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Saturday, September 1, 2012

CFO SPOTLIGHT – Paul Adcock, Pacific Business Unit of Dr. Pepper Snapple Group


Paul Adcock, ACMA, CIM, is vice president - finance, for the Pacific Business Unit of Dr. Pepper Snapple Group (DPSG), a publicly traded international distributor and manufacturer of Dr. Pepper, Snapple and 48 additional brands of well-known specialty beverages. DPSG's Pacific Business Unit, based in Walnut Creek, California, supplies these products in California, Nevada and Eastern Washington State. From 1989 to 2008, Paul held a variety of senior international finance positions at Cadbury Schweppes, plc, a leading British company which was the parent of DPSG prior to separation of the businesses in 2008.

As Vice President - Finance, for DPSGs Pacific Business Unit, he is the lead finance executive responsible for the company's direct store delivery business in California, Nevada and Eastern Washington State. The unit drives about $500 million in revenue and has 21 facilities including two manufacturing operations. In the following interview, Paul discusses his role in this liquid empire and how he helps the company remain at the leading edge of profitability and operational efficiency.

Q. Briefly describe your company, its work and your overall role.

A. Since we became a publicly traded company in 2008 we've been very focused on consolidating and building efficiency into our field operations. The DPSG business is divided into three areas emphasizing either a product or geography. These business segments are: Beverage concentrates (mainly the Dr. Pepper business distributed by Coke & Pepsi bottlers and Fountain); Packaged Beverages and Mexico. Our business unit is part of the Packaged Beverage segment which includes our Warehouse Direct sales to companies such as Wal-Mart and the Direct Store Delivery (DSD) where we deliver directly to our customers stores, whether a Wal-Mart or the local mom and pop store on the corner.

My primary area of responsibility is in direct store delivery where we go to retail customers like Safeway, take orders and deliver either next day or within 48-hours maximum. My reporting relationship is a dotted line to our Business Unit General Manager for the Pacific Business Unit, where all of my day-to-day interaction is focused but I report administratively to our finance team at headquarters in Plano, Texas.

Q. You said you are focused on operations. Are business processes a concern? Do you feel you should reengineer processes or are you building them from scratch?

A. This company spent a lot of time acquiring smaller, mostly family owned bottlers in the last few years to secure our route to market for our brands. In each of those transactions, we encountered different processes and systems and found we very much needed a single ERP system that would speed integration of all those legacy businesses. We recently implemented that system and its positive impact on efficiency was felt almost immediately driven by standardized charts of accounts and common understanding of core financial processes

In 2012, we launched a Rapid Continuous Improvement (RCI) initiative with a goal to develop a continuous improvement mindset at DPSG. The objective here is to eliminate activities which do not add value for our customers. Eliminating waste in any process or system frees up important resources - people, time and money - that can then be invested back into the business. To drive this mindset through the organization we have held over 160 Kaizen events throughout the business. These Kaizen events bring together a cross-functional team that uses techniques such as value stream mapping and cost benefit analysis to eliminate non-value added activities, be it in manufacturing, distribution or administration.

No individual makes all the difference or all the decisions in this process, the team owns the solution and results are tracked over time This initiative has had a very positive impact on all of our financial and operational processes. For instance, using the Kaizen process, we have been able to compress production change-over times, improve quality and delivery by lowering inventories while reducing out-of-stocks and, as a result, reduce the amount of warehouse space we require.

Q. The nature of your business requires a distributed workforce. Do you have a mobile strategy that keeps people in the field moving product efficiently?

A. Our delivery teams currently use hand-held RFID devices and that has worked fairly well for a number of years. However, we recognize that smartphones and tablet devices are continually evolving and are likely to offer very effective alternatives for delivering more of the kind of data our teams in the field need. I am leading exploration of these alternatives right now by piloting the use of tablets by our sales teams. My goal is to get us to the next level where we give all our sales people tablets they will carry with them. What we want to do is link their devices to our ERP data warehouse and then a full load of relevant information will be delivered overnight on each client they are scheduled to see the next day. That would include standard things like most recent purchases but the real opportunity is to provide real-time sales opportunity updates; for example new promotions, opportunities to fill product voids and checking merchandising execution against our agreed standards (including taking pictures as proof points).

Q. How much time do you personally spend on accounting, tax and compliance versus strategic input and thinking?

A. We've been able to get our core accounting functions honed to best-practice levels. For example, our monthly close takes only three days. Tax is managed at our headquarters in Texas. So, my focus has been on growing the business and refining our operations in the Pacific Business Unit. We provide operations leaders with details of trends, analysis of profitability by customer and KPIs from labor costs to average selling price and our ultimate aim is to help them understand their businesses better.

I personally have spent a lot of time looking at ways to better collect and manage data. I'm also focused on improving upfront data collection and am working with our IT and revenue management teams to create a new front-end for collecting promotional spend data and making it easier to access, review and post-analyze. Earlier I noted that we aspire to be an on-demand shop for data so we are looking at business intelligence dashboards and other SaaS applications that can make the on-demand approach a reality across our enterprise.

Q. Have you led a major transaction for DPSG?

A. I was very involved in the IPO and it was a successful project. I was at Texas headquarters at the time reporting to the CFO in my previous role as Controller at Cadbury Schweppes Americas Beverages. On the IPO I worked with the investment bankers to build a model that would establish our 10-year expectation of profitability by brand and by route to market including cash flow, earnings per share and other key metrics. I had to achieve agreement on my projections from our commercial organization as well as from our parent company in London. I also worked on the Management Discussion and Analysis portion of our filing and the restatement of accounts from IFRS to US GAAP. We listed our stock in May 2008 just before the market collapsed and our shares suffered like everyone's. But we've since rebounded and are up about 80 percent from our IPO debut.

Q. What other functions are you responsible for?

A. I have payroll for the Pacific Business Unit which is a real challenge in California. Our objective is to move away from being a transaction oriented organization to a value organization and so, to do that in payroll I am going to lead a project where we explore both business process and technology to see if we can fully automate our timekeeping. This will enable us to have more timely and granular data for use in better managing day-to-day staffing levels in the distribution building, as well as make our tax bills and payroll more accurate.

Q. Do you feel your finance organization priorities are aligned well with the company's objectives and priorities?

A. Yes. Our focus is on growing sales and profits and at the same time ensuring compliance and safety. We're pushing the organization forward to leverage technology and to get more timely and insightful financial information. My organization identified opportunities to increase margin, primarily through better efficiency and also through leverage on price negotiations. One of our goals in this is to decrease time spent with data and paperwork in order to increase customer face time for our sales team. In compliance and safety, we audit operations to help management see what is happening on the floor. This helps to reduce losses due to injury or inefficient handling of product.

Q. Has budget constraint factored into your technology purchasing decisions?

A. Not really. We knew when we became an independent company that we would need to invest heavily in IT infrastructure so we built it into the plan. The ERP project unfolded as we had planned and provides a great platform for the business. 

Q. Describe your relationship with James Fox, your business unit general manager, as well as with your executive team. How do you go about developing these and other key relationships?

A. For me, it's all about being open and honest. For James it's all about trust and making sure he can bounce sensitive or complex ideas off of me and get meaningful feedback and appropriate discretion. With the other executives trust is also key and the best way to win trust with them is to display excellent performance. For my part, I like to act in ways that are both transparent and inclusive. When a project begins, it's a journey and I like to bring the executive team on the journey with me.

 


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