Q&A Francois Marti, CEO, Fiat Services
At the 9th Annual Shared Services & Outsourcing Week, SSON spoke to Francois Marti, CEO, Fiat Services about the impact of the current economic climate on the automotive industry and how the Shared Service Center is helping them to operate at a more efficient level.
SSON: I am sitting here with Francois Marti, CEO of Fiat Services. Francois has just participated in McKinsey’s Big Picture C- suite session at SSOW in Budapest and he’s kindly agreed to spend a couple of minutes with us.
Could we kick off with a background to Fiat Services? How big is it, what does it cover?
Francois Marti: Fiat Services is the back office operation of the Fiat group servicing all the businesses going from automotive to truck, construction equipment and agricultural products. It represents about 5000 employees covering Europe and South America mainly.
SSON: One of the topics of the discussion, was the impact the current economic climate is having, you mentioned how having a captive had given you an opportunity recently. Could you elaborate on that?
Francois: We are facing a dramatic change in the automotive sector. Understanding the challenge the various governments are setting up with different incentive plans to support the sale. The faster and smarter we move to adapt to these decisions, the situation and support of the government, or the decision made at government level, it will give us the opportunity to capture a lot of market share in a very competitive market. Therefore having a captive shared service center gives us the opportunity to be closer to commercial decisions or strategic decisions and embed all those decisions right away in our processes, to be more efficient.
SSON: What about credit management? Talk to us about credit and collections.
Francois: Definitely, in this moment of crisis cash flow it is one of the main topics everyone is talking about. You need to make sure that you have the appropriate processes for cash collection but also that you do understand you account payable process.
If you do, it should help you look at the overall picture, looking at your cash position and making appropriate forecasts with the treasury department. This is why when we look at cash collection we look at the cash collection with the overall picture with treasury and accounts payable also embedding into the process all the major stakeholders from purchasing, treasury, accounting and commercial..
SSON: There was also some talk about moving gradually away from being a purely transactional center, where or what are you moving towards?
Francois: The first step we made over the past 3 years was to get back the control on our processes. In order to understand the processes and in order to govern and have the appropriate KPIs on those processes. Now that we feel comfortable with those processes we are moving into activities which are looking more at knowledge and content. We are taking a role on our processes which is more a governance than a plain control, so it’s a governance on the processes.
If you understand the processes you can distinguish what is or will soon become a commodity activity to what is or will be a content activity. For the back office activities which are considered as commodities we look for productivity and cost reduction through technology or off/near shoring. For the content activity you need to have appropriate and reliable data and the correct persons to analyse the data to give a dashboard for the management to take business decision. We do consider these activities as key to our business and the value add of a captive back office.What we tend to do is move into outsourcing transactional activities which are becoming for us commodities, but you need to understand those in order to move into data analysis and into reporting to give the appropriate support for business decisions.
SSON: What are major challenges to that?
Francois: The first challenge is to make sure you have reliable processes that give you reliable data, the second one is to have the appropriate profile and instrument to analyse data. We have a huge amount of data and you need to make sure you can capture and pick the appropriate information to prevent any misleading decisions.
SSON: Lastly Francois, you mentioned the HR part of the shared services work you are doing, what are the different challenges running a HR center versus a finance center?
Francois: When you deal with accounting processes, changes in the process have a indirect impact on the persons. No one seems to care about the one who needs to be paid or the one receiving goods or the quality of them. When you deal with HR, every single employee, every business partner of the HR community is directly impacted on the quality of the service is the business partner in the HR community so there’s a lot more change management that needs to be done. Making change is a trickier process for human reason and not technical one and the process tends to be slower.
To set up a shared service Center for HR, we had to make sure we had the appropriate knowledge base collecting the best practices and all the particularity of each global or national labor contract. If you want to deliver a service that is standardised, making sure that you have a face to face approach with employees, or if you have a call center answering the employee - we need to have exactly the same answer. Therefore, we work a lot on the knowledge base and anticipating all the questions and potential requirements of employees so we can be a lot more proactive.
By taking out people from HR in the manufacturing plants or by limiting the front desk, you need to make sure that you are giving the appropriate answer at the same level of services to the employee.
SSON: Francois thank you!