The Power of ONE: Building Treasury's Digital North Star

1st January 2020

Created from a triple merger, Ocean Network Express (ONE) had just nine months to digitise, streamline and automate treasury processes. Here, Toshiaki Ichida, General Manager, Treasury, ONE, is joined by Ziad Kabbara, Global Sector Head, Transportation, Aviation and Logistics, and Clarice Kwa, Vice President, Transportation, Aviation and Logistics, Global Liquidity and Cash Management, HSBC, to discuss highlights of ONE’s treasury transformation journey – ranging from robotic process automation to data visualisation.

Headquartered in Singapore, ONE is the world’s sixth largest container shipping company. It was formed in 2017 as the result of a merger between the three biggest Japanese shipping lines: K-Line, Mitsui O.S.K. Lines (MOL) and Nippon Yusen Kaisha (NYK). From its inception, ONE’s management team has looked to accelerate growth by leveraging technology to: enhance existing business models; develop innovative services for current markets; create value in new markets; and challenge the industry status quo with fresh digital services (see box 1).

Box 1: Digital is in ONE’s DNA

In April 2019, ONE established the Digital Container Shipping Association (DCSA) with A.P. Moller- Maersk, Hapag-Lloyd, and MSC. The goal of the new association is to pave the way for interoperability in the container shipping industry through digitisation and standardisation. In July 2019, ONE joined TradeLens, a society to digitise the global supply chain by improving the precision of tracking shipments in real time.

The vision for ONE’s treasury team was no different: digitisation was the order of the day. But a significant challenge lay ahead, as Ichida explains: “The triple merger meant that three individual treasury departments needed to be transformed into a single, efficient treasury structure. Each individual treasury had different systems, however, as well as disparate bank accounts, workflows, cultures and operating models. To complicate matters further, we had only nine months to put in place a global cash management set-up – and our cash transactions are widespread throughout the world, resulting in a dispersed and complex operating cash flow.”

Single bank strategy

Ichida and his team decided that the best way to rise to these challenges would be to deploy a single bank strategy. “The aim was to select a partner bank that could help us centralise cash management at the company’s global headquarters in Singapore – through the use of cutting-edge technology, and a global network,” he explains. “We not only wanted to achieve better visibility of cash and greater cash efficiency across the 44 markets we operate in, but also to have a one-stop shop for support around any issues.”

Toshiaki Ichida

Toshiaki Ichida
General Manager, Treasury, ONE

Choosing a single global banking partner is not a decision to be taken lightly, but Ichida had no hesitation in nominating HSBC Global Liquidity and Cash Management to take up the mantle, “thanks to the bank’s proven track record of helping corporates to digitise, automate and centralise cash management, not to mention its global presence”.

Kabbara echoes this: “Being a true partner for our clients is not only about having a presence in 67 markets or covering 90% of global trade and capital flows. We recognise that corporates also need strategic support as they navigate today’s challenges and transform their businesses for the future.

“So, while we understood that ONE was looking to leverage our global network and digital innovations to transform its treasury function, we also knew that Ichida wanted to push the boundaries of the possible – drawing on HSBC’s sector expertise to challenge industry conventions, and exploring the cutting edge of cash management through our regional insight.”

With this in mind, the two organisations have since worked together on ONE’s digital transformation journey, achieving four major milestones thus far.

Smart technology

First was the roll-out of a host-to-host (H2H) enabled enterprise resource planning (ERP) system linked to SAP HANA. As HSBC’s Kwa explains: “Technology was always going to be key to making it easier for ONE to have visibility and control over its cash balances – so the HSBC team worked closely with ONE’s finance function to put in place a solid foundation for the journey ahead. The ERP link went live in April 2018 and has proven extremely beneficial for ONE.”

Ichida expands on this, adding: “The ERP link technology enables us to swiftly recognise and directly control the cash in all the operating bank accounts, even under a local entity’s name. We now have control over 85% of our entire operating cash, the majority of which sits with HSBC.”

With the treasury technology backbone in place, it was time to look for efficiency gains that could be layered on top. “This was especially relevant since ONE has a relatively small treasury team consisting of just five full-time employees,” notes Kwa. Setting up an auto-sweep was therefore the second major project tackled by ONE and HSBC in a bid to centralise all cash at the corporate headquarters on a daily basis, without manual intervention.

Speaking about the successful initiative, Ichida notes: “This has enabled us to merge our corporate cash flow and our business operation cash flows in the same currency into one cash pool. As a result, it is easier for us to minimise the excess cash in each currency because we can monitor only one cash pool in each currency. We have therefore successfully reduced the excess cash in each currency by 50-60%. Our foreign exchange [FX] transaction volume has also been reduced by netting our internal buy and sell requirements in each currency.”

In search of further cash and liquidity management efficiencies, ONE’s treasury team then decided to implement HSBC’s Liquidity Management Portal. According to Kabbara, the portal is designed to “give clients a clearer picture of their cash position globally and enable them to make faster and more informed decisions about deploying funds”. Among the particularly useful features for ONE, Kabbara notes, is a Liquidity Management Dashboard, which uses data visualisation to give treasurers an accessible, real-time view of their cash and cash-equivalents, across multiple banks and products.

 Ichida outlines the benefits: “The Liquidity Management Dashboard shows our bank balance in a bar chart for all the ERP-linked bank accounts, regardless of the currency. On this dashboard, all the foreign currency bank balances are converted into our designated currency. This helps us to easily identify any country/currency where excess cash is accumulating – and enables us to take timely steps to remedy that”.

Ziad Kabbara

Ziad Kabbara
Global Sector Head, Transportation, Aviation and Logistics, Global Liquidity and Cash Management, HSBC 

The fourth completed project in ONE’s ongoing treasury transformation journey is the successful deployment of robotic process automation (RPA). Kwa explains the original challenge: “Ichida’s team was spending almost 40 minutes every day manually extracting data from multiple sources in order to produce daily and weekly cash position summaries. This was not necessarily an optimal use of resources and opened up opportunities for manual errors. We therefore worked with ONE’s treasury team to share experiences from other clients who had successfully deployed RPA for such a task – and today the company’s cash position data is extracted by bots, rather than treasury personnel.”

Having been freed up for 40 minutes each day, “the treasury team can now spend more time on value-added tasks, such as analysing past cash flow trends or producing a more accurate cash flow projection,” Ichida comments.

He is quick to point out, however, that the true value of technology comes by combining it with other technologies and human intelligence. He explains that through the combination of the four technology milestones already achieved, HSBC’s significant support, and ONE’s own expertise, 90% of ONE’s global cash is now placed under the control of the treasury team at the global headquarters. As a result, “treasury now places most of this cash in fixed deposits, which has considerably improved the non-operating cash flow,” says Ichida.

Moreover, Kwa adds that “the use of these technologies has in fact helped the company to speed up the adoption of a single corporate process and culture”. Kabbara agrees, adding: “Often, a triple merger can result in several years of legwork to achieve full integration, especially on the treasury side. But ONE achieved this in less than 12 months, thanks to treasury’s willingness to embrace emerging technologies and to adopt the best practices that HSBC was able to share from similar treasury transformation journeys with other clients.”

Never standing still

Looking ahead, Ichida plans to work in conjunction with HSBC to expand existing solutions, automate additional treasury tasks, and explore innovative industry solutions. For example: “We will expand the auto-sweep to other major currencies – such as GBP, HKD and THB – with the aim of creating a single cash pool in more currencies,” he comments.

Treasury is also working with HSBC and ONE’s internal IT team to develop a new cash flow forecasting model, linked to the HSBC banking system, within the Liquidity Management Portal. “It makes complete sense for this to be the next stage of development, since the bank already has all of the past cash flow data via the ERP link. The plan is to combine the historic data and the cash flow forecasting model into a single package, so that treasury can verify and identify the cash flow trends.”

In addition, ONE plans to use HSBC’s automated inter-company loan system later this year. According to Ichida, “this should help treasury put any cash in the bank accounts of subsidiaries to better use at the global headquarters. It will also help streamline inter-company loan administration tasks, both at headquarters and within the subsidiaries”.

Elsewhere, RPA will be applied to further recurring tasks, so that ONE’s treasury team can concentrate on more productive tasks, such as analysing or planning. “Treasury also aims to implement an FX platform to automate manual tasks such as journal entry or bank clearing, remittance arrangement or logging of FX transaction history,” says Ichida.

In order to ensure these digital endeavours are moving treasury in the right direction, Ichida’s team will also closely monitor three key performance indicators (KPIs) to better gauge ONE’s cash efficiency as a result of digital transformation. These are ‘Wider ERP coverage’, ‘Minimising operating cash’ and ‘Minimising affiliates’ corporate cash’ (see box 2). “Working towards these combined goals will result in even more concentration of cash to global headquarters,” Ichida explains.

Box 2: KPIs for Cash Efficiency

KPI 1: Wider ERP Coverage
Current: 85%
Goal: 97%
Action: Invite more banks and more countries to join HSBC’s ERP link.

KPI 2: Minimising Operating Cash
Current: 93%
Goal: 95%
Action: Further expand the auto-sweep to other major currencies such as GBP, HKD, and THB. And tighten monitoring through HSBC’s Liquidity Management Portal and new cash flow forecasting module to minimise the idle cash in each country.

KPI 3: Minimising Affiliates’ Corporate Cash
Current: 90%
Goal: 95%
Action: ONE will automate inter-company loan administration using HSBC’s system. This will help ONE to minimise local entities’ corporate account balances by auto-sweeping to the global headquarters’
corporate account.

A digital North Star

Although rightly proud of treasury’s achievements and plans for the future, Ichida also recognises the wider business benefits of continuing to embrace new technologies. “In today’s world, where technology is emerging and evolving, customers are expecting timely and accurate shipping, real-time transparency on their cargo and also looking to ONE to guide them with digital technologies. HSBC and ONE’s expanding digital collaboration is critical to the evolution of the container shipping industry.

“The opportunities to drive greater innovation across the shipping supply chain are enormous and HSBC’s new and innovative solutions have helped – and will continue to help – ONE to navigate the growing regulatory requirements, and technological challenges, we face in 44 markets,” he concludes.

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