Schaeffler is a leading automotive and industrial supplier known for its quality products, market-leading technology, and innovation. And, like most businesses, the company is transforming to meet changing market needs and to ensure it’s taking advantage of the new opportunities created by technology. In this interview, Stefan Bauerreis, Chief Financial Officer Europe at Schaeffler, explains how he’s using technology to transform the company’s financial shared service centers and the whole accounts payable process.
There are several trends that are driving change within our business, says Stefan. The most prominent are the changes in our industry, such as the shift from traditional combustion engines towards electric-powered vehicles. These are changing the focus of our enterprise and driving innovation through our product lines. Then there is the emergence of new technology solutions that automate back-end processes and transform how these teams support the business.
Driving towards automated accounts payable
Accounts payable is one area Stefan pays particular attention to. He explains that Schaeffler worked for several years to digitize invoice entry using an OCR scanning solution. “This was a successful first step to digitize accounts payable,” he says. “But there was more we could do to automate the process.”
To take that next step towards automation, Schaeffler launched an e-invoicing project. Stefan knew that it wouldn’t be straightforward, as its success would entirely depend on supplier adoption of the tool they selected. “It was clear from the offset that most suppliers were unwilling to pay the fees often charged by e-invoicing platform providers,’ he says. “So we didn’t want to go to our suppliers and ask them to use a solution that improved our processes but at a cost to them. Our supplier relationships are important to us. And we needed to ensure that they were also getting benefit from the e-invoicing platform.”
Given the project’s importance, Stefan and his team spent a lot of time analysing the market to find the best fit. “We were looking for a flexible, transparent platform that could scale as our business grows,” he says. “Once we compiled our shortlist, we staged an intense beauty contest where we compared each solution based on the attributes that were important to us. And through this process, we discovered that Tradeshift was the best option."
After a positive first year using the Tradeshift platform, Schaeffler is receiving around 25 percent of its total invoices through Tradeshift. They’re also getting bigger suppliers onto the platform quicker. “We have 80 integration suppliers on Tradeshift,” he says. “And after three years we expect to have over 50 percent of our total invoices coming through the platform. This is in line with our internal business case.”
Stefan has a clear answer when asked what’s made the project successful: collaboration. “Tradeshift is flexible to our needs and easy to work with, which helps a great deal. There’s also close collaboration between finance and purchasing that is helping make the project successful.
To gain even more value from the Tradeshift implementation, Schaeffler’s next step will be to use the platform to offer a Financing Program for outstanding invoices to its supplier base. “This will provide value to both Schaeffler and our supply chain,” says Stefan. “Our suppliers will get easy access to cheap liquidity and we’ll be able to better optimize our working capital and achieve our cash flow KPIs.”
Making a success of digital transformation
Accounts payable isn’t the only area where Stefan is driving digital transformation. He manages a variety of markets across Europe and Africa, as well as the Middle East and India in his role. And given the eclectic nature of these markets, there are new challenges Stefan must manage every day. “There is no one-size-fits-all solution for dealing with these issues and this makes my job very challenging,” he says.
Technology is helping Stefan overcome these challenges. For example, he explains how changing accounting standards and tax requirements are increasing the administrative burden on his finance team. “Yes, these changes are a challenge, but by using technology we’re able to adapt quickly and overcome,” he says.
But it’s not just about dealing with challenges. What’s more transformational is how technology is changing the work finance is doing. “We’re able to deploy our finance team more effectively because of the efficiency gains we’ve created using technology,” he says. “They’re doing less transactional work and instead focusing on strategic work that’s adding value to the enterprise.”
Planning for the future
Despite the success Stefan is having, he isn’t one to rest on his laurels. He recognizes that technology and the automobile industry is moving at pace. “We’re always planning for the future,” he says. “Whether that be adopting new technology to drive automation and efficiency gains, or upskilling the team so they can meet the challenges of the future. Whatever we do, we must keep moving forward. Automation and digitalization isn’t something that happens by itself. It takes drive and focus to make the changes necessary and set the enterprise up for success.”