International Flavors & Fragrances Inc. (IFF) creates, manufactures and supplies flavors and fragrances for the food, beverage, household products and personal care industries. The company has 29 manufacturing sites around the world that support the production of over 36,000 products. Its manufacturing facilities are located in the United States, the Netherlands, Spain, Great Britain, Argentina, Brazil, Mexico, Australia, China, India, Indonesia, Japan and Singapore.
IFF conducted a global benchmarking exercise with a consulting company that revealed cost and operational inefficiencies, with centralization recommended as the solution to save costs and improve processes globally. They initially considered establishing an in-house regional shared service center in Europe, but factors such as high set up costs, the complexity associated with running shared service operations in-house and the lack of internal alignment went against such a move, and thus sought the help of an external service provider.
IFF selected TCS based on an advisor-led competitive bid process that evaluated process capability (including language skills), transition expertise, continuous improvement practices, technology capability, culture and pricing.
The scope of the engagement covered most finance and accounting processes such as:
- Procure-to-Pay including invoice processing and payment proposals, vendor master data management and vendor helpdesk services
- Order-to-Cash including cash management, collections and customer master data management
- Record-to-Report including chart of accounts creation, cost center maintenance, journal entry processing, account reconciliation, intercompany confirmation and reconciliation, closure of books, regional reporting and SOX (Sarbanes-Oxley) controls
Throughout this engagement, we used TCS' FORE™ transformation methodology and the domain knowledge from our Centers of Excellence to suggest ideas for standardizing and improving the client's finance and accounting operations.
Our solution enabled the client to achieve significant business value including:
- Reduction in unapplied cash
- Significant reduction in intercompany differences
- Substantial improvement in collections volume along with reduced overdue balances
- Introducing an account reconciliation health indicator along with other process improvements that led to greater than 80 percent reduction in aged account reconciliation items
- Improving and automating intercompany reconciliations reduced the Out of Balance amount by more than 90 percent
- Implementing the journal entry workflow helped achieve better SSAE 16 controls
- Standardizing the chart of accounts helped identify unused accounts which accounted for 45% of the total number of accounts
- Streamlining the collection mechanism led to improved cash flows and better cash flow ratios
- Supported the implementation of AutoBank (the Hanse Orga software solution for SAP for automating the cash application process) tool that reduced manual cash application and improved the post collection process of applying receipts
- Significant operating cost savings by moving of all transactional and financial reporting work offshore and managing it effectively
We now support the company's finance and accounting operations that serve its businesses in 26 countries spread across North America, Latin America, EMEA, and Asia-Pacific, through our delivery locations which include both offshore as well as near shore locations namely Chennai, Budapest, and Hangzhou.