Harnessing the Expenses Burden

through Efficient Cost Management

Strategies

(How can I reduce costs

continuously?)continuously?)

1

Victor GuevaraGroup Finance Manager

Procter & Gamble

guevara.v.1@pg.com

au.linkedin.com/in/victorguevara/

These are the personal views of Victor Guevara and not of his employer

Agenda

• Introduction

• Loss Elimination as a Culture

• Preparation

• Analysis

• Execution & Tracking

• Some examples

2

Victor GuevaraGroup Finance Manager

Procter & Gamble

Australia/New Zealand

Positions Held & Dates

2002 Tax & Treasury Analyst, Australia & NZ

2003 Financial Analyst, Customer Business Development, Aust & NZ

2004 Competitive Intelligence Leader, Australasia, ASEAN, India

Education

University of

Sydney,

B. Commerce –

Accounting, B. 2004 Competitive Intelligence Leader, Australasia, ASEAN, India

2005 Senior Financial Analyst, Skincare, Australasia, ASEAN, India

2006 Plant Finance Manager, Somersby & Scoresby Sites, Australia

2008 Group Finance Manager, Market Operations, Aust & NZ

2010 Group Manager, Corporate Finance and Innovation Diamond

Leader, Australia

2012 Group Finance Manager, Customer Business Development,

Australia & NZ

3

Accounting, B.

Chemical

Engineering (Hons),

1997-2001

CPA (Australia)

External Interests

Captain, Australian

Army (Active

Reserve)

MBTI: INTJ

About Procter & Gamble

• Founded: 1837 Market Cap: 212 Bn (USD)

• Employees: 121,000 Revenue: 84 Bn (USD)

• Operations: 70 countries Brands: ~300

4

Loss Elimination as a Culture

• Establish need

• Establish target

• Analyse

• Execute

• Track

• Start again

5

Why do we need to cut costs?

� Loss elimination exercises cannot be seen as simply a finance project, otherwise it won’t be taken seriously

� In order to engage the organisation to cut costs, there needs to be a clearly articulated rationaleneeds to be a clearly articulated rationale

� The tone from the top needs to be positive

� Without this, the program can never be brought to life

6

Benchmarking

� Benchmarking is the solid basis behind which we can set the

right targets and glidepath

� Without a solid basis, teams will not be (as) engaged to deliver a

random target

� Benchmarking can be internal and/or external

� Benchmarking should involve financial and non-financial metrics

7

Now what do we do?

�“Wow, that’s clearly a stretching target. What

are we going to do now?”

�“That looks impossible. No way in hell”�“That looks impossible. No way in hell”

�How do we get started? How do we get

organised?

8

Current State

Current

Loss

Opportunity

Total Loss

Opportunity

Define the lossesDefine the losses

All losses above the ideal are recoverable, the only issue is

when and how much.

LOS

SE

S

9

Ideal State

(ex. Regulations)

Future Loss

Opportunity

Zero State

Future State

Value

added

Ideal CostCostLO

SS

ES

Brainstorming phase

�Define the scope

�Define the teams / themes

�Define the ideal state for each area

�Begin loss data collection

10

Decision phase

�From the list of ideas, risk adjust and rank losses

�Decide which projects to execute

�Assign project owners, timelines, targets�Assign project owners, timelines, targets

�Track execution

�Fix execution - if off-track

11

Example of Pareto principle

120

140

160

180

200

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oss

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on

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ject

1,000

1 ,200

1 ,400

1 ,600

1 ,800

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$ L

oss

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on

Supplier

Q ualifica tion

M Q M /JO E

12

-

20

40

60

80

100

1 6 11 16 21 26 31 36 41 46 51 56 61# o f P ro jects

$L

oss

Eli

min

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on

per

pro

ject

-

200

400

600

800

1,000

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$ L

oss

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on

75% of lo ss

e lim in ation

Tracking example

13

What happens if a project

becomes off track�Fix it – understand the root cause

�Adjust – CPS may have been too aggressive

�Make choices to heavy up resourcing or investment to accelerate

�Ensure we risk adjust the portfolio

14

What Why?Why?Why?

Why-Why-WhyInstruction:

Use Why-Why-Why analysis to identify underlying causes to your problems.

Key

Barrier(what is getting in our way from

meeting the target listed above)

Renewal

� Remember – Loss elimination is a culture

� Once the key projects are on track and some have been delivered, we need to start expanding the loss portfolio

� We celebrate our progress, and move onto the next part of our journey

� The more we look, the more we find. The journey is continuous

16

Final Thoughts

�Loss Elimination must be part of daily culture

� It starts with a strong rationale, benchmarking and portfolio of ideas

� It requires strong tone from the top and support from all multi-functional team members

� It requires decisive choices, strong execution and tracking

17

Any final questions?

Victor GuevaraGroup Finance Manager

18

Group Finance Manager

Procter & Gamble

guevara.v.1@pg.com

au.linkedin.com/in/victorguevara/