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Integrated Business Solutions (IBS) in SCMService offering for “next generation” shared service center approach

Development of Service Function Scope and Delivery Models

In recent years, consolidation possibilities emerged with a global perspective where onesaw American companies as pioneers and European companies as followers of the trend

Copyright © 2017 Capgemini Consulting. All rights reserved.

2

1980

Development of Service Function Scope Development of Delivery Models

Source: North Carolina State University, New York University, Capgemini Research

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

Demand locations Demand restrictions

Availability of skilled workforce

Capture and transport knowledge

Global and connected world

Desire for much lower labour costs

Onshore

Nearshore

Offshore /Rightshore

Globalbalancing

Industrialized services Workforce optimization Core competence

optimization

2017

Components

Reduction of vertical integration by sourcing of components or assembly

groups

Classic Support Functions

Outsourcing of IT services (IM / AM), BPO for Accounting / Payroll, Captive SSCs for additional

support functions

Operational services and support

Consolidation of operational business processes (e.g. Documentation, master data management,...) and bundling

in either captive SSCs or selective BPO

IBS positioning and purpose

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


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Value-add

Gen

eral

Re

lati

on

to

op

era

tive

bu

sin

ess

Spec

ific

TransactionalKnowledge

based

Self Service Business areas are enabled to independently work on tasks

Helpdesk & Callcenter SPOC (Single point of contact) for internal contacts

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

Business area Business area / operations specific tasks

with high local component Mostly transactional, regular activities Necessity for local input / programs

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

Transactional Partner / Shared Services Rule based, high volume, operative focus High process intensity High standardization, effectiveness and

efficiency

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31

Integrated Business Solutions

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:

Integrate / consolidateglobal consolidation of transactional processes

Standardize common process models / transparent delivery

Digitize / automatedigital process interfaces and automated workflows

Manage services application of service mgmt (SLA/KPI/Pricing) standards

1

2

3

4

SCM in the context of IBS

Using a common operating model platform, nowadays service centers can be extended towards the processes of supply chain management


4

Finance

HR

Procurement

IT

CREM/ Fac. Mgmt.

Supply Chain Mgmt

Controlling

Possible scope for global service platform

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

Common IBS Operating Model – global support platform further increases cost savings by harmonizing and standardizing IBS structures

Analytics

Typical SSC service scope today

Focus here

Global delivery modelOrganization and governance

Performance andservice management

Products andservices

Service definitionsand principles

Resourcing

Service selection criteria Service process split Process service handbook

Career model Comp & Ben. concept Workforce strategy Role demand profiles Recruiting strategy Employee value

proposition Trainings

HR and workforce qualification

KPI’s and service governance

Pricing model CIP2structure on

operational level BSA and SLA’s3

Organization,governance andescalation model

Framework policy BCP1 concept

Delivery hub strategy Delivery guidelines Delivery locations /

site selection Roll-in strategy and

planning

0.Quot. 1. Export

Order acceptance ExportQuotation Shipment processing Consolidation Invoicing

1.1

Receive order from customer or call

forward

1.1.1

0.1

Check feasibility and profitability

1.1.2

Check internal information

1.1.3

Initiate forwarding order (“single file”)

1.1.4

Shipment planning and booking (

1.2)

1.1.5

Additional services( 1.4)

1.1.7

Complete forwarding order

1.1.8

Pick-Up and Pre-carriage( 1.3)

1.1.6

Confirm booking1.1.9

Job costing( 3.3)

1.1.10

Shipment planning &

booking

1.2

Prepare and initiate internal

booking

1.2.1

Place internal booking

1.2.2

Create transit forwarding order

1.2.3

Prepare & initiate external booking &

potential consolidation incl.

FRB

1.2.4

Place external booking

1.2.5

Send internal booking

confirmation

1.2.7

Receive confirmation from

carrier

1.2.6

Pick-up &pre-carriage

1.3

Initiate subcontractor

order

1.3.1

Place subcontractor

booking

1.3.2

Additional services

1.4 1.5

Customs clearance export ( 1.6)

1.5.1

Security filing1.5.2

House B/Lprocessing

1.5.3

Consolidation( 1.7)

1.5.4

Send carrier shipment

instructions

1.5.5

Third party payment( 3.9)

1.5.7

Update “Shipped on Board” &

“Actual Time of Sailing (ATS)”

1.5.8

Receive carrier transport

documents[O B/L; M B/L]

1.5.6

Invoicing( 1.8)

1.5.9

Complete documentation

(incl. eFile)

1.5.10

Customs clearance

export

1.6

Prepare consolidation of internal bookings

1.7.1

Finalize and confirm load plan

1.7.2

1.7 1.8

Receive quotation request

0.1.1

Check existing internal customer

information

0.1.2

Check feasibility and profitability

0.1.3

Finalize quotation0.1.4

Receive booking confirmation

1.3.3

Initiate service order

1.4.1

Place service booking

1.4.2

Receive service subcontractor

booking confirmation

1.4.3

Initiate and prepare external

customer invoice(s)

1.8.1

Initiate and prepare internal

invoice(s)

1.8.2

Finalize and submit invoice(s)

1.8.3

Panalpina GBS HR Strategy“Engaged people in the right job equipped with the right skills for today and tomorrow.”

HR Manager will be responsible for the de-livery of people related elements of the com-pany strategy in BSC and acts as a Business Partner to the BSC Mgr

BSC HR managers are disciplinary led by the BSC manager and by Panalpina Regional HR on professional matters

HR Delivery Model

HR roles

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

Processes & Policies

Preferred recruiting strategy: new employees from local market

GBS will have its own employer value proposition

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)

IT System & Data

HR Governance 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

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)

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3 4

2

5 6

Dimensions for

GBS PerformanceManagement

Internal GBS Customers

Employees

FinanceProcesses /

GBS Services

Finance

• Translate strategic targets into metrics related to costs and profitability

Employees

• Translate strategic targets into metrics related to employees

Processes

• Translate strategic targets into metrics related to processproductivity and quality

Customers

• Translate strategic targets into metrics related to customers

Regional BSC (1..n)

Panalpina AG

Internal Customers

Global Business Services

Group COO

GBS Governance Board

Operative

level

Escalation

Level 1

Escalation

Level 3

Escalation

Level 4

Escalation

Level 2

Panalpina Executive Board

GBS Regional BSC Manager

Head of GBS

RCEO

BU Mgmt.

Opera

tions

Area / Country Mgmt.

OperationalInterfaces

GBS Reg. Gov. Board

BSC Country Service

Management

BSC BU Service

Operations Management

Team LeadProcess ExpertClerk

Process Manager

Operations / Product Manager

Strategy Vision and mission Guiding principles Governance framework

Business model Value proposition Roll-out strategy / concept

1

2

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3 4 5

MissionVision

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

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

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

GlobalBusinessServices

(GBS)

Drive

CIP1

Manage

Comp-

lexity

Live

Standard-

ization

Ensure

Quality

Manage

Risk

Increase

Scala-

bility

Lever

Wage

ArbitrageGBS

Vision

GBS

GBS

Possible further GBS centers

Conf irmed BSC locations

GBS

GBS

GBSGBS

Communication and change6

Transition model Stakeholder map

Communication and changemanagement plan

Communication guideline Employee talks

Plan

Return

Source Make DeliverDevelop Store

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Plan

Return


14

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


5

13% increase in product availability through BPO for inventory mgmt

Order lead time improved by 12%

13% increase in product availability through consolidation of inventory management

23% reduction of FTE for order management

3-5% reduction in inventory days

50% reduction in FTE through central tariff filing

20% reduction in FTE through central reporting

10% cost savings through centralized container management 5% cost reduction in

transport and logistics through central management

25% deduction in FTE through central export/ import documentation

25% reduction of supply chain management costs through offshoring the planning Increase forecast accuracy 5-10% 14

5% deduction in FTE through offshoring Master Data Management

15% reduction in FTE through consolidating master data management

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66% reduction in order cycle time

Up to 25% reductionin 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

15-25% reduction in costs through consolidation of procurement

1 Based on Capgemini Consulting project experience

10-15 % cost savings in technical documentation costs for complex products

10-15% production efficiency

IBS

IBS

IBS

IBS

For a global freight forwarder we consolidated 20% of FTE in core logistics processes in regional and global shared service centers on 4 continents

Case study consolidation of core processes in freight forwarding (1/2)


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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

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:

SITUATION & SOLUTION

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

BENEFITS

Ex

tern

al

ch

all

en

ge

s Inte

rna

l ch

alle

ng

es

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.

Difficult logistics market and economic environment - limited growth options

Continuously high market volatility, currently answered with permanent resource adjustments

Manageability and global optimization needs transparency and common standards

Permanent necessity to improve cost basis and increase productivity at equal or higher quality

Plan adherence and resource stability is basis for reliant operations and possible long-lasting investments

Need for global service availability at consistent high quality in a globalized market

Top-line pressure

Market volatilityTransparency & standardization

Bottom-line pressure

Need for stabilityGlobal customers

23.898

14.444

8.544

-6.140-8.770

-4190

Cumulated

27.786 TEUR

in 2018

[TEUR]

Year over Year Benefits

Total Cumulated

Strategy development

Concept design

Center ramp-ups and

global roll-ins

CASE STUDY

Early top management involvement & commitment

CRITICAL SUCCESS FACTORS

Rapid site selection and ramp-up

Intense collaboration

Pilot implementation

Simulation combining business and IT side

End-to-end process analysis

Alignment of strategy and delivery framework

Plan

Return


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4

IBS lifecycle

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


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Improve: Achieve IBS Operational Excellence

Operative Performance Management

Business Process Management / Workflow

Service Management / Pricing and SLAs

BeLeanTM for Services, CIP

Design: Integrated Business Solutions

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

Analysis: Maturity Assessment and Scenarios

Maturity Assessment IBS Quick Check Benchmarking & Process- /

Resource Mapping (PRM) Shoring / Sourcing scenario

development Business Case

Build: Transformation approach / management

Standard implementation approach and toolkit

Program management industrialized roll-out

Change Management and communication

TRANSFORM RUN1 2

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.

With a long track record in SCM and SSC projects and profound experience in trans-formation Capgemini Consulting is the global partner for IBS projects in the SCM context

Why choose Capgemini Consulting for IBS in SCM


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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.

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-use-material

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

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.

Capgemini Consulting has significant experience in the consolidation of supply chain management processes in various industries

Excerpt of references


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Issue

New processes require efficient governance structure

Need to transfer operational processes from local to central responsibility

Investigation of centralization of SCM related support functions

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

Issue

Volatile market and harsh 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 “self-managed” 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

Issue

Different ERP systems across different regions

Non-standardized way of working between and lack of visibility across the regions

Non-availability of master data

Solution

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

Issue

Significant improvements of productivity in technical publication creation

Better efficiency in customer service

Efficient publishing through multi-channel delivery to airlines

Solution

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

Freight forwarding Agricultural company Aerospace Automotive

Volker Darius Vice President

IBS Operating / Delivery Model

Phone: +49 151 4025 2497E-Mail: [email protected]

Juliane KowarikSenior Consultant

IBS @ Supply Chain Management


Ralph Schneider-MaulVice President

IBS @ Supply Chain Management


Your Contacts

mailto:[email protected]



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