DaimlerChrysler: Revving the Finance Engine.

Everything is non-value-added until it's been proven to be value-added," says Frank Sklarsky, vice president for corporate financial activities at DaimlerChrysler. And Sklarsky sees continuous opportunities for double-digit efficiencies all over the place.

"We try to take the approach that there's 90 percent or 95 percent waste in everything we do," he says. When a worker puts a hubcab on a car, for example, Sklarsky thinks, "The only thing that's value-added is the last turn of the bolt. There's no limit to the amount of improvement you can make in any process." But, he hastens to add, not at the expense of quality.

Thus, in its quest to enhance the capability and excellence of its financial processes, Sklarsky says, DaimlerChrysler has "shifted the focus from a transactional, 'factory finance' view to one that offers greater value to our customers. We have to improve the cost or efficiency, cycle time and quality of everything that comes out of the controller's office. And quality means accuracy in both reporting and forecasting."

One operating tip: "Always move from manumation to automation," Sklarsky advises. "Any time there's a piece of information, record it once. Then you can funnel it where it needs to go and let the computer do the reporting."

He uses the acronym BHAG -"big, hairy, audacious goals" - because, he thinks, "It's better to come close to meeting an outrageous goal than to meet an average one." So, for instance, while the controller's office in the former Chrysler Corp.'s Auburn Hills division now can close the books in two days, it's working on closing them in fewer hours, with fewer resources.

That same controller's office has shrunk by about one-third (from about 1,800 people in 1992 to roughly 1,200 today, mainly through attrition). But operational efficiencies have increased productivity. These efficiencies include balance sheet and income forecasting; implementing and streamlining investment planning; consolidating ledger output; launching SAP in Mexico as a pilot program and planning to launch it in the U.S. and Canada next year; a single inventory record initiative that reduces the need for physical inventories; an expense reporting pilot initiative that intends to eliminate paper; and new scorecards within plants to focus on processes. "In the first quarter of 1998," Sklarsky boasts, "we closed the books, filed with the SEC and announced our earnings by April 9."

Peak Performance

Since late 1993 the company has had what it calls a "financial management excellence" initiative. "There are two kinds of improvements: breakthrough and continuous," Sklarsky explains. "Our employees spend about 5 percent or 10 percent of their time thinking about how to do their jobs better. That results in continuous improvement." But to nurture those "Eureka!" moments, the company creates specialized teams that include 30 or 40 members of the controller's staff, IT people and "judicious use of consultants," Sklarsky says. The teams look at investment planning and forecasting, performance measures and other metrics. "As old tracks come off, new tracks come on," he adds. "The teams are asked to reduce cycle times and resources consumed, and enhance the quality of output by double-digit figures."

It may seem like a luxury to have an elite group that's measured against and rewarded on achieving breakthroughs, he notes, but for DaimlerChrysler, "It's paid big dividends"-including, he says, increased credibility for the finance staff. On a scale of one to five, with one being the best, Sklarsky notes, "We've gone from a four to a two over the past several years. Our customers tell us we've shifted from a cop role to a business advice role."

Still, he concludes, "We think that, for as far as we've come, we've probably only picked the low-hanging fruit. There's a lot more to do."