For global confectionery giant Mars, legacy technology meant that the company’s FX dealing processes were at times inefficient and error-prone. Mars needed a solution that would enable the treasury team to deal FX more effectively, freeing up resources to focus on more value-adding activities.
Regional Currency Manager EMEA
Headquartered in the US, Mars Incorporated is one of the world’s largest manufacturers of confectionery, pet food and other food products. With a workforce of over 80,000 people in 78 countries around the world the company achieved annual sales of US$33bn in 2015.
Given the company’s global reach, the effective management of FX is a crucial tenet of the overall risk management function at Mars. However, the company’s legacy technology infrastructure was causing the treasury team a considerable headache.
Challenges were primarily caused by the outdated treasury management system (TMS), which was prone to crashing – especially at critical times such as during the treasury’s routine trading window. The system also didn’t allow Mars to trade multiple value dates simultaneously, which exacerbated the workload for the currency team.
To complicate matters further, the treasury still relied on spreadsheets for around a quarter of its trades. “Unsurprisingly, errors were common,” says Alex Haigh, Regional Currency Manager EMEA at Mars Chocolate. “We had to spend a significant amount of time finding the errors in the spreadsheet and correcting these. Even when everything worked, there was limited straight through processing. A significant amount of time was spent manually managing each trade.”
It was clear that the situation needed to be addressed. The treasury team had already been using Thomson Reuters FXall for deal execution for some time, but much of the functionality remained untapped. The implementation of a new TMS provided an opportunity to leverage the functionality offered by the system more effectively by closely integrating FXall into the new TMS.
“We talked to our Thomson Reuters relationship manager about our new TMS installation and what we wanted to achieve. They then worked seamlessly with the TMS provider, explaining how the FX account structure at Mars worked, which then enabled FXall to be bolted onto the system seamlessly and to our exact specifications,” explains Haigh. “We then vigorously tested FXall within the new TMS architecture using different currency pairs, deal volumes and multiple value dates and found that very few issues occurred. After this we were able to go live – it was incredibly straightforward and seamless.”
The integration of Thomson Reuters FXall into the new TMS has transformed FX dealing for Mars. “We now run the numbers in the TMS and once we accept the hedge recommendation we are able to export these instructions into FXall,” Haigh explains. “Once the deal is executed in the module, confirmation will be received in less than one minute. This will then be sent back to the TMS and the system will be updated automatically, allowing us to instantly run new reports and share these with other departments in the company.”
Enabling the full functionality of Thomson Reuters FXall by integrating it into the company’s new TMS has delivered a plethora of benefits for Mars. Haigh claims that around 12 working days a year have been saved through the efficiency provided by the new set-up and the ability to trade multiple value dates in one transaction. “What is more, we are also saving a significant amount of time by no longer having to spend hours finding errors in spreadsheets – these have been completely eradicated from the process.”
Mars has also posted impressive cost savings. “FXall always enabled us to get best price execution,” says Haigh. “But now we have unleashed its full functionality, we are able to achieve a netting benefit as well when trading multiple value dates. We are saving tens of thousands of dollars a year on spreads as a result.”
More benefits may follow. “Now that we are using FXall to its fullest, it is providing us with a richness of data that we never had before, enabling us to leverage numerous analytical tools and ensure we are operating best-in-class,” adds Haigh. “We are now able to use these insights to build better FX hedging strategies and look at ways to add more value to the business.”