Written by Chin Kuang Kim | 12 July 2022
Chin Kuang Kim, Vice President and Divisional Chief Financial Officer (CFO) at Jabil.
The usage of the shared service centre (SSC) model can be traced back to the 80s when it was introduced to reduce costs and standardise processes for better efficiency. Fast forward to today, the model has emerged as a key differentiator in the optimisation and digitalisation of many business efforts.
SSC’s rapid adoption underscored its role as a value-creator in many areas, such as customer service, performance management and future optimisation. Companies that were looking to build new capabilities and enter new markets deepened their reliance on SSC, leading to the birth of the Global Business Services (GBS).
As evidenced by the immediate effects of the 2020 pandemic (and beyond), GBS’s resilience throughout made it possible for companies like Jabil to address continuous cost pressure and fluctuations from increasing market volatility, technology-driven disruptions and globally connected value chains.
Value Creation through Digitalisation in GBS
Forcing companies to further professionalize their support functions, the pandemic accelerated the implementation of forward-looking analytics, business intelligence, and sustained investments in digital solutions, a tell-tale sign of shifting focus from cost arbitrage to value-driven services that emphasized GBS’ high-performing ability to strengthen business agility, scalability and resiliency.
Findings from EY, go on to show that GBS organisations “rose to the challenge and came into their own: for nearly 50 per cent of the survey respondents, productivity was unaffected, and for 38 per cent productivity increased.” This complements the 2021 Deloitte shared services and outsourcing survey which revealed that digital enablers that improve and optimise businesses’ services are essential in shaping the organisation’s innovation roadmaps.
Testament to these sentiments, Jabil’s Penang GBS transitioned from transactional roles to more strategic consulting and advisory ones over the span of 13 years, to now include Financial Global Business Services, Centralised Procurement, and Risk Governance. The centre, which began its operations in 2009 with 100 employees in Information Technology (IT) and Supply Chain Management teams, is today one of the largest GBSs in Penang. Leveraging its digital capabilities to elevate Jabil’s value chain and better address internal and external stakeholders’ needs, the Penang GBS sees some 1,000 employees supporting over 180,000 Jabil colleagues worldwide.
Housing advanced setups of Centres of Excellence for Robotic Process Automation (RPA), Application Programming Interface (API) Management, B2B Services, and Cloud Management, the GBS’ expanded and digitalised operations model survived the rigours of the global pandemic. Signalling the strategic convergence of IT and Finance, and the advent of ‘as-a-service’ models, executive leadership has turned to Chief Finance Officers (CFOs) and the Finance Function to advance the business and enhance operation resiliency, which in turn saw the spearheading of process innovations that led to Jabil’s GBS becoming an internationally award-winning operation.
New Expectations and the Necessary Approaches Post-Pandemic
Coupled with digitalisation influenced by Industry 4.0, CFOs are reframing the future of finance and related functions, with a focus on trusted technology, enhanced talent profiles, and an expanded ecosystem. Ensuring that the financial-management approaches and tools being used to guide Jabil through the pandemic stick in the next normal, innovations across GBS Penang and Guadalajara in Mexico caught the attention of judges consisting of distinguished groups of international finance executives across industries, in two differing awarding programs.
The pandemic has also reframed GBS’ narrative, positioning Jabil as the “champions of building new ways to add value to enterprises and drive best practices”, as the awards have demonstrated.
A case in point is Jabil’s digital transformation in Accounts Payable (AP) which has improved the company’s visibility and control over outbound cash flows, increased working capital, and ensured a strong supply chain. Using RPAs to operate seamlessly, Jabil achieved straight-through invoice processing rates averaging 40 per cent across all Jabil GBSs. Setting this benchmark has also freed up time creating room for the AP team to engage in value-adding initiatives using data analytics, hybrid cloud computing, predictive analysis, and artificial intelligence (AI).
It must be said that (hefty) investments in emerging technologies are not the only thing the GBSs should look at if they want to deliver more value for their stakeholders. Savvy GBS leaders in the manufacturing space are positioning their organisations to deliver increased responsiveness to changing business needs and achieving supply chain resiliency in the post-recovery phase. As the EY report aptly points out, high-performing GBSs are poised to be more focused on customer-centricity and value-delivery in shaping their next evolution in the areas of:
- Process expertise: shared service talents need to take a holistic view of the processes and identify the root source of errors or inefficiencies emanating from upstream as well as potential gaps that may occur downstream. A critical winning metric for Jabil Penang GBS was the utilisation of cloud-based solutions e.g digital fingerprinting for vendors, intelligent automation of invoice approval, exception handling, and tracking for continuous improvement across regions and suppliers – to effectively eliminate manual tasks and deliver improved vendor relations.
- Collaboration and Negotiation: shared services are all about integration and streamlined processes on and off the shop floor. Creating strategic internal relationships and business partnering helps both the cause of shared services and the manufacturing goal of operational excellence. We believe that building an ecosystem of ‘connected factories’ provides the platform for end-to-end (E2E) processes, sophisticated digital tools and solutions employing machine learning or artificial intelligence, and for transparent and harmonized data necessary for power business intelligence.
- Analytics: as the role of shared service companies transitions to creating more value, data analytics have come under the spotlight. While one strategy is for shared services to leverage independent data Centres of Excellence, more and more are setting up their teams of number crunchers who will bring extraordinary analytics capabilities to the table. Empowering a future-ready talent pool, Jabil’s initiatives such as its citizen data scientists programme with Universiti Sains Malaysia (USM), and the Early Career Programme (ECP) for IT talents allows them to be a critical player in strengthening Malaysia’s public-private manufacturing partnerships.
Transformation Engine With Next-Gen Digital Talents
While GBSs remit remains as being the backbone of efficiency, driving standardisation and cost gains – for many organisations like Jabil, they are also the engines of transformation for the entire business. A point not lost in many industries, a recent Malaysia Digital Economy Corporation (MDEC) statement records that Malaysia is expected to grow its GBS market size from US$1.3 billion in 2019 to US$1.5 billion (RM6.15 billion) by the end of 2024.
Operating in a world where digital disruption is rife and convergence of technologies is shaking up the business environment, the quest to scout and leverage next-generation digital talents is one of the top priorities of every organisation.
Creating value that will future-proof business operations, talents at Jabil Malaysia of which 95 per cent are locals, are now serving leadership roles in their GBS, across functional, business partner, and development managerial roles within the IT division. In growing skill sets that are not generally fostered within the functional ranks of (other) traditional shared services, innovative talent development initiatives continue to be at the forefront of Jabil’s people culture.