Improved Finance Reporting and Control Framework for Dairy Farm

| Success story

BPO yields savings of about 55% and 20% respectively on finance and procurement costs

“The success of managing change, especially where it affected people directly involved, is a testimony to Capgemini’s credentials. Key benefits of the partnership with Capgemini include cost savings and greater efficiency. With Capgemini taking care of back-office processes and systems, our people can focus on helping to grow Dairy Farm’s core business.”

“Over the last few years, Dairy Farm has grown more quickly than we had expected. As a direct benefit of the partnership with Capgemini, our cost per store for back-office support has come down. It has made it easier to seamlessly bolt services for new acquisitions, like the IKEA business in Hong Kong, into existing processes and systems being managed by Capgemini.”

Howard Mowlem, CFO, Dairy Farm International

The Situation

As a leading pan-Asian retailer, Dairy Farm and its associates operate more than 3,000 outlets – including supermarkets, hypermarkets, health and beauty stores, convenience stores, home furnishings stores and restaurants. It employs some 60,000 people in the region and reported total sales of US$5.1 billion in 2004.

Operations in Hong Kong, playing a key role in Group affairs, encompass more than 1,100 retail outlets and 15,000 employees. In the late 1990’s, competition increased dramatically in the Hong Kong market. Dairy Farm embarked on a restructuring effort focused on strengthening core competencies, reducing operating costs, avoiding capital outlays in non-core areas and growing revenue.

 

The Solution

During 1999, Dairy Farm partnered with Capgemini to deliver shared services from centers in China and Australia in a deal involving the transfer of about 400 Dairy Farm employees to Capgemini.

During the first 18 months of operation, the partnership facilitated a radical reshaping of the finance function for Dairy Farm. This was achieved against a backdrop of rapid growth for the Group. Pleased with the results, Dairy Farm entered into a new 7-year partnership with Capgemini in 2003 for a full scope of Business Process Outsourcing (BPO) services including Finance & Accounting, HR Administration and Procurement services for Group companies in the region.

Capgemini leverages its Rightshore™ approach to deliver services from BPO Centers in Guangzhou and Hong Kong.

 

The Result

The partnership allows Dairy Farm access to world-class capabilities in Finance & Accounting, HR Administration and Procurement without incurring associated capital outlays. With Dairy Farm enjoying a dual listing in London and Singapore, rigorous attention ensures that financial processes adhere to common standards and regulatory compliance.

Notable accomplishments include cost reductions via a decrease in finance and accounting personnel with savings exceeding 55%. In addition, more than $3 million has been saved by renegotiating the procurement of operating supplies.

The transition has supported growth of almost 500 additional retail outlets, several new businesses and an integrated Oracle-based financial system across business units. The service has also implemented on-line tools for budgeting, management reporting, procure-to-pay and time & expense processing. Flexible, adaptable and scalable processes are key elements of Capgemini’s outsourcing services.