Photo of Christian Forst, adidas Group and Meg Coates.

This solution extends this company’s global cash factory programme into Russia/CIS. The solution implemented includes RUB cash pooling, standardised payment processes, an optimal bank account structure and SAP cash management, bank communication manager, IHB and bank account management (BAM) tool.

The challenge

adidas Group has been rolling out a global cash factory programme since 2011. Approximately 75% of the countries, which contribute to the total group net sales of around €17bn, have been approached and staffed with the respective treasury applications.

In order to further increase the degree of centralisation, Russia/CIS came in scope. Before the cash factory rollout programme to Russia was launched in 2014, adidas sought to overhaul its Russian rouble (RUB) cash management and payment processes. The following issues gave incentive to the project:

• Inefficient and decentralised payment process.
• Decentralised RUB cash management processes.
• Lack of transparency of bank accounts and balances.
• Inefficient use of liquidity.
• In addition, transaction volume was spread over several banking partners, so economies of scale could not be taken advantage of and there was also no clear bank-country-currency allocation.

The team identified four objectives before beginning the project:

• Increase of centralisation by automatically controlled RUB cash pooling.
• Increase of transparency on all RUB bank account balances in real-time to operate a daily, centralised and global cash management to enable efficient liquidity use.
• Standardised, integrated and centralised RUB payment process.
• Optimisation of bank account structure in Russia, based on standardised and harmonised global contracts and documentation.

The solution

After the bank selection process, the project comprised three key phases:

The implementation process was centrally coordinated between adidas Group and its banking partner, involving the setup of a centrally managed RUB account and pooling structure, a centrally and globally managed eBank administration, and the implementation of new technology (eg host-to-host connection).

“This great award, is a great achievement of the Finance Treasury Community and our whole Implementation and Finance Team. We are all very proud of this great team result. The clearly defined project objectives, innovative approach and a strong interdisciplinary project team, which combined business, technical, process and project management skills were the key of this success.”

A holistic technical treasury management approach was implemented. This included:

• Introducing SAP cash management for visibility, transparency and automated RUB cash management and setup SAP bank communication manager, SAP IHB and bank account manager (BAM) tool.
• A centrally managed cross-company RUB account and pooling structure was established. Domestic and non-resident RUB accounts were embedded in a domestic and automatic end-of-day zero balancing pool with a two-way sweep structure.
• The pooling was supported by an underlying loan. The intercompany pool and the underlying loan managed via the SAP IHB and hence an automated interest calculation is setup. The top RUB non-resident account is managed centrally by adidas’ group treasury.

Best practice and innovation

The innovative approach revolutionised adidas’ global RUB cash management, liquidity and payment processes. In particular, the highly automated and standardised payment approach embedded in a cross-company RUB pooling solution gained global cash visibility and optimised liquidity usage. The implemented payment factory combined a shared services organisation with an IHB, a model which is quite unique.

This complex treasury structure consolidates payments with efficient funding, concentrates company RUB cash at the top level and disburses funds through sophisticated processes, which have been designed to minimise bank fees and reduce process time. With the implementation of standard XML format for all Russian payments, country-specific requirements could be easily embedded in a globally harmonised process, in which 60 countries have already been set up globally.

“The key success factors of the project have been the clear defined project objectives and a strong interdisciplinary project team,” says Christian Forst, Senior Manager, Group Treasury.

“The project combined business, technical, project management and process skills and was supported by senior management, which brought the required attention in order to implement the solution but also the huge change management process. Based on our information the solution we put in place is state-of-the-art as adidas is the first corporate in the German DAX to have implemented this innovative and sophisticated cash management and payment factory approach in Russia.”

Key benefits

• Operational efficiencies.
• Greater control.
• Cost savings.

Key takeaways

The solution will help create real-time visibility of global RUB cash positions to enable an efficient liquidity usage, while it will help evolve foundations and provide insights – the cornerstone of the Integrated Performance Management. The key points are:

• Centralisation of inefficient and decentralised payment process as well as decentralised RUB cash management processes.
• Transparency of bank accounts, balances and processes.
• Efficiency of business processes by implementing standardised and global harmonised cash management and payment processes.
• Reduction of bank charges due to optimisation of bank and RUB account structure.