Cummins Business Services Review for 2006/07

Cummins Business Services
Review for 2006/07
I am Cummins. I am CBS.
I know what my company and my business group stands for.
I’m ready to carry out its mission of returning value to our
customers, shareholders and communities. I bring my own unique
perspective to work every day, as do my colleagues around the
world. Together we create a rich diversity of cultures and views.
I understand that my company’s vision includes all the communities we serve around the globe, not just my own. And I believe
my success will contribute to the success of everyone we serve,
everywhere. I am Cummins. You can depend on me.
Table of Contents:
Letter to Our Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Loyalty Profit Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
CBS Goal Tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chairman’s Six Sigma Quality Awards 2006 . . . . . . . . . . . . . . . . . . 7
CBS Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
CBS Global Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
CBS Key Locations and Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . 9
CBS Regional Leaders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
CBS Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Unite Work Transferred Into CBS . . . . . . . . . . . . . . . . . . . . . . . . . 10
CBS Billing By Business Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
CBS Gross Expense By Region . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Services as Percentage of AOP . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Service Definitions and Vendor Partners . . . . . . . . . . . . . . . . . . . . 13
“We enable success for our partners by providing dependable and high quality business services.”
Letter to Our Customers
In last year’s annual report, I spoke with enthusiasm about all the good
work going on at CBS and of my optimism for 2006 and beyond.
I proclaimed that 2006 was going to be the Year of the Customer.
I was wrong – at least on one count.
When service is your business, EVERY year is the year of
the customer.
Around Cummins, we say “we do what we say we will do.” As part
of Cummins global re-branding strategy in 2006, we reinforced the
concept of dependability as our key brand attribute. So, let me add a
CBS twist to the Cummins’ brand promise:
I am Cummins. I am CBS. You can depend on me.
The date on this annual report says 2006 – and while I will spend
some time on last year, this report is just as much about what we are
doing in 2007 – another year of the customer.
Wowing the customer
CBS (as is all of Cummins) is taking a very disciplined approach
on the journey to service excellence by using a framework that starts
with the customer perspective: “Through the Lens of the Customer”
(TLC). TLC challenges employees to view processes, communication,
customer support, work space – in other words – everything – through
the lens, or viewpoint of the customer. We developed the four service
standards you see on the front cover: Reliability, Responsiveness,
Relationship, Resolution, which will become part of our service culture
DNA.
The first TLC training step was taken in December 2006 when
40 Cummins employees, including 14 from CBS, took part in a
“Train the Trainer” session. This initial group will serve as employee
trainers and Customer Support Excellence ambassadors for CBS
globally. Training for all CBS employees is scheduled to be introduced
throughout the globe during 2007.
We are also working on a process to track and measure process
performance - an offshoot of our Service Level Agreements (SLA).
And our customer excellence survey team has a goal of surveying all
services at least twice a year to measure satisfaction and capture data
that CBS can act upon.
Leveraging partnerships in service delivery
Our internal voice of the customer work told us that our customers
were very interested in reducing their CBS costs, particularly those
driven by employee behavior. Our billing system provides hard data
on costs, drivers of usage and potential volume reductions. To leverage
that data, we created the Usage Management Team (UMT), a
cross-business unit initiative supported by several members of CBS
that will work with the business units to help them better understand
the CBS billing process and to promote education on
customer-driven consumption.
CBS has committed to leading initiatives that will result in $3 million
in reductions for the business units.
Our accounting services team in 2006 made progress in its
collaboration with the business units to create an accurate annual
operating plan (AOP) for 2007. CBS also created a forecast process
to enhance financial reporting. In addition, accounting services used a
cross-functional team to improve supplier payments and intercompany
accounting processes.
In 2007, we plan to create a team to complete CORE in 2008 and
track progress monthly. The CORE finance Oracle strategy is to have
one global instance or database to support the US and Europe;
the 2007 goal is to implement in China, Southeast Asia,
South Pacific and Africa.
Recently, CBS announced the expansion of our partnership with
KPIT Cummins, which will allow KPIT Cummins to begin performing
finance and accounting services for CBS, beginning this year.
The transition of these services from CBS to KPIT Cummins will
begin in India and Australia.
Loyalty Profit Chain
“CBS leads the way to shareholder value.”
CBS
Internal Service
Quality
Customer
Satisfaction
Employee
Satisfaction
Customer
Value
Employee
Retention
Customer
Loyalty
Employee
Productivity
Revenue/
Profit Growth
Employee
Service Quality
Shareholder
Value
CBS Goal Tree 2007
“What’s on YOUR badge?”
Swati Rath volunteered to construct houses for the Jimmy Carter Work Project 2006.
“ One area of focus in 2007 will be to certify more than 50 percent of CBS leaders as Sponsors.”
Infusing quality into every process
In 2006, CBS exceeded both our annualized and current year
Six Sigma savings targets for the year. Our total annualized savings in
2006 were $8.01 million U. S. dollars against a target of $7.4 million.
CBS successfully closed more than 16 customer- focused projects in
2006 that benefited both CBS and our internal Cummins customers,
and we anticipate that trend to continue in 2007. Not only is CBS
working with our internal customers to reduce their CBS service
consumption and improve processes, we are also working to identify
good projects that will positively affect Cummins external customers.
We also had a record number of active projects in 2006, with more
than 90 projects closing green. One area of focus in 2007 will be to
certify more than 50 percent of CBS leaders as Sponsors. The CBS
Black Belts will also be communicating with and mentoring all new
belts to ensure good progress is made on active projects.
Our Global Project Management Group expanded the number of
functional business projects from two in 2005 to 12 launched in 2006.
Before late 2005, the group managed only IT infrastructure projects
for CBS IT, Corporate IT and various business unit IT organizations.
Using trained professional project managers to manage and implement
large CBS business initiatives has resulted in faster implementations
and systems that meet functional requirements.
Supporting technology needs
2006 saw the conclusion of another successful Power Sweep.
Power Sweep II raised the bar, delivering even more machines to
nearly double the locations in the same amount of time as Power
Sweep I. At the end of the project in November, the team had
delivered and installed 30,000 machines worldwide.
An effort to improve the current email and Sametime environment is
underway in 2007. CBS will partner with IBM to provide hosting and
support for these two popular collaboration applications. The migration
to the new environment is expected to deliver better technology
efficiency for Cummins and improved performance and greater
productivity for users.
CBS IT has recently signed contracts with two providers (Verizon and
AT&T) for state-of-the-art data centers for the Asia-Pacific and the
Europe Middle East and Africa (EMEA) regions, respectively. Cummins’
growth in the Asia-Pacific and the addition of China joint ventures to
the infrastructure prompted CBS to secure the space in Singapore,
while the EMEA center will relocate within the U.K. from Peterborough to Redditch. We ran out of capacity at Peterborough and the
infrastructure could no longer support what was required to provide
excellent computing services for our customers. These two centers
are the latest developments in CBS’s comprehensive global data center
rationalization project, which will ultimately result in four regional data
centers around the world.
During 2006, CBS IT worked closely with the Enterprise Risk Management group and ran three major projects on disaster recovery, with
the intention of reducing Cummins’ exposure to a disaster at one of its
major computing locations or in its network infrastructure. A Six Sigma
project was run to select a more robust network technology that could
eliminate single points of failure; this led to the selection of Multiprotocol Label Switching (MPLS), followed by several similar projects to
eliminate single infrastructure points within the CBS IT data centers
and to prepare CBS IT to support business unit applications that they
will want protected.
We plan to complete the MPLS deployment across the globe and the
Infrastructure project during the early part of 2007. The processes
and technologies developed for existing data centers will be replicated
in the new Redditch and Singapore data centers. CBS IT is working
with the business units to prioritize critical business applications that
will take advantage of the new disaster recovery offerings within the
service level agreements.
Children of CBS Stockton
employees learn the ropes in Travel Services
“A world map tool will now be available to Cummins’
management, enabling Cummins’ personnel traveling worldwide to be instantly located, if needed.”
Helping employees
Cummins serves customers in more than 160 countries, so global
travel is part of many employees’ jobs. Travel always involves an
element of risk, but in today’s world it is especially important to
manage that risk to the best of our ability. Until a few years ago,
Cummins worked with as many as 17 different travel agencies across
the world as Cummins’ business expanded globally. Travel data was
minimal, and in the event of an emergency it was difficult to track
employees worldwide.
In 2006, Cummins moved to a single, global travel agency that could
not only measure up in terms of economics, but also capability,
systems and emergency reporting. Cummins used Six Sigma tools
to develop the RFP process and sign the best agency for the job.
A world map tool will now be available to Cummins management,
enabling Cummins personnel traveling worldwide to be instantly
located, if needed.
CBS’ benefits call center in 2006 added some additional resources and
processes to gear up for new initiatives slated for 2007, namely using
the MyCummins portal to house benefits documentation and
holding periodic informal awareness sessions with Human Resources
employees on CBS services and processes.
CBS partnered closely with the OneSource team in 2006 to consolidate
numerous payroll systems globally and to establish regional payroll
providers in many areas. Consolidation work in India, the South
Pacific, South America and China have resulted in significantly fewer
payroll systems for Cummins globally. Benefits include fewer vendors
to manage, significantly improved internal controls, more robust
platforms and disaster recovery processes and commonization of
processes. This work continues in 2007 as part of the OneSource
rollout. Approximately 60 percent of the global workforce is now
paid through ADP as a result of vendor transitions in the U.S.,
the U.K. and South Pacific regions during 2006.
The pension conversion to our new outside supplier, Hewitt, went live at
the beginning of 2006, and both pension and the Retirement Savings
Plan (RSP) have been running smoothly since. At the end of the year,
Hewitt began posting Cummins RSP and pension summary plan
descriptions on the Your Benefits Resources website, where
participants can easily access the information on a self-serve basis.
CBS and Hewitt will continue to work on documenting pension and
RSP processes for further automation, which will not only increase the
speed at which those calculations can be done, but will also decrease
workflows and call volumes, increase web usage and ensure
calculation accuracy.
CBS Logo Lockup
The CBS logo lockup, which is the official term for placing the
Cummins “C” next to the words “Business Services, “ comfirms our
status as a bona fide business group within Cummins. With that
recognition should come an even greater commitment on our part to
lead to the way to shareholder value.
Notes from all over
It is difficult to select 2006 highlights from our many accomplishments,
but below are a few memorable ones from around the world in 2006:
India – UNITE process completed for THL and TCL (two JVS) and
initiation of monthly customer site visits for interaction and issue
resolution.
Mexico – 13 Six Sigma projects completed, customs reconstruction
process completed for Engine and Filtration businesses, extended accounting support for Ariba implementation.
CBS competed against the Corporate and Finance groups
in the Columbus, IN Diversity Olympiad.
“CBS will be partnering with IBM to provide hosting and support for email and Sametime.”
China – the Power Sweep II implementation team in China was
recognized as one of the 12 best East Asia Business Organization
teams in 2006.
Brazil - consolidated the Customs areas in Brazil and support of the
OneSource implementation
U.K. – started successful partnership with Young Enterprise,
the U.K.’s leading business and enterprise education charity.
Europe – initiated its first Green Belt training course in Belgium, with five
employees facing the challenge of attending the training in English (their
second language) as well as learning the new language of Six Sigma.
Let me close by expressing my appreciation of the hard work done by
all my CBS colleagues around the world. CBS is ever-evolving, like
Cummins itself, and we stand ready to meet the many new challenges
and opportunities that lie ahead.
Our continued commitment to excellence for our customers and Company
is more important than ever. Thanks to my colleagues for all they do, and
to our internal Cummins customers for their continued trust and support.
I am Cummins. I am CBS. You can depend on me.
Floyd K. Rutan
Executive Director – Cummins Business Services
Chairman’s Six Sigma Quality Awards 2006
Six Sigma Belt:
Carolyn Butler-Lee
Six Sigma Belt:
Pravin Ghodke
Project Name:
Reduce Freightliner (FL) Past Due Receivables
Project Name:
In-Sourcing of Fixed Asset Services – India
Y Statement: Reduce FL past due receivables of
Engine Business dollars from 9% to 3.5%
Annual Savings: CMI - $73,000 FL: $77,000 (Cost Avoidance)
Sponsor: Ginger Lirette (CMI) & Roger Nielson (CEO, FL)
Team: Emily Burns, Mary Berry
Description: The primary objective of the project was to identify
opportunities to reduce variation in our respective A/R and A/P transaction processes to improve Freightliner past due receivables. In addition,
we made the process easier for our customer and showed we are easy
to do business with.
Y Statement: To in-source fixed asset (FA) services located at
CBS-Nashville from 0% to 100 % without any negative impact on
quality of service.
Annual Savings: $492,000
Sponsor: Anuja Mazgaonkar
Team: Marlo Clark, Shripad Vaze, Jerrold Giles, Danny Wall ,
Akshat Sharma, KPIT Team.
Description: The focus of the project was to ensure the smooth
transition of services from USA to India without affecting the continuity
of the service to end customers. Another objective was to know the
failure modes in existing FA management process & address them
in a control plan.
CBS Leadership
Cummins Business Services
Floyd Rutan
Exec. Director – CBS
Regional Leaders*
Global Service Leaders
Staff
Lynda Atherton-Miles
Director, Europe
Dwight Bonifacius
Exec. Director,
Human Resources Services
Fabiano de Luca
Director, Quality
Alen Liu
Director, China
Anuja Mazgaonkar
Director, Middle East, Asia
Tadashi Yamashita
Director, South America
Stephen Peterson
Exec. Director,
Accounting Services
Vernon Wilson
Exec. Director, Information
Technology Services
Senthil Kumaran
Director, Business Strategy
Darnella Mosley
Director, CBS Line HR
Patricia Wissel
Director, Customer Excellence
*see Region chart, below
The Regions
Europe, Africa
India, Asia Pacific
Mexico, Latin America
Lynda Atherton-Miles
Anuja Mazgaonkar
Tadashi Yamashita
Erica Heyns
Director, South Africa
Cate Hron
Director, South Pacific
Sergio Piñon
Director, Mexico
StaffStaff
as of
2007
as April
of March
2006
CBS Global Map
IT Regions
1. US and Canada
2. Mexico
3. Latin America
4. South Africa
5. Europe
6. India
7. Singapore
8. South Pacific
9. China
CBS Key Locations and Contacts
CBS Headquarters
(includes Columbus)
CBS Europe
(includes UK, Europe, South Africa)
2931 Elm Hill Pike
Nashville, Tennessee 37214
Contact: Tom Aitken
Ph: 615-986-9095
Count: 440
Quayside, Dunedin House
Columbia Drive
Teesdale TS176BJ, England
Contact: Lynda Atherton-Miles
Ph: (44) (0) 1642 412716
Count: 215
CBS Brazil
(includes Mexico, Argentina)
Rua Jati, 266 - Cumbica - Guarulhos
Sao Paulo State - Brazil
CEP 07180-900, Brazil
Contact: Tadashi Yamashita
Ph: (55-11) 6465.9870
Count: 155
CBS Asia-Pacific
(includes Singapore & East
Asia, Dubai, Australia, Korea, Japan, Phillipines)
CBS China
Suite 900
China World Tower
IT Guo
REGIONS
No. 1, Jian
Men Wai
1.
US
and Canada
Beijing, 10004, China
2. Mexico
Contact: Alen3.Liu
Latin America
4. South Africa
Ph: (86) (0) 763-586-3109
Count: 55 5. Europe
6. India
7. Singapore
8. South Pacific
9. China
Kothrud
Maharashtra
Pune 411038, India
Contact: Anuja Mazgaonkar
Ph: (91) 20-25385435
Count: 200
CBS Regional Leaders
Mexico – Sergio Piñon
Brazil – Tadashi Yamashita
Europe – Lynda Atherton-Miles
Asia-Pacific – Anuja Mazgaonkar
Singapore – Anuja Mazgaonkar
China – Alen Liu
Australia – Cate Hron
South Africa – Erica Heyns
But the regions are grouped:
Latin America – Mexico, Brazil, Argentina
(Yamashita)
Asia-Pacific – India, Singapore, East Asia,
Dubai, Australia, Korea, Japan,
Phillipines (Mazgaonkar)
Europe – UK, Europe, So. Africa
(Atherton-Miles)
China – China (Liu)
Financial Statement
CBS Income Statement ($ Thousands)
2002
2003
2004
2005
2006
Total Billing
$101,014 $122,583 $137,958 $160,802
$206,621
Less Gross Expense
118,227 133,571 140,780 161,574 208,478
Net income/(Loss)
$(17,213)
$(10,988)
$(2,822)
$(772)
$(1,857)
Better/(Worse) than AOP $3,700 $872 $(6,859)
$(1,496)
$(1,857)
Note: Net loss was due primarily to higher cost and lower volume in printers, higher than expected
Power Sweep I close-out costs, and losses at new 2006 locations. Unite Work Transferred Into CBS ($ Thousands)
10
2003
2004
2005
2006
Engine $6,319 $4,245 $5,147 $2,157
Power Generation
2,726 1,229 209 1,525
Filtration
2,849 1,604 493 560
Distribution
2,960 422 3,639 7,335
Turbo Technologies
1,199 -
-
529
Emerging Markets
-
-
-
3,536
Emission Solutions
-
-
-
61
Corporate
1,251 529 200 -
Total Unite Transfers
into CBS
$17,304 $8,029 $9,688 $15,703
CBS Billing By Business Unit ($ Thousands)
2003
2004
2005
2006
Engine
$56,193 $56,219 $76,279 $80,031
Power Generation
13,747 15,889 16,000 22,885
Filtration
14,474 19,340 22,335 29,616
Distribution
10,499 9,017 13,666 26,823
Turbo Technologies
2,927 3,231 4,424 6,278
Corporate/CBS
8,887 14,837 17,222
26,113
JV & Non Consolidated Billing 15,856 19,425 10,876 6,125
Total Business Billing
$122,583 $137,958 $160,802
$206,621
CBS Gross Expense By Region ($ Thousands)
2003
2004
2005
2006
US
$112,639 $113,722 $114,050 $121,791
EMEA
18,442 20,710 29,486 43,778
Mexico
2,490 6,051 7,619 7,232
Brazil
297 5,786 9,587
Asia-Pacific
-
4,633 17,191
Australia
-
6,264
Other
-
-
-
2,635
Gross Expense
$133,571 $140,780 $161,574 $208,478
11
CBS Services as
Percentage of AOP
$ In Millions
12
% of
2007 AOP
Service Line
Service
Accounting Services
Customer Collections
6.5
3%
Financial Close
2.0
1%
Fixed Assets Management
2.8
1%
Intercompany Accounting
4.4
2%
Supplier Payments
7.4
3%
Travel Services
3.8
2%
HR Services
Benefits & Data Administration
7.1
3%
Compensation
0.8
NA
Employee Mobility
2.3
1%
Payroll
3.9
2%
IT Services Application Hosting
43.7
20%
Collaboration
8.4
4%
Engineering & Development
1.7
1%
Global Desktop
34.1
15%
Legacy Application Hosting
10.3
5%
Local Area Network
5.1
2%
Printers
8.2
4%
Site Support
6.7
3%
Storage
15.0
7%
Telephones
26.5
12%
Wide Area Network
16.1
7%
Local/Other
3.8
2%
Total
$ 220.6
100%
Service Definitions and Vendor Partners
Accounting Services
Customer Collections is the process
of obtaining payment from the customer
– from customer set-up through receipt of
cash – for both internal and external.
Vendor partner: Oracle Financial
Applications
Financial Close is the maintenance of,
postings to, and month-end process for
the financial books of an entity.
Vendor partner: Oracle Financial
Applications
Intercompany Accounting maintains and
ensures offsetting intercompany transactions for Cummins entities to allow for
balanced, consolidated financials.
Vendor partner: Oracle Financial
Applications
Supplier Payments is the processing of all
internal and external trade supplier liabilities
for goods and services, from document
entry to funds disbursement.
Vendor partner: Oracle Financial
Applications
Travel Services is responsible for establishing travel policy, procedures, and tools
for Cummins employees to use when traveling on company business. The CBS charges
cover the cost of expense reporting and
overall management of the travel service.
Vendor partners: American Express,
Concur Technologies
Fixed Asset Management is the management of the customer’s asset records from
when the RFA is approved up through the
retirement or disposal of the asset.
Vendor partner: Oracle Financial
Applications
HR Services
Benefits administers employee benefit
programs for active, inactive, and retired
employees.
Vendor partners: Hewitt Associates, Anthem
Compensation supports Cummins
employees and Human Resources teams
in the delivery and maintenance of the
company’s compensation programs.
Employee Mobility provides administrative
and consultative support for the business’
need to move employees anywhere in the
world, which includes Expatriate Program
administration, Relocation management and
Immigration process administration.
Vendor partners: Deloitte & Touche,
Prudential
Payroll services provide for the accurate
and timely payment of employees’
compensation as well as ensuring
compliance with all appropriate regulatory
and tax filing requirements.
Vendor partner: Automatic Data
Processing (ADP)
IT Services
Application Hosting provides servers
and related equipment in a controlled data
center environment on which Business Units
run the software of their choosing.
Vendor partners: Oracle, Sun, Mircrosoft,
IBM, Digex, HCL Technologies
Engineering and Development is a
project-based service that introduces new
technologies and upgrades to Cummins’
infrastructure platforms and supports
infrastructure engineering needs of
Corporate
IT-sponsored architecture projects. The
service also supports business unit IT
projects that include technologies not
supported by current CBS IT infrastructure.
Collaboration includes Lotus Notes email,
Sametime instant messaging, and Sametime
meetings.
Vendor partners: IBM (Lotus),
HCL Technologies
Global Desktop provides and supports
standard Cummins-owned desktop, laptop
and engineering workstations for all stakeholders who connect to the Cummins Wide
Area Network.
Vendor partners: Dell, Microsoft,
HCL Technologies
Hardcopy Output (printers) provides
hardcopy output solutions to allow all
Cummins Global Desktop users to print,
copy, scan or fax via a common
global service.
Vendor partner: IBM
Legacy Application Hosting monitors
and supports the Mainframe and AS400
computing environments.
Vendor partners for mainframe hosting:
ACS, IBM
Local Area Network (LAN) provides and
maintains networks within a facility. This
service includes facility cabling, racks,
and equipment, as well as monitoring,
consulting, and trouble resolution services.
Site Support provides support for IT
devices in manufacturing plants that are not
covered under the Cummins Global Desktop
(CGD) support model.
Storage manages the storage and backup
environments that support and protect
the data required to deliver Business Unit
applications, user home drives, file shares,
and email.
Vendor Partners: Hitachi Data Systems,
HCL Technologies
Telephones and wireless communications
provide support for global phones, global
PDAs, and global wireless access using
cellular technologies for Cummins-provided
equipment.
Vendor partners: Verizon, AT&T, T-Mobile
Wide Area Network (WAN) provides
and maintains Wide Area Network circuits
(monitoring and provisioning), equipment,
issue resolution/troubleshooting, consulting,
and capacity planning.
Vendor Partners: HCL Technologies, AT&T
13
©2007 Cummins Inc.