The challenges and solutions
Mondelēz’s regional treasury centre covers the diverse markets of both Asia Pacific, Middle East and Africa (AMEA). Its challenges are:
Complexity – geographically AMEA is managed as one region, however there are 20 plus currencies, settlements cycles, regulatory bodies and taxation frameworks with different levels of treasury maturity.
Poised for growth – many factors are leading to growth, namely demographics, unique brands and snacking culture. However, the infrastructure to keep pace is in its early stages, like the use of cash versus digital payments and import/export regulation versus free trade zones.
Capital reforms – infancy stage of capital and currency reforms across the AMEA region. This leads to trapped liquidity and weak working capital metrics.
Stakeholder management – ten to 12 teams work towards delivering growth objectives. However, each is unique and tends to have friction points. Mondelēz’s treasury is at the core and is tasked to bring about harmonisation. It has demonstrated excellence in crafting a treasury charter comprising five key work streams:
- Releasing regional liquidity – in order to support growth and use existing capital in the best possible way, one key area was to mobilise cash across the region and release it to the US. Working with Citi, Mondelēz performed a deep dive across the business to reduce balance sheet reserves and avoid trapped liquidity.
- Embracing digitisation – with a view to simplify and bring speed to the operations across the region, treasury embarked on a journey to enable digital ecosystems across the value chain. Mondelēz was looking at 360° change, including projects such as cash flow forecasting. Mondelēz is in the process of embracing AI and a machine learning tool which has three-way data aggregation powered by robotics and AI for faster DSO management. Embracing digitisation comes with risk and cyber-security is embedded in all internal training, deployment and control framework.
- Proactive working capital engagement – Mondelēz instituted metrics-driven working capital engagement, in line with its cash repatriation strategy. The company implemented optimisation solutions in both payables and receivables. For the first time, markets like Malaysia, Vietnam, and India are now on-boarded on the supply chain.
- Exposure management – given the nature of business and geographic coverage, Mondelēz has large local currency exposures. Developing a strong risk management framework was one of the biggest achievements for the treasury leadership.
- Connected treasury prism – Mondelēz’s treasury partnership with global, regional and local stakeholders has been a key cornerstone of this effort. It has successfully leveraged a connected prism of global growth strategies to align and accept the transformation. This prism helps it connect internally across tax, compliance, accounting, transfer pricing and local finance operations as well as externally with regulators, banks, auditors and other functional teams.
Best practice and innovation
Mondelēz has over-achieved its goals and its journey demonstrates many best practices that are truly inspirational in the areas of:
- Technology leadership.
- Leading internal excellence.
- Managing external turbulence and ownership.
- Striking partnerships.
- Clear communication and multi-tasking culture.
Key benefits
- Unlocking value for earning per share (EPS).
- Improved working capital metrics.
- New cutting-edge technology deployed.
- Exposure management improved.
“One of the challenges for treasurers is that while we have excellent insights about our own business, our channels of information about the wider markets are far more limited. We are not looking for banks to sell products and services to us: we want them to understand our needs, pain points and aspirations and connect this with their wider market knowledge to be able to present solutions that are specific and yielding value to us,” says Ramana Konda, Director, Treasury AMEA Region.
