Asian transformation

Since 2001, Capgemini has been working with a leading pan-Asian retailer that employs over 230,000 people. The group has almost 10,000 outlets, comprising supermarkets, hypermarkets, convenience stores, health and beauty stores, and home furnishings stores, under well-known brands.

Paper chase

For many years, the retailer used manual, paper-based accounting methods. This approach was inefficient and cumbersome, and it was difficult to improve

More specifically:

• Tasks were being performed within different processes with various business rules, no standardization and lack of synergy
• Roles and responsibilities were unclear, resulting in low efficiency
• Around 450,000 paper invoices per month were being processed manually. This labor-intensive approach involved around 30 people in data handling, with low productivity, high attrition in people management, and high risks of information security
• Over 3,000 queries and disputes were incurred each month, and the dispute log was maintained in Excel, with no transparency on resolution status and aging monitoring. The data repository was also in paper form, leading to expensive costs in document retrieval and longer lead times
• Data extraction took place on multiple platforms, and people were tasked each day with data massage and matching on daily sales reconciliation, stock management and various accounting tasks, with no technology enablers.

In the organization’s Hong Kong operations, this approach created a range of challenges. Within vendor master data – and there were over 2,000 vendors – the same supplier was sometimes assigned multiple vendor codes, leading to potential risks of double or wrong payments. Non-standard purchase-to-pay (P2P) processes were performed in various ways and locations, without clearly defined roles and responsibilities. Users’ access roles were not clearly defined in the ERP system, resulting in conflicts in areas such as goods receiving and invoice receiving.

On top of this, report generation was not automatic, necessitating manual rework. Regular daily tasks such as sales reconciliation, stock movement and adjustment, were performed manually with low productivity, and with associated human errors. Finally, the extraction and reconciliation of information for the preparation of reports was not conducted centrally.

In 2017, a new leadership team was put in place, which tasked itself with the mission of modernizing the organization’s processes and addressing their shortcomings.

Transforming business practices

Capgemini worked closely with the organization’s North Asia Finance operation to transform business practices and increase productivity.

We started by introducing Capgemini’s Global Process Model (GPM) – via maturity analysis of the client’s “as-is” process and technology landscape – to identify problem and gaps to the best practices of GPM. We then proposed improvement opportunities and designed “to-be” processes leveraging our ESOAR (Eliminate, Standardize, Optimize, Automate, Robotize) methodology, which eliminated non value-add activities, standardized processes and activities for synergy, optimized systems to enhance efficiency, and finally automated and robotized processes and opportunities to improve productivity.

GPM alignment triggered the transformation roadmap, which started with transitioning the organization to an electronic data interchange (EDI) platform –handling 75% of its P2P transactions. With a new platform and process model in place, we then implemented a range of tools, including:

• A Command Center to optimize control and governance of service delivery, and to automate KPI reporting, providing the retailer with transparent live information and business insight analysis
• An online query-to-report (Q2R) system to optimize vendor query and dispute monitoring through the different phases of each ticket lifecycle, and to automate service-level agreement (SLA) control by flagging overdue issues
• ABBYY’s optical character recognition (OCR) system to automate invoice processing end-to-end – the first time OCR had been used for a non-Latin-based language. We applied OCR to the 25% of paper invoices not addressed by the P2P EDI platform, achieving accuracy of 95% for printed invoices and 85% for hand-written invoices. This was a breakthrough transformation of the P2P processing landscape, ending the decade-long need to handle paper, and achieving 83% hands-free processing on trade invoices.
• UiPath to robotize ten related processes across the organization’s finance operations, covering P2P, order-to-cash (O2C), and record-to-report (R2R), delivering further productivity gains in terms of necessary headcount.

In 2018, based on the success of the initial transformation, Capgemini proposed rolling out this approach across the region, and in particular to its operations in mainland China. The aim is for China to reach Hong Kong’s levels of productivity and maturity, which would represent a 50% improvement on pre-existing performance in China.

Implementing a target operating model

A major factor in the success of the original client implementation was the creation of a target operating model (TOM). Within this model, in-country finance controllers and finance business partners reporting to the regional finance team are themselves supported by a robotic process automation (RPA) Center of Excellence. They are also supported by centralized accounting and business services, which have regional ownership of R2A, P2P, and O2C functions, and by Capgemini’s transformation team.

In addition to core functions including invoice processing, these supporting roles address areas such as:

• In-country tax, audit, statutory, and controllership support
• The management of local policy
• Centralized non-accounting services, including stocktaking, loss prevention department, and buying income.

The transformation team also conducts service delivery reviews to ensure monthly KPIs are being met, and to look for individual areas of potential improvement.

The TOM has now been designed to extend across the entire North Asia region. Drawing on Capgemini’s “Five Senses of Intelligent Automation” and ESOAR (Eliminate, Standardize, Optimize, Automate, Robotize) methodology, the TOM will deliver further savings and productivity improvements.

Delivering tangible outcomes and innovation

Last but not least, Capgemini has also committed to provide continuing consulting and advisory support to the pan-Asian retailer overall. A transformation and innovation office (TIO) has been created to drive productivity improvement of the company’s retained processes, and a forum has been set up to exchange innovative ideas and information.

As a result of all these changes, the company has reduced its relevant headcount by a third, freeing up resources to be redeployed in further value-adding activities. Leveraging the ABBYY OCR system has generated a 30% productivity saving, and a 10% efficiency saving in SLA control has been recorded through the online Q2R system.

The Finance Director of Accounting Services of the retailer’s operations in Hong Kong and Macau has expressed her appreciation to the Capgemini team for its innovation and dedication. “The transformation projects done by Capgemini team are in line with [our] strategy and automation agenda,” she has said. “Hong Kong’s successful story will be pioneering, and contributing to [our] way forward.” She added, it will be “the role model for the rest of the Group to learn and replicate.”

Violet Liu is a senior delivery executive at Capgemni China, currently managing the largest FAO account at the center.