Finance Effectiveness Benchmarking Report

Start adding items to your reading lists:
or
Save this item to:
This item has been saved to your reading list.

 

How Devro’s CFO drove rapid transformation across a multinational company 

The meat goods manufacturer collaborates across teams to reduce costs and bolster its differentiators: high-quality products and superior customer relationships.

 

 

What defines a CFO as a business partner?

Increasingly, finance is being called upon to provide the business with insight and commercial support, and to serve more generally as a trusted partner. But there’s a considerable debate regarding what this means when put into practice.

Questions include: Where should the CFO set the vision for finance, and their own personal aspiration? Will the CFO truly serve as the CEO’s right-hand person? Should finance be at the center of helping the business execute its strategy? Is finance driving change, not just for finance, but for the entire business? There are not many CFOs that can answer “Yes” to all these questions, but there is one who can.

Devro plc is the world’s leading supplier of collagen casings for food, used by customers in the production of sausages and other meat products. The company is headquartered in the UK and has manufacturing sites there, in the US, Netherlands, China, the Czech Republic and Australia. Devro has over 2,000 employees worldwide and 2017 revenues of £256.9 million.

The challenge: Focusing on differentiating capabilities

In 2018 Devro’s newly appointed CEO, Rutger Helbing, articulated a refreshed and clarified strategy for the company. This strategy is not academic—it requires an absolute focus on what differentiates Devro in its market, as well as an investment in the capabilities that drive that differentiation. But above all, it requires that the organization tackle the Must Win battles quickly. In the past, the funds for such investment simply hadn’t been available. But Rutger turned to his recently hired CFO, Jackie Callaway, to make the necessary changes happen.

To begin, Jackie tested to see whether or not there was room to reduce operating expenses and at the same time reduce cost. The first step came in the form of a quick benchmarking exercise, which examined the total sales, general and administrative (SG&A) cost. This high-level view confirmed the “size of the prize,” and proved that there was a significant opportunity for Devro to realize cost savings which could be reinvested in high-priority strategic initiatives.

Creating ownership for the change

Jackie and Rutger wanted to act fast. Jackie recognized that a robust approach to cost savings required external help, and they would have to make sure that the solution was optimized and, crucially, that all the senior executives felt included in the design process and were fully committed.

“We pulled a cross-functional team together, which was really important,” Jackie explains. The team included representatives from commercial, supply chain, product development, HR, finance and IT. “It was multi-jurisdiction as well, so we didn’t just take people from head office. They came from all around the world, 12-15 high-potential people from across the group.”

Commitment in a few short weeks

Utilizing a series of surveys, strategic discussions and management interviews, Devro’s top differentiators quickly became clear. Rather than diffusing efforts across all areas, Devro would focus on its high-quality products and superior customer relationships. Company activities were then analyzed to clarify what supported this differentiation, which were necessary to keep the lights on, which were “table stakes” activities and which were non-essential and could be eliminated.

The evidence and thinking was solidified in an intensive and carefully planned three-day workshop. The time investment from Devro was significant, bringing together senior executives from around the world.

 

See how they’re doing it
Modern finance is different for every business

Devro

Dixons Carphone

Elsevier

Grupo Colón Gerena

KAYAK

KPN

Leonardo

The UK's Royal Air Force

“The organizers claimed they could get three months’ work done in three days, which made us all smile,” said Jackie. “However, it turned out to be true! Start-to-finish the process took seven weeks, and that speed was essential.”

 

The plan in action

Devro is currently executing on the strategy it devised during this transformational process. In the area of product quality, Jackie explains that product excellence is about ways of working, but it’s also about investing in product development. For instance, adding more category management and product development roles.” In terms of cost savings, she says, “where we’ve managed to find most of the savings is really in back-office support services that you can bring into a shared service.”

Devro is also working to strengthen the intimacy of its customer relationships. “We innovate with our customers and make them as efficient as possible, because we want them to be successful,” Jackie says.

What enabled early success

Having defined the plan, the team worked hard to communicate a vision of the future to the organization, with the CEO acting as a key figure in the process. The project has quickly moved to execution, maintaining the speed and momentum that was established at the outset.

Whilst many CFOs would feel comfortable supporting and advising major strategic change program, how is it that this CFO ended up in the driving seat? “The CEO has to invite you into the process, and Rutger, as the former CFO, was comfortable with that,” says Jackie.

She also gives credit to her team. “You have to have a finance team that gives you complete confidence, so that you can invest the time and your own energy,” she says. If a company’s transactional, compliance and control processes are not functioning well, the CFO is unable to rise to the challenge.

How talent grows: spending time in the business

And how should CFOs look at building talent for the future? “There is huge value in working with different cultures in different countries and quite difficult circumstances. It’s good to be out of your comfort zone, and work outside traditional finance on the way. For a finance person to be a true business partner you need to spend time in the business.”

Rutger, Devro’s CEO, started this program by borrowing inspiration from Jack Welch’s quotation “You’ve got to eat while you dream”—meaning that the company must deliver on its commitments, while developing and implementing a long-range strategy and vision. The vision is there now, and is certainly being delivered.

 

This profile is part of PwC’s 2019 Finance Effectiveness benchmarking reporting. PwC would like to thank CFO, Jackie Callaway for sharing Devro’s story.

 

Contact us

Robert Bishop

Consumer and Industrial Products & Services Finance Leader, PwC US

Christopher Dimuzio

Principal, Finance Transformation Leader, PwC US

Ed Shapiro

Director of Finance Effectiveness, PwC US

Brian J Furness

Global Consulting Finance Leader, Partner, PwC United Kingdom

Gavin Hildreth

Finance Benchmarking Lead, PwC United Kingdom

Follow us