrated Business Solutions Knowledge based Business Partner Decision support for business Linkage and alignment with business necessary High knowledge transfer Support of decision and interface between business areas and operative processes Corporate / Competence Center Organized by knowledge areas Cross BA leverage of high expertise Development of internal “best practices” Close link to top management Periodical, non transactional activities 3 Self Service Business areas are enabled to independently work on tasks Helpdesk & Callcenter SPOC (Single point of contact) for internal contacts The purpose of IBS is to shift significant chains of the process to a global supply chain management backbone with regional / global service delivery centers by addressing four levers: 1 Integrate / consolidate 2 Standardize 3 Digitize / automate 4 Manage services global consolidation of transactional processes common process models / transparent delivery digital process interfaces and automated workflows application of service mgmt (SLA/KPI/Pricing) standards Copyright © 2014 Capgemini Consulting. All rights reserved. 3 Using a common operating model platform, nowadays service centers can be extended towards the processes of supply chain management SCM in the context of IBS Supply Chain Management as new functional scope for integrated business services, leveraging existing centers and technology to improve cost basis, drive standardization and quality and allow for global scalability Analytics Controlling Focus here Supply Chain Mgmt Plan Develop Source 14 Make CREM/ Fac. Mgmt. Store Deliver Return IT Common IBS Operating Model – global support platform further increases cost savings by harmonizing and standardizing IBS structures Procurement HR 1 Vision and mission Guiding principles Governance framework Strategy 2 Global delivery model Delivery hub strategy Delivery guidelines Delivery locations / site selection Roll-in strategy and planning Finance Business model Value proposition Roll-out strategy / concept Organization and 3 governance Vision Mission Global Business Services (GBS) will – Reduce overall operating costs (costs/file) – Operate standardized processes, ensure process compliance & continuous improvement – Ensure and monitor high delivery quality (share of first time right files) – Increase flexibility and scalability of core business Organization, governance and escalation model Framework policy BCP1 concept Global Business Services (GBS) is the internal service provider for defined services: • Provides reliable cost efficient in-house, services, monitored and reported by SLAs & KPI’s • Reflecting business needs (esp. complexity, language, availability) • Operates based on global standards, while considering regional specifics • Manages low staff turnover and encourages employee development Global Business Services (GBS) Manage Ensure Risk Quality Lever Live Wage Arbitrage Standardization GBS Vision Increase GBS is not: • A separate profit center – it helps business to increase local profits • A global process owner – but supports business to fulfill overall standards Manage Scalability Drive Complexity CIP1 Performance and 4 service management HR and workforce 5 qualification KPI’s and service governance Pricing model CIP2structure on operational level BSA and SLA’s3 Career model Comp & Ben. concept Workforce strategy Role demand profiles Recruiting strategy Employee value proposition Trainings Panalpina AG Panalpina Executive Board Group COO Escalation Level 4 GBS Governance Board Internal Customers GBS GBS Reg. Gov. Board Head of GBS Regional BSC (1..n) GBS Conf irmed BSC locations GBS Possible f urther GBS centers Area / Country Mgmt. BU Mgmt. BSC Country Service Management Finance Operations / Product Manager Operational Interf aces Escalation Level 3 Processes / GBS Services Process Manager Team Lead Process Expert Clerk Panalpina GBS HR Strategy Processes • Translate strategic targets into metrics related to process productivity and quality “Engaged people in the right job equipped with the right skills for today and tomorrow.” HR Manager will be responsible for the delivery of people related elements of the company strategy in BSC and acts as a Business Partner to the BSC Mgr Escalation Level 2 Escalation Level 1 Employees • Translate strategic targets into metrics related to employees Employees Internal GBS Customers 7 Possible scope for global service platform Panalpina global defined HR processes are regionally adapted and implemented on-site HR core process within the center is hire to retire: recruitment, placement, development, training, rewarding/retaining, retirement BSC HR managers are disciplinary led by the BSC manager and by Panalpina Regional HR on professional matters Customers • Translate strategic targets into metrics related to customers 3 HR roles Operative level 1 HR Governance 6 BSC HR Management focuses on qualitative HR tasks and cares about the BSC employees issues Personnel administrative processes (e.g. payroll) are either outsourced or conducted by Region / Area* Support regarding recruiting & qualification partially by external partner or Region / Area (during ramp-up) 2 HR Delivery Model Dimensions for GBS Performance Management GBS Regional BSC Manager BSC BU Service Operations Management Operations GBS Finance • Translate strategic targets into metrics related to costs and profitability Global Business Services RCEO GBS GBS 4 Processes & Policies Communication and change Transition model Stakeholder map Communication and change Communication guideline management plan Employee talks Products and services Service definitions and principles Resourcing Service selection criteria Service process split Process service handbook Typical SSC service scope today 0.Quot. 0.1 0.1.1 0.1.2 Check existing internal customer information 0.1.3 Check feasibility and profitability 0.1.4 Finalize quotation GBS / BSC culture shall correspond to the global Panalpina values and be locally influenced to a certain degree People & Culture There should be a uniform global HR IT system, preferably Panlink (successfactors) Preferable high degree of digitalization of data and administrative processes (ESS/MSS) 6 IT System & Data 1. Export 1.1 Quotation Receive quotation request Preferred recruiting strategy: new employees from local market GBS will have its own employer value proposition 5 Regional Business Service Centers have their own (local) HR – BSC HR Manager Each BSC HR Manager has a solid reporting line to the BSC management and a dotted line to Regional HR – he/she is involved in the information flow of Country department to ensure regional integration and alignment with local HR topics 1.2 Order acceptance Export 1.1.1 Receive order from customer or call forward 1.1.2 Check feasibility and profitability 1.1.3 Check internal information 1.1.4 Initiate forwarding order (“single file”) 1.1.5 Shipment planning and booking ( 1.2) 1.1.6 Pick-Up and Precarriage ( 1.3) 1.1.7 Additional services ( 1.4) 1.1.8 Complete forwarding order 1.1.9 Confirm booking 1.1.10 Job costing ( 3.3) 1.3 Shipment planning & booking 1.2.1 Prepare and initiate internal booking 1.2.2 Place internal booking Pick-up & pre-carriage 1.3.1 Initiate subcontractor order 1.3.2 Place subcontractor booking 1.4 1.5 Additional services 1.4.1 Initiate service order 1.4.2 Place service booking 1.2.3 1.3.3 1.4.3 Create transit forwarding order Receive booking confirmation Receive service subcontractor booking confirmation 1.2.4 Prepare & initiate external booking & potential consolidation incl. 1.2.5FRB Place external booking 1.2.6 Receive confirmation from carrier 1.2.7 Send internal booking confirmation 1.6 Shipment processing 1.5.1 Customs clearance export ( 1.6) 1.5.2 Security filing 1.5.3 House B/L processing 1.5.9 Invoicing ( 1.8) 1.5.10 Complete documentation (incl. eFile) 1.7 Customs clearance export Consolidation 1.7.1 Prepare consolidation of internal bookings 1.7.2 Finalize and confirm load plan 1.8 Invoicing 1.8.1 Initiate and prepare external customer invoice(s) 1.8.2 Initiate and prepare internal invoice(s) 1.8.3 Finalize and submit invoice(s) 1.5.4 Consolidation ( 1.7) 1.5.5 Send carrier shipment instructions 1.5.6 Receive carrier transport documents [O B/L; M B/L] 1.5.7 Third party payment ( 3.9) 1.5.8 Update “Shipped on Board” & “Actual Time of Sailing (ATS)” Copyright © 2014 Capgemini Consulting. All rights reserved. 4 Along the entire supply chain we look at several processes, where consolidation brought more than 20% of savings in costs or in FTEs Overview of cost-saving potentials in supply chain processes1 14 15% reduction in FTE through consolidating master data management 5% deduction in FTE through offshoring Master Data Management 10-15% production efficiency 66% reduction in order cycle time Plan 10-15 % cost savings in technical documentation costs for complex products 15-25% reduction in costs through consolidation of procurement 1 10% cost savings through centralized container management 5% cost reduction in transport and logistics through central management 25% reduction of supply chain management costs through offshoring the planning 14 Increase forecast accuracy 5-10% Develop Source 14 Make Store Deliver Return Up to 25% reduction in costs through consolidation of procurement Increase in category spend compliance up to 95% 2-5% cost savings on inventory supplier management and consignment 50% reduction of required warehouse space 50% reduction in FTE through central tariff filing 20% reduction in FTE through central reporting 25% deduction in FTE through central export/ import documentation 13% increase in product availability through BPO for inventory mgmt Order lead time improved by 12% 23% reduction of FTE for order management 3-5% reduction in inventory days 13% increase in product availability through consolidation of inventory management Based on Capgemini Consulting project experience Copyright © 2014 Capgemini Consulting. All rights reserved. 5 For a global freight forwarder we consolidated 20% of FTE in core logistics processes in regional and global shared service centers on 4 continents Plan Develop Source Store Deliver Return Case study consolidation of core processes in freight forwarding (1/2) SITUATION & SOLUTION 1 4 Make CASE STUDY BENEFITS Situation: Our client was facing heavy external and internal pressure resulting in the decision to re-shape its operating model towards consolidation and regionalization of transactional operational services Consolidation of 20% of FTE’s in core processes Savings of 50-60% personnel expenses per shifted FTE 10% p.a. steady state savings on OPEX Process standardization and harmonization for regional and global application Established global service line organization, governance model, performance / service management Increased transparency through established KPI concept Industrialized roll-out approach defined and applied to pilot Cumulated 27.786 TEUR in 2018 23.898 Year over Year Benefits Total Cumulated 14.444 8.544 Top-line pressure Bottom-line pressure [TEUR] -4190 -8.770 Permanent necessity to improve cost basis and increase productivity at equal or higher quality Market volatility Continuously high market volatility, currently answered with permanent resource adjustments IBS strategy has to address challenges on a long-term to ensure future success and market competiveness. IBS is a strategic measures to respond to these challenges proactively and aspire industry leadership. Global customers Transparency & standardization Manageability and global optimization needs transparency and common standards Internal challenges External challenges Difficult logistics market and economic environment - limited growth options CRITICAL SUCCESS FACTORS Need for stability Plan adherence and resource stability is basis for reliant operations and possible longlasting investments Need for global service availability at consistent high quality in a globalized market Solution: In close collaboration with client, establishment of a global service unit comprising 4 regional Shared Service Centers on 4 continents We supported our client in 3 phases of the transformation: Strategy development -6.140 Concept design Center rampups and global roll-ins Early top management involvement & commitment Rapid site selection and ramp-up IBS Alignment of strategy and delivery framework IBS Pilot implementation IBS Simulation combining business and IT side IBS End-to-end process analysis Intense collaboration Copyright © 2014 Capgemini Consulting. All rights reserved. 6 IBS for SCM follows the lifecycle for the set up of service centers – our approach covers both transform and run phase with proven methods and deep SCM knowledge IBS project approach 1 TRANSFORM 2 RUN Analysis: Maturity Assessment and Scenarios Design: Integrated Business Solutions Build: Transformation approach / management Improve: Achieve IBS Operational Excellence Maturity Assessment IBS Quick Check Benchmarking & Process- / Resource Mapping (PRM) Shoring / Sourcing scenario development Business Case Target Picture design for IBS operating and service model End-to-end global process / service and IT definition and integration Stakeholder commitment and community building Standard implementation approach and toolkit Program management industrialized roll-out Change Management and communication Operative Performance Management Business Process Management / Workflow Service Management / Pricing and SLAs BeLeanTM for Services, CIP IBS lifecycle The Capgemini Consulting IBS approach covers the full lifecycle – from first evaluation and feasibility study over design to implementation and improvement of existing functions. All modules and methods can be applied individually as well. Copyright © 2014 Capgemini Consulting. All rights reserved. 7 With a long track record in SCM and SSC projects and profound experience in transformation Capgemini Consulting is the global partner for IBS projects in the SCM context Why choose Capgemini Consulting for IBS in SCM Transformation projects We are the proven expert for sustainable implementation of both, SCM related and SSC related projects – from thought to finish; we drive transformations with a special focus on change management and a joint team integration of employees on all levels. SCM process knowledge We know supply chain management by heart and have worked in the full context of both supply chain strategy and concepts as well as operational improvement on shop floor level. Experience and track record Our experience is proven by our track record in the area of consolidating processes in shared service centres or centres of excellence which consists of over 200 projects Methods and ready-to-usematerial We bring to the project our deep knowledge of various supporting methods and tools like BPM, process analytics and Lean, business case / PRM and offer a valuable project documentation and proven and individually adapted training material Capgemini Group We can offer the whole service package from planning over the technical implementation to the final execution of the outsourced day-to-day business from one single source thanks to our Capgemini family including an in-house BPO organization and all the related operational best practices Collaborative consulting approach IBS projects are reorganization and transformation projects perfectly suiting our collaborative consulting approach, working in joint teams and developing sustainable concepts that actually work Copyright © 2014 Capgemini Consulting. All rights reserved. 8 Capgemini Consulting has significant experience in the consolidation of supply chain management processes in various industries Excerpt of references Freight forwarding Automotive Agricultural company Aerospace Issue Issue Issue Issue Volatile market and harsh New processes require efficient Different ERP systems across Significant improvements of economic environment Need for transparency and standardization Pressure in need to improve cost basis and increase productivity Solution In-depth analysis of end-to-end core processes Definition of global delivery model and of operating model for global sourcing organization Knowledge transfer to global service line organization for “selfmanaged” global roll-in Benefits 20% of operational FTE identified as offshore potential and savings of 50-60% PEX per shifted FTE Shift from fix to variable cost Single standard process defined/aligned governance structure Need to transfer operational different regions Non-standardized way of working productivity in technical publication creation Better efficiency in customer processes from local to central responsibility between and lack of visibility across the regions Investigation of centralization of Non-availability of master data Efficient publishing through multi- SCM related support functions Solution Solution channel delivery to airlines Solution Analysis and identification of improvement opportunities for relevant processes Elaboration of scope and vision for future process excellence Global process governance and centralization of support Benefits Break even in the third year after run time, 15 Mio EUR savings operational cost Additional 8,9 Mio EUR capital cost-saving for inventory reduction Process compliance and excellence Implementation of one ERP system across all regions Establishment of globally centralized master data creation, KPI and process metrics Single business request template across all regions Benefits Integration of disparate systems and businesses On time creation of master data Significantly enhanced visibility of master data status High accuracy in master data maintenance with quick turnaround times service Reengineering of the whole process of creation of technical publications Business process outsourcing of technical publication generation processes and multi-channel distribution Implementation with Capgemini work management solution TPM Benefits Costs for technical publications could be reduced by 35% Optimized customer service thanks to standardized process for the creation of documents Copyright © 2014 Capgemini Consulting. All rights reserved. 9 Your Contacts Volker Darius Principal IBS Operating / Delivery Model Phone: E-Mail: +49 151 4025 2497 volker.darius@capgemini.com Juliane Grandke Senior Consultant IBS @ Supply Chain Management Ralph Schneider-Maul Principal IBS @ Supply Chain Management Phone: E-Mail: +49 151 4025 1247 ralph.schneider-maul@capgemini.com Phone: E-Mail: +49 151 4025 0988 juliane.grandke@capgemini.com Felix Haeser Senior Consultant IBS @Supply Chain Management Phone: E-Mail: +49 151 4025 0998 felix.haeser@capgemini.com