Cash & Liquidity Management

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Becoming an e-Commerce Centre of Excellence Following a period of acquisitions, DPDHL Group embarked on a process to centralise, standardise and automate treasury activities, including establishing an in-house bank. As part of its Strategy 2020, group treasury’s aim was to become the preferred banking partner for all its entities.

Becoming an e-Commerce Centre of Excellence
Becoming an e-Commerce Centre of Excellence
by Carola Schmitz Becker, Head of Cash and Banking, Deutsche Post DHL Group


Deutsche Post DHL Group (DPDHL Group) is the world’s leading mail and logistics services group, generating revenues of more than €59bn in 2015. Nearly half a million people are employed across the group, which includes over 930 entities across more than 220 countries and territories. Bearing in mind the diversity and vast geographic reach of the business, treasury has a major role to play in facilitating growth, whilst also responding to changing demands created by emerging business models such as e-commerce, as Carola Schmitz Becker, Head of Cash and Banking at DPDHL Group, explains.

 

Key Points

  • After a period of acquisitions, DPDHL Group embarked on a process to centralise, standardise and automate treasury activities, including establishing an in-house bank
  • Aiming to become the preferred banking partner for all its entities, the Group drew up its Strategy 2020, which includes a focus on e-commerce to increase sales and improve customer experience, as well as on growth in emerging markets
  • Payment service providers were appointed to provide global coverage, and this process is ongoing
  • The author outlines the benefits the centralising programme has brought to the Group’s entire cash management cycle, as well as to payment methods, and emphasises the ability of treasury to make a strategic contribution to the firm and become a specialist partner to the wider business


Earlier centralisation initiatives

Like many treasury functions, we have been through a journey to centralise, optimise and standardise cash, treasury and risk management activities across the group, transitioning from a reactive, sometimes firefighting approach to being a more strategic architect for the business. Starting in 2009, after an intensive phase of acquisitions, DPDHL Group had a decentralised treasury organisation with a variety of systems and processes, which created problems of consistency, visibility and managing costs. We therefore embarked on a project to centralise, standardise and automate our treasury activities by migrating to an integrated, process-oriented business function. This included implementing a centralised in-house bank for intercompany clearing, balance sheet hedging, cash pooling and intercompany financing. The in-house bank also acted as a payments factory for the group, with responsibility for external payments and direct debits.

The centralisation project brought a number of advantages, both qualitative and quantitative. While the qualitative benefits are often easier to identify, such as improved controls and enhanced reporting, we also calculated significant improvements in terms of reduced pressure on local resourcing, and reductions in both foreign exchange conversion costs and financing costs.


From centralised treasury to strategic business partner

With a proven track record in centralisation and process standardisation and re-engineering, we then embarked on a project to become a more specialist solution provider to the business. In particular, by strengthening our internal service offering, we would become the preferred banking partner for all our entities, offering a combination of treasury specialisation and deep understanding of the business needs of our internal partners. As part of our group-wide Strategy 2020, we have one strategic focus on growth in emerging markets, which treasury has supported in a variety of ways. For example, we have consolidated our banking relationships in Africa, reducing from over 100 to five banks, significantly increasing visibility and control over cash and risk in the region. We have also implemented innovative techniques such as virtual accounts to streamline, identify and reconcile incoming payments more easily.

 

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