R v pethe-tata motors

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R v pethe-tata motors

R v pethe-tata motors

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  • 1. Shared Services Experience of IndianCompanies TATA MOTORS LTD. Ravindra Pethe Friday, Sept 21, 2012 TATA MOTORS
  • 2. Outline• TML SS background• Overview of TML SS• Key Milestones• Unique value proposition of TML SS• Way Forward TATA MOTORS 2
  • 3. BackgroundTata Motors Regions - 8 (CVBU), 11 (PCBU)Mumbai Regional Sales Offices - 29• Corporate Office • Sales invoicing• Accounts and Finance • Inter-RSO transfers• Treasury • Dealer management• Exports• Corporate HR • Cash handling• Sales FinancePlant Locations Subsidiaries (supported by TMLSS)• Pune – Commercial Vehicles (2 plants)• Pune – Passenger Cars • TML Drivelines Ltd (Payroll)• Jamshedpur • Tata Automation Ltd (A/P, Payroll)• Lucknow • Tata Motors Logistics Distribution Company Ltd• Sanand - Nano (A/P, Payroll, A/R)• Dharawad • Tata Technologies Ltd (Travel claims processing)• Maval • Tata Marcopolo (A/P, Payroll, A/R, FA, Bank Reco)Functions at plant• Strategic Sourcing• Localized Procurements• Manufacturing• Inventory• Warranty• New Products Introduction• ERC – Engineering Research Center• Inter-location / RSO despatches• Plant HR TATA MOTORS 3
  • 4. The change: Before and AfterDecentralized plant locations, RSOs, Shared ServicesGeographically dispersed subsidiaries  Leveraged SAP  Rationalized manpower and improved Location practices & mix of professionals. Cultural diversity Controlled  Opportunities for job rotation & skill Decentralized development. Information silos  Transaction Process Management Close the books- - Critical review at the inception lead time - Eliminations and substitution - Standardization across locations. Lack of standardized - IT enablement processes Synchronized - Responsibility and ownership of Strategic drive for Opportunity for cost Shared Services end end-to-end process optimization  Formal cell for Internal controls over Measurement of financial reporting productivity?  Support for flexibility required by Business Duplication of efforts  Centralized platform for quality, Rationalized controls and exception reporting Lack of uniform skills  Cost advantage – service cost  Inbuilt review mechanism for cost Less conducive for controls and cost reduction process reengineering opportunities SS has created a unique value proposition by leveraging IT and combining the benefits on in-house management. TATA MOTORS 4
  • 5. TML SS – in perspective Supports A/P, Payroll, Assets accounting, A/R , SOX and Financial Closing Supports all locations of TML India and some of its subsidiaries, plans to support some of the international subsidiaries in near future. From its inception, volumes have gone up by say 3 times, reduction in man-power achieved by over 30%, Significant improvement in transactional efficiency and process management. SOX compliant right from FY 2007. (Mandated from FY 2008) SS was responsible for SOX • Materials and • Payroll for on roll and • Asset Master • Credit Management • Chart of accounts Services payments temp personnel • Customer master • Reconciliations • Asset creation • Incentives to • Close the books • Imports and • Time management • Asset disposal dealers • Consolidation Capital • Leave management • Asset transfer • Dealer account • Analytical reviews • Vendor master • Retirement benefits monitoring, recons. • • Depreciation Closing, Schedules • Sales tax, Service • Withholding taxes • Travel and Exp. • SOX compliance • Asset monitoring tax management Accounting • IFRS and India • Pricing support reporting • H/R financial masters Close the Books Accounts Accounts Payables Payroll Processing Assets Accounting and financial Receivables Accounting Plays significant role in internal controls over financial reporting TATA MOTORS 5
  • 6. TML SS - key milestones 2004-05 2006-07 2008-09 2010-11 2011-12• SAP 4.6 to replace • SOX compliant • SS for small car, TMLD • Perks given in 3.1H processes payroll • Display of vendor open• SRM – all vendor info • E-Hundi – 1st in items on SRM • PF, superannuation • SRM for service available on portal India statements in PDF vendors • MIS dashboards,• CRM – All dealer info • Attendance Performance measures • Payroll card for temp • DMS and WEB base available on portal recording system payment system for (ARS) imports payments • Removal of all SOD • PC to SMS for loans• Automatic Hundi conflicts, Role-based processing • Batch processing access • Debit notes to • SRM extended for vendors through for PF, pension indirect buying settlements SRM in PDF format• Workflows for • RTGS, DMS, mail-SMS exception reporting, GR alerts for vendors • Help-desk revaluations • Web-portal for • Online query system enhancements for all SRM vendors. travel claims • Instant customer• Dr. note recovery thro’ feedback on help desk payment • Evaluated Receipts System • On-line leave updation• Tolerance group for automatic IV• Service entry sheets TATA MOTORS
  • 7. Quality and Performance Measurement standards a. Surveys (internal and external customers) b. Benchmarking c. Balanced scorecards d. Formal KPIs e. Metrics reporting f. Formal assessments / surveys post transition g. Risk assessment h. Controls testing / assessments TATA MOTORS 7
  • 8. What is different in our SS model?Our differentiators: Mission Catering to the changing business needs – e.g. To be the world class Nano deposits, incentives, material pricing Shared Services Re engineering the existing processes – before Total customer Best-in-class Lowest cost satisfaction take over by SS group. Services at processes New processes implemented with high level of process maturity / automation. Mandate for looking for cost reduction opportunities and empowered to challenge even Customer Focussed Ethical standards Transparent Dealings the approved costs. Establishing, validating and responsible for the Efficient Well Controlled Performance Measures ‘internal controls over financial reporting’ High Automation Increased Creativity Innovative Thinking “Shared Services in Tata Motors to be a Pro-active Change Agent by Partnering the Business in Creating Value for All Stakeholders through a Highly Motivated Team and World Class Processes” TATA MOTORS 8
  • 9. Unique service offerings of SS team 1. Process re-engineering, standardization, improvements • Identify process improvement opportunities across business • Assess risks associated with ‘as-is’ processes • Ensure re-engineered processes are deployed within SS and across business. Helps compliance as well. 2. Automation • Monitor key automation projects through strategic IT initiatives • Monitor all automation requests for timely and successful deployment 3. Leveraging expertise for Subsidiaries • Dealing with subsidiaries for ‘as-is’ process study and suggesting process improvements • Subsidiaries planning for SAP – involvement right through the design stage • Transition support. 4. SOX compliance • SOX benchmarking results suggested that our SOX compliance is both efficient as well as effective than global as well as Indian counterparts • Guidance to scoped-in subsidiaries on risks and controls • Compliance used effectively – for bringing business benefits 5. Analytics • Targets for cost reduction / liquidity improvements • SAP scripts prepared for controls monitoring, Business Objects, ACL – tool agnostic analysis. • Moving towards continuous controls monitoring, wherein scripts to be owned by process owners. Business benefits derived TATA MOTORS
  • 10. IT in Shared Services• SAP R/31. Single instance and company code2. Functional: 4.6C, Technical: ECC 6 on netweaver platform Best use of3. Integrated modules – MM, FI, SD, CO, PP, AA, PM, PS, HR, IS-Auto technology in SSC from IPQC -• Others SSON1. SAP B/W – for control reports, analytics2. SAP GRC – for SAP access, authorizations and role management3. SRM – for interface between vendors, buyers and A/P Shared Services4. CRM – for interface between Customer Support, Sales and Marketing, Warranty-AMC and A/R Shared Services5. SAP DMS – for vendor master updation6. Hyperion – Consolidation, budgets and planning (WIP)7. Live-link – Content management (proposed as a back-end for vendor invoice management system for service invoices)8. ARS – Attendance recording system9. Web portals for travel, leave10. Vendor help-desk – on netweaver platform11. SAP IS-AUTO is implemented for warranty claims recording and processing, for failed parts monitoring12. VIM-OCR – forthcoming – for end-to-end vendor invoice management lifecycle TATA MOTORS
  • 11. Process maturity example 1: Bill of Exchange (E-bills) generation Process BenefitsEarlier  Accurate and timely payment, recovery  Auto-recovery for pending debits  Elimination of manual errors, such as wrong distribution / 1. Vendor to get the B/E to Accounts non-collection of B/E Vendor master 2.contains flags for Accounts verification before acceptance (delays) Daily payment run  Reduced operational cost generates e-bills 3. vendors with e- bills facility Vendor to discount B/E with Banks automatically Encrypted file sent to  No manual B/E generation / distribution 4. participating Banks Validation of vendor Data entry of Hundi details (duplication) Vendor a/c credited by  Single B/E for all supplies across locations a/c by Bank 5. Manual clearing of liability created vs. paid (errors,  Bank in 2 hrs post authorization and Improved vendor satisfaction delays) payment Authorize the file on Bank’s server validation  E-mail info on payment details 6. Debit notes settled through cheques  E-bills generated daily (except Bank holidays)  No manual work, no discrepancy situations 7. Vendor reconciliation issues  Management Insight  Predictability of costs  Analysis of discount costs  No monitoring for recovery of debit notes Key features Impact 1. First in India to introduce e-bills 2. Tri-party agreement with house banks, vendors and TML 3. No manual B/E generation / distribution Parameters Pre Post 4. Automatic e-mail intimation of payment details to vendors B/E Generation Manual Auto 5. Direct debit to TML by Banks on due date Time for vendor to get paid 3 - 4 days 2 hrs 6. Automatic recovery of debit notes Error rate in B/E generation/distribution 3% Nil 7. 80% payments through e-transfers 8. Advancing the retirement of B/E period to lower the borrowing cost TATA MOTORS
  • 12. Process maturity example 2: Chassis Transport Payments through ERS Process BenefitsEarlier:  Accurate and timely payment, recovery RSO 1  Auto debits for delays  Auto calculations for payables 1. Completely manual process of transport invoice payment  No errors, frauds 2. Transporter invoices - Physical RSO 2 2 copies received once  Reduced operational cost dispatches were initiated  Min. transactional cost for invoice processing 3. No co-relation with receipt quantity at RSO and date of Plant location receipt away chasis Drive RSO 3 4  Improved vendor satisfaction 4. Accounts departmentreaches RSO 3 Vehicle to await confirmations from RSOs, Certify shipment in SAP  Shipment status information to transporters long follow-ups.  No waiting for invoice submission, clearance 5. Confirmations related issues: vague, not in time, person-  Payments on due dates specific 2  No discrepancy situations 1 5 6. Manual bill passing – subject to errors and delays  Management Insight Transporter code, route and RSO acknowledges quantity System calculates transit  Predictability of costs mode (self drive / trailer) received and shortage / selected in SAP damages delays & master based  Analysis of paid v/s recovered transport costs transporter paymentKey features Impact • Master for approved transport vendors, routes, freight charges, delay charges, damage charges • Dispatch document triggers creation of sales invoice and creation of liability against transport charges Parameters Pre Post • Order, acknowledgement in SAP at respective locations • Auto-calculation of payment, recovery and auto-generation No. of transporter payments p. person p. day 45 Unlimited of net pay on due date • Amount disbursed during the year is Rs. 69.00 Crores Time to process liability (from despatch date) 15 3 • ERS facility offered to inter-RSO transport also Error rate 2-5% Nil TATA MOTORS
  • 13. Process maturity example 3: Travel expense claims Process Automation & Controls  Numerous system validations for accuracy and adherence to policy Travel requisition, approvals & bookings through web-based portal  Against TADA rules Travel expense reports against the same requisition submitted  Against duplication System validations against policy and settlement of claims by SS  Requisition period matching with claim Payment through RTGS, e-mail trigger for the same period  Encrypted payment processing files for data integrity  Role based access controls  Auto-clearing in SAP for processed claims  Linking of the travel period with the attendance system (in process) Highlights Benefits Around 1,20,500 travel claims (Rs. 1200 million) p. yr. All travel claims self certified Parameters Pre Post E-mail alerts at each stage No. of travel bills p. person p. day 50 125 Claim status available to all Time to process (days) 12 3 Over 95% employees rated the process “excellent” Error rate 2.5% 0.5% TATA MOTORS
  • 14. Analytics Examples: Order to Cash Duplication check• Already servicing in financial, Payroll Rate difference check Duplication check Credit control check risk analytics and operational Dealer incentive audit analytics• Technology investment under Warranty progress for advance analytics Spend analysis tools and technology Policy violations• Pilots underway on predictive Claims audit analysis• SS gave Rs.30.00 crores, Rs. 36.00 Crores and Rs 90.00 Purchase to pay Crores of tangible business Discounting analysis benefit (cash flow / savings) T&E Cycle time analysis through analytics in 09-10 , 10- Travel spend analysis Duplication check 11 and 11-12 respectively. Policy violations Rate difference check Overdue advance settlements Payment term mismatch Duplication check Expense audits TATA MOTORS
  • 15. AnalyticsFinalised Analytics framework :We are changing processes for appropriate data capture, wherever feasible. TATA MOTORS
  • 16. AVERAGE PROCUREMENT RATE COMPARISON (Same vendor supplying samee Parts across plants but at different rates) 2 Parts (1 pair) 88 Part Nos. 64 Parts 24 Parts corresponding 3 Vendors Active duplicate part (12 pairs) supply both Part Duplicates ‘Inactive’ both the Part Nos. across Nos. ‘Active’ plants at different rates Material : HOB 1.75MX17.5PA ST NPB III GR IP SH DIE ( Part Nos. : 33010330501 & 33010330608) Vendor-V1 Vendor V2 Vendor-V3Avg.Procurement Rate (Rs.) 75.00 65.00 90.00 73.68 87.71 Avg.Procurement rate (Rs.) Avg.Procurement rate (Rs.) 63.12 85.00 85.11 62.25 70.00 60.00 80.00 79.59 79.59 68.47 68.87 67.35 57.70 75.00 65.82 56.30 65.00 64.58 55.00 70.00 63.12 63.40 63.39 65.00 60.00 50.00 60.00 60.17 59.14 57.70 47.53 55.00 56.30 55.00 45.00 Part-33010330501 Part-33010330501 Part-33010330501 Part-33010330608 Part-33010330608 Part-33010330608 TATA MOTORS
  • 17. Way Forwarda. We have internally formalized a vision for GDC (Global Delivery Centre)b. It includes both expansion and extension plans – Expand into end-to-end service offerings, as opposed to Finance processes alone (Project Sutra – planned on 17th Oct’11) – Extend the services to global subsidiaries as wellc. Subsidiaries that are planned to be serviced from this year – TML Driveline – Tata Marcopolo – Tata Automation Ltd (balance areas)d. Discussions initiated with Foreign subsidiaries including Jaguar Land Rover, Hispano, Thailand) TATA MOTORS
  • 18. Thank You TATA MOTORS