Planning, Accounting and Controlling Excellence

During the years of global growth, Mann und Hummel, a filter manufacturer based in Baden-Württemberg, Germany, managed its group very strongly via legal entities and regions. Due to its current size and the growing international requirements as well as customers who are increasingly globally oriented, the world market leader had to think about a suitable strategy towards an even better market positioning.

The global business units now take center stage to satisfy customer needs and interests. These units are efficiently provided with products from the global production and logistics network. In addition, they are optimally supported by "enabling functions" and "shared services" which are also managed globally.

Legal entities and regions continue to play an important role on the second control level. This change made it necessary to adapt all financial processes and systems. It quickly became clear that it was also necessary to use this unique opportunity to review all processes and, wherever possible, to simplify and standardize them.

To this end, the comprehensive transformation project PACE (Planning, Accounting and Controlling Excellence) was set up together with consulting partner cbs. The consolidation has simplified processes, increased transparency and significantly reduced the effort required for future SAP rollouts.

Simplify and standardize

Right at the start of their project to transform the business model and the Group management model, those responsible came to the conclusion that the project needed to be expanded. Consequently, it was additionally decided to tackle a simplification and standardization of the processes in the finance area.

Björn Wolf, Vice President Finance and Controlling: "This greatly expanded the project scope and also significantly increased complexity. However, we would do it again at any time, because the opportunity to both redesign the organization and drive forward the necessary standardization in a targeted manner rarely arises in a group of this size."

Mann und Hummel originally came from a structure characterized by legal entities with EBIT responsibility and global business units, i.e. a typical matrix organization with all the associated challenges. The advantage: The company already had a uniform SAP platform. Otherwise, the project complexity would have been many times greater.

The company wanted to focus much more on the market and its customers in order to respond as efficiently as possible to the challenges of the future with the new organization. "In addition, we believe that it was imperative to establish such a finance control model in order to be prepared for the future and upcoming topics such as digital transformation and S/4 migration", explains Björn Wolf, Vice President Finance & Controlling at Mann und Hummel.

Structure and processes

With consulting support and the cbs Enterprise Transformer, Mann und Hummel first went into the ERP system to standardize processes. Two timelines had to be kept in mind, as there were two major triggers for the project: establishing new corporate structures with new processes at the fiscal year change, thus ensuring the standardization of valuations; and introducing new, standardized IT systems and processes, retroactively during the year.

"The project objectives followed two different timelines, but were very closely wired together in terms of content and built on each other", says Raphael Haberstock, ERP project manager at Mann und Hummel.

A separate approach was chosen for the project organization. In the concept phase, the structure was very strongly process-oriented and business-oriented. Those responsible gave a great deal of thought to the chart of accounts as well as to the costing structures, profit center accounting and the allocation behind it.

During implementation, the project team switched to a system-oriented project structure, divided into five subprojects: ERP FI/CO, Planning and Forecasting, Financial Consolidation, Reporting, and Systems Data Architecture. The central point was the changeover to a globally uniform chart of accounts.

First, the new operational chart of accounts was defined centrally by the project team and then had to be gradually expanded to include local requirements and resulting accounts. This was necessary to meet the legal requirements of the countries, for example in Brazil, Mexico, Russia or Turkey.

There were around 40 companies and 16 different languages to cover as part of the chart of accounts changeover. In addition, there was the implementation of New G/L and the replacement of classic Profit Center Accounting (EC-PCA). In addition, New Asset Accounting was already introduced in ERP, also as a preparatory step on the way to S/4.

By switching to a global controlling area, Mann und Hummel can make much better use of its service center structures. This also results in the economies of scale.

In addition to the major changes already mentioned, the costing scheme was also standardized and simplified worldwide. The valuation of raw materials, supplies and merchandise was changed from average prices to standard prices in order to also track purchasing efficiencies. Furthermore, the team adjusted the profit centers and cost centers.

Uniform naming conventions are now in place here, meaning that a blueprint for a company's cost center structure has been defined and implemented worldwide. "This was an important step for our production area because the unified charging methodology ensures that we have the same standard pricing worldwide" explains Haberstock.

Big Bang without loss

The transformation project was successful throughout. The conversion with the help of cbs Enterprise Transformer was carried out in a challenging big bang over a weekend, without any frictional losses. The operational areas did not notice anything from the conversion; in the background, the structures of finance and controlling were converted to standards. Operational business could be continued seamlessly after the conversion weekend.

"We spent a lot of time on communication and change management. That was the key to success," Wolf sums up. But, according to the project manager, this initiative had to come from the project management and be exemplified on a daily basis. The project team had 100 percent support from the board and the shareholders at all times - that was also a success factor.

In the end, everyone pulled together. "That was a team! We managed to get internal business colleagues, our IT and external cbs consultants to work on the common goal completely without boundaries", Wolf praises.

The control model has been implemented and is functioning smoothly, and the reporting system is also running optimally. "We have drastically reduced and simplified some of our processes in the finance area - this is a huge plus", explains Wolf. In addition, the company is now optimally prepared for the subsequent switch to S/4 in terms of structures and processes in the financial area.

The automotive supplier has gained a very high level of transparency through the many standardizations - the global player can now work more efficiently and make more agile strategic decisions. The end-to-end and up-to-date transparency makes the company better: "The new management model enables us to provide reliable information on the current financial situation much more quickly and to respond better to the many challenges of the future", Wolf explains.

The transformation project in figures

A total of 60,000 objects were converted to a new standard. Once Mann und Hummel had almost 25,000 local accounts, this number was reduced to 2200 accounts.

The number of profit centers fell from 3,000 to just 500. Further facts and figures: 45 companies with 87 plants worldwide were affected.

The newly defined, uniform structures were introduced retroactively, so that the system now appears as if the uniform structures had always been in place. In total, more than 300 employees worldwide worked on this project.