All For One

Danone’s multi-phase technology-fuelled project tackling risk in Asia has created a more agile, resilient, and connected operation

Over the last 12 to 18 months, accelerated by the onset of the pandemic, Danone’s treasury initiated an ambitious multi-phased project with a view to transforming its treasury and risk management in Asia. The team has enabled faster processing and greater proactivity. This makes for a more resilient and agile operation that TMI is thrilled to name in our Corporate Recognition Awards as Best Risk Management Solution for 2021.

Corporate Recognition Awards

Best Risk Management Solution

Danone

Danone’s approach to risk management is comprehensive. The initiative has been driven by deep stakeholder management and senior-level sponsorship that has secured resource allocations and rapid execution throughout. This has enabled the deployment of technology at every stage, digitising paper-heavy processes.

Through a TMS deployment, for example, it has mitigated risk around lack of visibility and manual processing, as well as enhancing bank access management. This has created options for additional solutions and platforms, with work in progress to deploy RPA, AI/ML, and active data analytics for the group’s shared service centre.

The FX risk component has seen a new set-up in the region, leveraging process centralisation and automation of FX deals, with execution through Kyriba, using a Bloomberg and Citi interface. This has enabled Danone to create a highly modular workflow in which all modules connect seamlessly to reduce manual intervention.

Liquidity risk has seen it deal with highly regulated markets with conservative repatriation options being managed via a new offshore cash pooling and lending structure in China, with a ZBA approach operating in Oceania, Hong Kong and UAE. Danone has also applied automation to bank deposits and MMF reporting in its new TMS.

It has also overcome operational risk, especially in managing the reduction of cash and credit facilities for smaller customers with weaker credit profiles, and the reduction of cash handling in key markets such as Indonesia.

Change management

Danone’s treasury team realised that even though individual teams sometimes had conflicting priorities, organisationally it was important to set up a multidisciplinary team to guide every participant in the same direction, with the same depth and breadth of support crucial in overcoming resistance to change.

The test for each project was to secure the support of business teams and to assure them there would be almost no disruption to day-to-day business flows as the project team began modifying processes and changing the set-ups. Clear communication and a light-touch approach enabled resistance to the initiative to be minimised.

Overall, every step had to be seen through a business lens. The teams worked closely to explore options that would cushion the impact of any potentially negative outcome and deliver minimal disruption. For this purpose, every operational stakeholder was consulted, aligning as a part of a ‘bottom-up’ strategy, that achieved strong buy-in to the strategic objective.

Success

Danone has secured key gains at an in-country, regional and global level. The financial gains from its liquidity risk management programme include the capacity to upstream large amounts of cash. This meets senior management commitments to investors to reduce leverage at a global level, while enabling Danone business teams to grow. FX centralisation and automation has facilitated investment improvements, while centralisation via the new TMS has afforded treasury improved banking access and account rationalisation.

Having delivered this against the backdrop of a complex regulatory environment, and with major disruptions created by Covid-19, Danone has achieved considerable success. For this, it is the clear winner of the 2021 Corporate Recognition Awards for Best Risk Management Solution. Danone is also TMI’s Top Treasury Team of 2021, for its comprehensive work throughout the year (see separate article). Congratulations to the entire Danone team.