Photo of Rikitoku Masahiro, Daniel Teo Thiam Guan, Bridgestone Asia Pacific Pte Ltd and Minako Stryer, J.P. Morgan.
Daniel Teo Thiam Guan
Bridgestone is a global leader in tyres and rubber building on its expertise to provide solutions for safe and sustainable mobility. Headquartered in Tokyo, the company offers a diverse product portfolio of premium tyres and advanced solutions backed by innovative technologies, improving the way people around the world move, live, work and play. In the Asia Pacific region, Bridgestone locates its regional headquarters in Singapore, overseeing the operations of tyre production and sales facilities, as well as supplying its products across more than over 20 countries in the region.
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MEMCNP and IO solution delivers major benefits for Bridgestone in APAC
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Even as Bridgestone’s business evolved significantly over its 90-year history, its treasury and banking infrastructure in APAC remained decentralised and sub-optimal, and the platforms and systems used across its vast organisation were highly manual. In addition, each market maintained over ten banking providers locally, resulting in disparate payments processes that required extensive and manual reconciliation.
Bridgestone Asia Pacific Pte Ltd had not deployed optimal structures due to the complexity presented by the highly diverse set of markets, currencies and regulatory regimes. Without a centralised treasury structure, Bridgestone was not able to access its large volumes of internal cash in APAC, estimated at around US$900m as of September 2022 that was trapped and scattered across ten markets in the region, to fund strategic projects.
As part of its efforts to accelerate transformation of the company into a “strong” Bridgestone, with the emphasis on becoming profitable across its entire business portfolio as well as executing a premium business strategy through a more resilient supply chain, Bridgestone knew it was time for a major overhaul of its treasury and banking infrastructure.
In October 2020, Bridgestone’s regional treasury team, with strong support from its HQ, embarked on a multi-year treasury transformation, starting with a liquidity centralisation project to consolidate its regional cash with two primary banks to optimise liquidity and returns across ten markets in APAC. The treasury transformation represents a significant milestone for the tyre manufacturer, that boasts a progressive organisational culture.
As a first step towards centralisation, Bridgestone established a multi-entity, multi-currency notional pool (MEMCNP) with new banking provider J.P. Morgan, that connects many large tyre entities across the region in China, Thailand, Australia, New Zealand and Singapore.
Set up in Singapore and expected to be fully live in the fourth quarter of 2022, the MEMCNP will optimise cash efficiency by offsetting excess balances in cash-rich entities with the borrowing needs of cash-poor entities across the region, through several layers of pooling and sweeping structures.
As for the restricted markets of Indonesia, Malaysia, Vietnam, South Korea and Taiwan, Bridgestone will continue to concentrate cash at the country level with another cash management bank for interest optimisation (IO), to maximise yields on cash balances.
Bridgestone’s multi-entity multicurrency notional pool structure
Best practice and innovation
Bridgestone demonstrated rigour, having gone through extensive RFP processes to assess various banking providers and solutions – before settling on an approach to build a best in class treasury focused on centralisation, automation, optimisation and governance. This project aligns with “Economy” and “Efficiency”, two of the eight values of Bridgestone E8 Commitment in staying committed to maximising the economic value of mobility and business operations as well as maximising productivity through the advancement of mobility.
- Cost savings – nearly US$1m in incremental interest income by active cash management.
- Number of banking partners/bank accounts reduced.
- Process efficiencies.
- Increased automation.
- Risk mitigated.
- Improved visibility.
- Manual intervention reduced.
Future proof solution.