The title “set-up for success” has a double meaning. On the one hand it refers to how OCI Nitrogen was able to merge 2 different business units with diverse characteristics into one company. On the other hand it refers to the role that Voorne Partners played in helping OCI management set up its integration project.
The Issue
OCI Nitrogen emerged from the sale of DSM Agro and DSM Melamine, 2 distinctly different business units sharing a common main ingredient, Ammonia. The newly formed company, OCI Nitrogen, had to put its own support structure in place quickly as DSM, understandably, was willing to support its divested units for a transition period only.
The primary focus for OCI was getting its ICT support and ERP system into place as quickly as possible. Very early on however, OCI realised that an approach focussing only on the ICT angle would be insufficient. Processes, roles and responsibilities and the organisational structure were all equally important to assure a successful integration. For this reason they invited Voorne Partners to work together with OCI management to set up the project to address all these key dimensions.
The Approach
There was a clear desire by OCI to, as much as possible, run the project with its own people. Voorne Partners therefore took on its traditional role of catalyst and support, working with our clients and using only a minimal number of consultants. Our contribution was in 2 main areas:
- Working with the OCI board and project management to address the non-ICT dimensions. The main elements here were:
- Trading model, which describes the legal/tax product and invoice flows from suppliers, internally through OCI and on to the final customer. By using mapping or other graphical techniques, a trading model can provide insight into the complexity of the legal/fiscal set-up and particularly into the non-value-added inter-company administrative flows. (This refers to inter-company orders and invoices, needed for fiscal purposes, and not to the inter-company movement of goods, which may well be a sensible part of a supply chain set-up.) Inter-company transactions are a source of hidden cost, first of all due to the direct workload associated with the transaction itself, and secondly through accounting as they need to be accounted for in the local statutory accounts and consolidated/eliminated in the group accounts. Although a certain number of inter-company transactions is unavoidable for any international company, these can be minimised. Voorne Partners Single Business Entity (SBE®) model will reduce these to their bare minimum, without affecting the value chain itself.
- Steering model, defining the accountabilities on an organisational level within OCI. A steering model describes the components and hierarchy for financial performance management. It distinguishes Investment centres, profit centres, turnover centres, cost centres and expense centres. It serves as a tool to clearly define financial accountabilities. While a steering model is high level and not personalised, it forms the basis for other techniques, such as a financial performance control matrix to arrive at individual accountabilities and authorisations.
- EISA matrix, which defines accountabilities on an individual level.
- Support and advice for project management and the team leads;
- Training and education on project management techniques
- Content review of critical documents such as the Business Blueprint and the project’s Plan of Approach.
OCI staff implemented the project based on their own Business Blueprint and ICT blueprint.
The Outcome
Voorne Partners assisted OCI in an important phase of the transformation, that being the reduction of operating entities in Europe, a clear responsibility structure and an important direction in the Plan of Approach for the IT-SAP translation of the new structures. Subsequently OCI successfully implemented its project and provided both Agro and Melamine with a high quality platform to pursue their business goals.
As Job ten Berge, Chief Financial Officer of OCI Nitrogen said: “Our Fusion project aimed at OCI Nitrogen being ‘Simply the best’ in its business. Voorne Partners helped us in keeping the focus on ‘de-complexion’ from a number of angles.” OCI Nitrogen produces ammonia, mineral fertilizers, and melamine. Ammonia is the basis for fertilizers and melamine. Its fertilizers play an essential role in improving agricultural productivity. Melamine is used as a raw material for adhesives and resins in the manufacture of things such as furniture panels, laminate flooring, coatings and paints, and plastics.
OCI Nitrogen produces ammonia, mineral fertilizers, and melamine. Ammonia is the basis for fertilizers and melamine. Its fertilizers play an essential role in improving agricultural productivity. Melamine is used as a raw material for adhesives and resins in the manufacture of things such as furniture panels, laminate flooring, coatings and paints, and plastics.