One Finance - The focus is on steering

Dr. Dirk Mahlstedt, Project Manager of One Finance, is a happy man. He’s been leading the restructuring and modernization of finance at the Group since December 2019, following an initiative by Finance Board Member Dr. Frank Claassen.

The core 20-strong team working under Dirk Mahlstedt, Claudia Parman, Werner Krieger, Frank Keßling and Florian Haberland are reorganizing processes and steps to make the company’s figures more meaningful and reliable. Where needed, they call in experts from other departments including personnel, Global Business Services, Production, Sales and of course IT.

Finance, like the rest of DMK, is working to become faster and more efficient, aiming to make the figures that the department generates more reliable and transparent to give management a sound basis for decision-making. That makes One Finance an important part of the CFO’s agenda, preparing the department for the future. For the project team, that means digging deep into different processes and systems. “We’re addressing almost everything,” says Mahlstedt. “Settlement models, reporting, planning and the finance organization.”

This may sound abstract but it will have very real consequences. One of the first big goals is establishing an ambitious target milk price to meet farmers’ legitimate expectations for a competitive price for their milk. This target price is oriented towards what is known as the 11-point average that key rivals pay farmers. Management reporting now makes it easy to see whether the Business Units are meeting this target or where there are gaps that need to be closed.

For the first time, One Finance is introducing strategic financial planning. In the future, the department will look further ahead, while needing fewer resources. “Up until now, we planned for the following year and updated it,” says Mahlstedt. “Each year, employees in finance had to update the plan several times.” Strategic finance planning means in the future, there will be a ten-year horizon, medium- term plans that look at the next three years and provide more detail, and also a concrete plan for the year ahead. This is only drawn up once, in the second half of the year.

This system will not only be more consistent, as CFO Dr. Frank Claassen sees it. In the future, managers will also be assessed according to whether or not they are meeting their short, medium and longer term goals.

“Our project is an investment like any other real investment. It’s just that we are not buying a machine or a building, but investing in processes and systems,” says Mahlstedt. Planning began in autumn 2019 and the modernization of finance as a function is due to be complete at the end of 2021. In 2020, the focus is on the four milk Business Units, extending to encompass the Group as a whole in 2021.

One Finance is building on the results of previous projects that are now being integrated into a single coherent system. Right now, the finance division is in a transition year, amid all the changes associated with One Finance. “Ultimately, we’re like a building site: this year, we’re undergoing a core refurbishment, and in 2021 we will expand the attic,” is how Mahlstedt describes it.

One Finance also aims to make the numbers the department generates more relevant. “By establishing the Business Units three years ago, we adapted the organizational structure to meet the demands of the market. But there are several levels of value creation in one business unit, from production to sales, so the current figures often don’t tell us enough.” To gain a clearer picture in the future, plant and sales will be viewed separately as of the summer. This greater transparency will let management take much more targeted action. “Many of the results of this project are going to be integrated into a new management reporting scheme, ready for use right away.” In the long term, all this information will be processed in a new foundation that will reflect the coming project results.”

Mahlstedt and his team have not lost sight of the employees and stakeholders in all the business units, even as they focus on processes, tools and figures. After all, it is the people in the company who have to help implement all these changes. One Finance is a driver to establish one single way of working, not only in the finance division but beyond, too. That’s why Change Management is also an important part of the project, to persuade employees of the value of all these innovations and to win acceptance for this new shared way of working, and anchor it in daily life.

This is working well within the team already, as the crisis triggered by the coronavirus has shown. Just two months after the start of the project, the team members had to start working remotely. Nonetheless, they kept working together effectively, says Mahlstedt. “The conceptual work was tough at first, at least. Overall, though, I’m amazed at the results you can achieve while working virtually.”