How can you make process improvements easier to realise?

Jan Fonfara

Sony Europe

Agenda a. Sony & Sony Europe

b. Baseline

c. Target

d. Solution

e. Challenges

f. Journey

g. Achievement

h. What If

i. Still to Do

j. Q & A

Sony & Sony Europe

Sony • app 65 Bill. EUR sales worldwide • app. 165k employees • Founded in 1946 by Masaru Ibuka & Akio Morita Sony Europe: • Distribution of Consumer and Professional Electronics

across Europe (7.5 Bill EUR external sales) • Development and manufacturing of Professional Electronic

products • Covering every European country through 27 branch offices • app 5k employees

Sony Europe Electronics=

26 different legal entities

Legal Entity Restructuring

• Main Co in UK• Countries as branches of the Main Co• S/CIS, S/TUR not in scope

TODAY TOMORROW

S/CIS

STURK

SFR

SDL

SUK

SNORD

SESP

SITA

SOASCH

SHEL

SPOR

SPOL

SCZE

SHUN

SLVK

SBNL

SOCE

S/TURK

S/UA

1

1

1

1

SFRSFR

SDLSDL

SUKSUK

SNORDSNORD

SESPSESP

SITASITA

SOASOASCHSCH

S/CISS/CIS

STURKSHEL

SPORSPOR

SPOLSPOL

SCZESCZE

SHUNSHUN

SLVKSLVK

SBNLSBNL

SOEMSOEM

1

1

11

1

1

1

11

2

1

1

1

1S/TURK

1

S/UAS/UA

1

1

24

As Sony Europe was

• 26 legal entities across Europe • Independent local finance functions with

regional headquarter coordinating • 570 Finance employees (estimated..) • No outsourcing • Overlapping functions (local, regional,

sub-regional) • Limited process standardisation • Lack of transparency, difficult to

compare entities • Unsustainable cost structure accelerated

by unfavourable market environment

Baseline

2010

42 SAP company codes

The Impacts

• “Controllers controlling the controllers” • Long budgeting process (bottom-up – top-down

etc.) lasting 3 months • Re-budgeting process half yearly • Discussion about intra-SEU transfer prices • High effort for governance (e.g. SOX) • Lack of actual control • Relying on the middle (e.g. FD of local organisation) • (partially) meaningless KPI’s • Inwards focus • Finance not seen as part of the business

Baseline

Sony Europe Vision

Simplification

Standardisation

Customer focus / Our Purpose

Competitive cost structure

Finance to deliver value

Flexible Organisation

Target

Thro

ugh

The Solution

Sony Europe Electronics=

26 different legal entities

Legal Entity Restructuring

• Main Co in UK• Countries as branches of the Main Co• S/CIS, S/TUR not in scope

TODAY TOMORROW

S/CIS

STURK

SFR

SDL

SUK

SNORD

SESP

SITA

SOASCH

SHEL

SPOR

SPOL

SCZE

SHUN

SLVK

SBNL

SOCE

S/TURK

S/UA

1

1

1

1

SFRSFR

SDLSDL

SUKSUK

SNORDSNORD

SESPSESP

SITASITA

SOASOASCHSCH

S/CISS/CIS

STURKSHEL

SPORSPOR

SPOLSPOL

SCZESCZE

SHUNSHUN

SLVKSLVK

SBNLSBNL

SOEMSOEM

1

1

11

1

1

1

11

2

1

1

1

1S/TURK

1

S/UAS/UA

1

1

24

2011

Target

1 legal entity

1 standardised branch per country

1 SAP Company Code for Europe

1 Standard Process used (unless TLS)

Centralised process ownership

Outsource all processing (PTP, OTC, RTR)

Transformation of process, systems and ways of working in short period of time

Simultaneous standardisation and outsourcing of processes

Moving from local to central decision making and responsibility

Cost savings already required in first year (2011) and fully to be realised in 2012 (Finance costs -30% vs. base)

Massive challenges and very short timelines required a new and systematic approach

Challenges

Key steps

Journey

1. Define standard processes fast and log them in a flexible, easy to understand system

2. Preventing the spread of outdated off-line process maps (Visio, PowerPoint etc.)

3. Enable communication between central, local and outsourced teams / see and talk about the common truth across all 26 Sony locations and 2 outsource locations (Pune and Bucharest)

4. Ensure changes to processes are controlled 5. Define targets (KPI’s) and start monitoring

Decision to go with Nimbus as a tool and Nimbus as a

partner for helping us create our process documentation

Step 1

Journey

• Define standard processes fast and log them in a flexible, easy to understand system • Process experts, SAP solution architect and future Process

Owner in workshops to define processes. Facilitated by Nimbus Process Author

• Build Sony Europe process framework (connecting the processes)

• Decide which parts are to be outsourced

Step 2

Journey

• Preventing the spread of outdated off-line process maps (Visio, PowerPoint etc.) • Project to include previous process documentation (e.g.

SOX) in Nimbus • Declaring Nimbus as mandatory • Roll-out of Core Process Map (Nimbus) across key

stakeholders • Integrating of existing training material (e.g. System task

guides, work instructions)

2011 Sony Corporation

Process / Risk / Control “Commitment to the Basics”

Ownership

• Single Global Process Owner for every process

Simplicity

Transparency

• Standardised process across Sony Electronics

• All processes documented in a single tool (Nimbus)

Control

• Any change or local variation must go through a strictly governed change control process

• Using the standard process is mandatory

Step 3

Journey

• Enable communication between central, local and outsourced teams / see and talk about the common truth across all 26 Sony locations and 2 outsource locations (Pune and Bucharest) • Create Sony me@work incl. landing page and defined

process areas • Roll-out across Sony Europe Finance community including

outsourcer • me@work is the only accepted documentation to be used as

reference for outsourced tasks

Step 4

Journey

• Ensure changes to processes are controlled • Implement a Change Request process including workflow,

review procedure, decision making body and escalation • Include different stakeholders (e.g. IS, Compliance) as

changes might need their support • Enforce the standard process (if something is incorrect CR

route still needs to be followed)

RequesterEuropean

Process OwnerCAFÉ Approval Implementation

Step 5

Journey

1. Define targets (KPI’s), start monitoring and improving • Developing the KPI structure and ensure they reflect clear

process responsibilities (e.g. Outsourcer – Sony) • Daily reports for driving process execution • Monthly report for KPI and SLA reporting in order to drive

further efficiency

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Untouched To be deleted

SONY APW Items WNS APW items

Return to vendor APW items Manual approval required by Sony

Manually approved, to be posted by WNS SONY AP2 Items (old SAP Workflow)

Closing Balance

So far....

Achievement

• Processes are truly standardised and fully outsourced

• A new operating model is established

• Business has not been disrupted • Central process and delivery

ownership • Local finance teams being

transformed and focus on credit risk and business partnering

• Organisation is flexible and focussed

AP Headcount 2010 2011

Sony 69 3

Outsourced 0 59

2010 2011 2012

Sony 95 43 35

Outsourced 0 53 60

AR and Credit ControlHC

vs. 2010 2011 2012

Finance cost -15% -30%

Sony Finance HC -32% -52%

..we would not have done it?

What if..

• Market environment has changed significantly, decline in most European CE markets / “LCD hangover”

• Margins and profitability are under even higher pressure • Significant disruptions due to natural disasters (Fukushima,

Thailand flooding) • Significant decline in European CE markets • Sony Consumer Products (global) -19% (LC) Dec YTD

We are just getting started..

Still to do

• Using the KPI’s for our improvement projects • Moving me@work (Nimbus) usage to a new level

• Integrating KPI reporting • Integrating further SOX evidence and testing documentation

• Acknowledged best practice across Sony – Utilising this advantage • ...

Q & A