Pernille Fabricius, Global CFO at Damco - Global Offshoring spoke at the CFO Event UK 2013

1. Global Offshoring
…………… ………………………………...
Pernille Fabricius
Damco International B.V.

2. Content
1
2
Process and benefits of offshoring
3
2
Global offshoring – The Damco / Maersk journey
Conclusion

3. Introduction – AP Møller Group Overview
Container activities
Terminal activities
Oil & Gas activities
• 117,000 employees in more than 130 countries
• 2012 revenue: USD 59.1 billion
3
Tankers, offshore and other shipping activities
1: Maersk Line
2: Maersk Oil
3: Maersk Drilling
4: APM Terminals
5: Maersk Tankers
Retail activity
Other businesses
6: Maersk Supply Service
7: Maersk FPSOs
8: Svitzer
9: Damco
10: Maersk Container Industry
11: Dansk Supermarked

4. Evolution of Group Global Service Center
End of year FTE’s; Key stages
9,028
4,881
977
2002
1,662
2004
5,525
5,413
5,890
2006
2007
2008
2009
2,404
2003
5,852
Local initiatives
2005
PONL
acquisition
Process
cleanup
Maersk
Line
Growth
Group Procurement
Technical Organisation
4
10,182
2010
2011
Growth of
non-Maersk
Line
2012
Organisation
development

5. Shared service centers are now based in 5 cities across Asia
Mumbai (~2600 FTE)
Chengdu (~1500 FTE)
Pune (~3000 FTE)
Chennai (~2700 FTE)
5
Manila (~3100 FTE)

6. Services already performed at the GSC for DAMCO
Finance
Operations
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•
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Accounts Receivables, Accounts Payables
General Accounting & Reporting
Master Data Management
FACT (SAP) Support
Travel Expense Management and Inter Company Billing
• Import / Export Documentation
• Import data quality, reporting, customs clearance, container delivery
and invoicing
Commercial analytics
Market research & industry analysis
Client review packs incl. operational and financial benchmarking
Presentation support
Green logistics projects, e.g. transportation mode optimization
Business Control
6
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•
•
•
•
•
•
•
•
Process Dashboard
Remote Control Audit
Competitor Financial Analysis (CFA)
Ocean & SCM Volume and Profit Share
Audit Finding Database & Follow-up

7. Further offshoring is a key component of our Finance Target
Operating Model
Improve the process performance and focus
on reducing risks and increase financial
transparency
Improve productivity and bring finance cost
to benchmark level
Finance to become a business partner
7
Process standardization
Finance off-shoring and
outsourcing
Strong functional leadership
and insightful analyses and
recommendations

8. Estimated potential for future offshoring by function
Indicative
Total offshoreable FTEs
% of total
Min
65
Max
69
61
57
51
55
50
46
37
Total
43
35
15
5
Finance
8
Customer
Services
HR
IT
Operations
Sales
Network /
product

9. Content
1
2
Process and benefits of offshoring
3
9
Global offshoring – The Damco / Maersk journey
Conclusion

10. The initial offshoring process
Opportunity Evaluation
Execute OA
Timeline -----
Business
Case
2-4 Weeks
Preparations
Project
preparation /
Charter
Assist
Work
Shadowing
and
System
Analysis
Standard
Operating
Procedures
and KPI
1-5 Months
2-8 Weeks
Work shadowing and training phase
where SOPs are developed and
current process performance is
understood
Process staff required full time to
assist with knowledge transfer
Management required to
implement change management
plan
What
happens?
Intensive local / detailed
evaluation of final off shoring
potential for each functional area
/ location (<1 week)
Prep. Phase where GSC
recruits work shadow
team and migration
managers
Customer
resources
required
Provide local process experts
from specific function to map
current process and split between
onshore and offshore
Ensure that process
experts and project
manager in place for
migrations
GSC
resources
required
Business case signed off by BU
(finalized FTE impact, financial
impact and implementation
timeline)
Migration handbook
Project plan
Change management
plan (New org.
design, comms.
strategy, HR strategy)
1
0
Observe
SOPs
Contract SLA
Perform
Realise
and
Hypercare
Takeover
Migration
Sign Off
Continuous
Improvement
Operating
Model Day
to Day
Engagement
2 Weeks-4 Months
Day to day
Gradual off shoring of tasks with
step-wise ramp up, and detailed
review of performance
Continued operations
offshore
Perform intensive review of off
shoring performance
Begin organization downsizing as
required
Ongoing management
(through SLAs)
Contract SLA finalised
Hypercare report
Hypercare sign off
Scorecards
Process improvement
plans
Customer surveys

11. Capturing the full benefits of offshoring is a journey
Year 1
Year 2
Year 3
Year 4
Year 5
Transition
Year 6
Year 7
Benefits
•
•
•
1
1
Multiple incremental developments over years
together realise the full benefits
•
Leverage GSC‘s Process & Performance
Management expertise
•
Re-Engineering Wave 2
Harmonise and re-organise processes employing
relevant assets and technology
•
Re-Engineering
Wave 1
Leverage GSC delivery centre assets
•
Consolidation
Realise process efficiencies based on
implementation and optimisation of global
processes and standards
Create efficiencies through activity consolidation
•
Process
alignment
Labour arbitrage
Continuously leverage and exploit GSC delivery
assets

12. Adding Value is a joint effort
Win together
Improve
together
Work together
Cost Arbitrage
• Provide labor and skill
arbitrage
opportunities
• Leverage on IT-and
Bottomline Impact
office infrastructure
1
2
Value add
• Identify and pursue further
opportunities to increase
• Ensure continuous process shareholder value
improvement and innovation
Process Improvement
• Bring best practices through
professional partnerships
within and outside GSC
Bottom- and topline impact
Topline impact

13. Continuous improvements are founded on our PEX &
Operations Management Method
Business Management
Long Term
Strategy
Policy Deployment (Business
Planning, Budgets, Scorecards &
Assessment)
Review of
Operational
Management
Operational Management
Daily Management
Gemba
Observe how the process is working
Problem Solving
Visual Management
System
Gemba
Standard Work
Instructions on how to do our work in
the best way we know
Projects
VMS
Manage daily work based on
process performance
Kaizen
Kaizen
Implement small improvements quickly
Standard Work
1
3

14. Sustainable Continuous Improvement (SSI)
Kan Ban
Colleagues in other GSC
with similar processes
Front Office and/or
Process Owner
Calibration & Best
Practice Sharing
Internal Operating
Procedures & Daily
Review Meetings
Team Member
1
4
Failure-ModeEffect-Analysis
(FMEA)
SSI Kit
Team Leader

15. How to create engagement?
•
Demand quality
•
•
Involve Local & GSC team in root cause
analysis
Send email appreciations to the teams
for good performance
•
Ensure root causes are addressed
instead of quick fixes (“Firefighting”)
Share successes of Local Organisation
with GSC
•
Win-Win Solutions = Quality Work +
Happy Employees
•
•
•
1
5
Set up and follow agreed escalation
matrix
Involve both GSC and Local F&A teams
in change management
•
•
•
•
•
Build personal relationships
CFO to send direct feedback to GSC team
One team = GSC team does not “work
for” FO but is considered part of the
same team
Share the success and rewards across
both teams
Established intranet team sites and
shared email groups

16. Content
1
2
Process and benefits of offshoring
3
1
6
Global offshoring – The Damco / Maersk journey
Conclusion

17. Lessons learned from our journey so far
1.
2.
Process mindset & capabilities need to be fully embedded in the organisation
3.
Right incentives and change management in the sending organisation
4.
Cost has been a consistent driver, however focus shifts over time towards process
optimisation
5.
Fix and ship yields faster impact, however has longer term implications
6.
1
7
Strong mandate from senior management critical
Strong execution needed, to maintain delivery quality whilst managing migration
projects

18. Q&A
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