shared services transformation
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THE PINK PANTHER™ & © 1964-2009 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved. © 2009 Owens Corning.
Owens CorningShared Services Transformation
IQPC/SSON Finance TransformationPat Cassity, Shared Services Director
September 22, 2011
2
Agenda
• Overview of Owens Corning
• History of Owens Corning Shared Services– Timeline – Process Areas– Captive Centers– Costs
• Need for Change in Shared Services Strategy
• Transition to offshore provider
• What We Learned
• Next Steps
3
Owens Corning At A Glance• Founded in 1938, an industry leader in glass
fiber insulation, roofing and asphalt and glass fiber reinforcements
• 2010 revenues: $5 billion
• 15,000 employees in 28 countries
• FORTUNE 500 company for 57 consecutive years
• Residential Insulation• Commercial & Industrial Insulation• Manufactured Stone Veneer• Residential Shingles• Roofing Asphalts
• Composites
Global Leader
Leading North AmericanMarket Positions• Residential Insulation• Commercial & Industrial Insulation• Residential Shingles• Roofing Asphalts
• Composites
Global Leader
Leading North AmericanMarket Positions
THE PINK PANTHER™ © 1964-2009 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved.The color PINK is a registered trademark of Owens Corning. © 2009 Owens Corning.
4‘98 ‘00 ‘02 ‘03 ‘08‘99 ‘01 ‘04 ‘05 ‘06 ‘07 ‘09
Owens Corning Global Shared Services Process Areas and Locations Over Time
1993 -1998 U.S.• AP
processing• Hourly
Payroll • T&E admin• Payroll
(salary)• Freight pmt
2000 Europe• Cash
disbursement• AP
processing• T&E admin
2003 India• AP• Fixed Asset
Accounting• Inter-
Company Acctg
• Bank and GL Recons
2004 India• Analytics• OCIL AP
2006 US• Customer
program administration
• More Freight Processing
2008 US• PO creation• Small capital
Sourcing• Customer
Service• Adjustments• Telecomm
InvoicingMoved to India• Europe AP• Europe
consignmentOCV • Thimmapur
Payroll
• Started in 1993
• Began with 27 FTE in Charleston, WV in 1993
• Steadily grew scope of services provided.
CHARLESTON, WVCHARLESTON, WV
WARRINGTON, UKWARRINGTON, UK
MUMBAI, INDIAMUMBAI, INDIA
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Charleston, WV• Opened in 1993• 90 Employees as of September, 2009• Primarily Supported North American Operations• Tasks/Responsibilities
– Accounts Payable • 560,000 Invoices Annually
– Freight Processing • Over 500,000 Freight Invoices, Rate Maintenance
– Payroll • Supporting U.S. and Canadian Operations (Approx 10,000 employees) – Hourly and Salaried
– Master Data• Vendor Master, Material Master, Finished Goods Master
– Mailroom, Scanning into Workflow– Customer Service
• 15 positions transferred from Toledo late 2007– Travel and Entertainment / Procurement Card
• Processing and Administration– Other (Rebate Processing, HR Support)
6
Mumbai, India
• 40 Employees as of September, 2009
• Supported F & A Processes (moved Corporate Finance)– Intercompany Accounting– Fixed Assets Accounting– Bank and General Ledger reconciliations
• Supported Indian Operations– Payroll– Accounts Receivable– Accounts Payable (also supported N America, Europe)
• 17 people in total supported the three regions
7
Warrington, UK
• 4 Temporary Employees as of September 2009– Reduced from 10 employees in 2007, when AP processing moved
to Mumbai
• Supported OC “legacy” plants (prior to SG acquisition)
• Travel and Entertainment Processing
• Invoice Scanning / Supplier Support– All Invoice Processing moved to Mumbai in 2008
• Payment Runs
8
Global Business Shared ServicesOrganization Size Increased and Cost Decreased
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
98 99 00 01 02 03 04 05 06 07 080
20
40
60
80
100
120
140
160Spend FTE
Budget & Headcount Over Time$ in 000’s
Year ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08
$ / FTE 60 61 61 68 69 64 56 60 51 46 46Low Cost Country 0% 0% 0% 0% 0% 20% 21% 25% 26% 29% 31%
From 1998 - 2008:• Scope of work
increased and cost per FTE reduced
• Shifted FTE mix to more low cost country employees
• Reduced average cost per FTE by 25% vs. 1998 and 33% vs. peak in 2002
HeadCount
9
Transformation of Owens Corning• Emerged from asbestos-related bankruptcy in 2006
• Acquired $900M composites company from Saint-Gobain in November 2007
• Divested two building materials businesses in 2008
• Focused on regional growth – increased manufacturing capacity in Europe and Asia
• Now operating as 2 major business units 1) Building Materials2) Composites
• Consolidated Global Information Technology and Global Shared Services organizations in 2009
NA Building Materials Global Manufacturer
10
OC Shared Services Roadmap
Drive increased value to OC:
Shared services strategy development
BPO partner selection
Transition to BPO Provider
Process standardization & optimization
Evaluate new opportunities –Europe, HR, A/R
New org structure to leverage new delivery model
Drive increased value to Drive increased value to OC:OC:
Shared services strategy development
BPO partner selection
Transition to BPO Provider
Process standardization & optimization
Evaluate new opportunities –Europe, HR, A/R
New org structure to leverage new delivery model
Strategy AssessmentBPO SelectionInitial Transition
A strategic service delivery capability:
Scalable delivery model
Global footprint
Minimize Cost to Deliver
Leverage IT and Business process synergies
Standardize Service Delivery
Enabled for M&A integration with speed
Continuous improvement
A strategic service A strategic service delivery capability:delivery capability:
Scalable delivery model
Global footprint
Minimize Cost to Deliver
Leverage IT and Business process synergies
Standardize Service Delivery
Enabled for M&A integration with speed
Continuous improvement
Not Positioned to Scale and Reduce Cost:
Captive centers limit scalability and cost reduction opportunities without significant investment
Sub-optimized work, focused at task/activity and transaction level
Not leveraging IT and Shared Services synergies
Not Positioned to Scale Not Positioned to Scale and Reduce Cost:and Reduce Cost:
Captive centers limit scalability and cost reduction opportunities without significant investment
Sub-optimized work, focused at task/activity and transaction level
Not leveraging IT and Shared Services synergies
Captive CentersIncremental Savings -Scalable, low cost model
20082008Previous State Previous State
2009 2009 –– 20102010ActionsActions
2011 +2011 +Expansion of CapabilityExpansion of Capability
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Transition to Offshore Provider Timeline - 2009
• RFP developed: March
• Strategic assessment: June
• BPO provider selected and contract signed: September
• Communication to employees: September
• OC India employees begin working for offshore provider – 34 chose to take jobs with BPO• OC Mumbai employees to do same roles with BPO for 18
months
• Due Diligence (scope) in US and UK: October
• On site Knowledge Transfer begins: November
• Off shore Knowledge Transfer begins: December
12
Transition to Offshore Provider Timeline - 2010
• OC Mumbai employees move to BPO: February
• Ramp down of Charleston employees began in March
• UK office closed in April– Services provided by UK office done by offshore provider
• Charleston, WV office closed in June– 87 jobs eliminated – 3 jobs were kept (operating out of home offices in WV)
• Payroll Leader• Garnishments / Payroll Tax Expert• Accounts Payable Leader
13
People ImpactCharleston
• My focus from announcement to closure (acting as Site Leader)• Very little attrition
– Clear, transparent communication throughout– Retention Packages – State of WV Retraining programs• TAA – Trade Adjustment Assistance act
• Approved by Department of Labor• Up to $20K in educational assistance• Extension of unemployment benefits while in school
• Proactive discussions with other area firms
Mumbai• 34 employees chose to take jobs with BPO
Warrington, UK closed in April – retained P2P expert
14
2010 Actions After Transition• Move from transition to operations focus - stabilization
• Shared Services Organizational Structure
• Governance – Assess and prioritize future opportunities– Cadence of meetings and reports
• ERP Rationalization in Europe – throughout 2010– Standard ERP platform- 2007 Saint Gobain plants– Change from decentralized processes to offshore provider
• Roles Changed– In Shared Services– External to Shared Services
Managing People Managing a Process
15
2011+ Focus - Growth• Build on global, scalable model
– China and Australia - 2011– Korea, Japan – 2012– Latin America – 2012
• Business Platform for M & A activity– Acquisition in Q3 – Template for future – standardization = speed
• Expansion of services– Plant procurement activities – Consolidation of travel management office– HRO– Build organizational structure to drive growth
• Leverage IT and Shared Services
16
Project Outcomes
• Delivered sustainable cost savings starting in 2010
• Met or exceeded process level Service Level Agreements (SLAs) with proper controls
• Enabled a global shared services platform to expand the back office work that can be done across OC regions
• Fully informed organization through clear, simple communication
17
Lessons Learned• Focus, Prioritization and Perseverance
• Even though the execution is offshore, we’re accountable for the process
• People are the most important asset
• Pick the right provider – culture, commitment, values
• Involve stakeholders up front
• Joint ownership• Partnership between Business Units, Finance, IT
• Continue to validate and reinforce policies
• Active management of offshore partner throughout • Succession planning, attrition, recognition
THE PINK PANTHER™ & © 1964-2009 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved. © 2009 Owens Corning.
Questions?Learn more about our company
from the www.Owens Corning.com Web site.
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