Processes and capabilities

In 2014, we made substantial progress in codifying our company-wide core processes by developing supporting toolkits and including our processes in our corporate directives to ensure appropriate governance. A high level summary of each of the processes follows.

In each of our Business Areas, we face different market situations, with differing critical success factors. We are therefore developing appropriate capabilities to establish and maintain a competitive advantage. These capabilities are described in the Business performance section.

People, product and process safety

People, product and process safety comes first at AkzoNobel. Our Safety process is aimed at managing operational risks in all our business activities. By applying this AkzoNobel process consistently, rigorously and without exception throughout the company, we demonstrate that safety is a core principle that engages and unites all of us.

There are three main elements within the Safety process, which depend on the daily commitment of each and every employee, as well as line management leadership:

  • People safety is focused on increasing awareness of behaviors that put us at risk, by establishing a culture of taking care and involving all employees in safety improvement
  • Process safety is focused on identifying and controlling hazards in our operations by avoiding unwanted events resulting in injuries, waste or harm at manufacturing sites. Process safety is also fundamental to ensuring consistent reliability and productivity of assets at optimal cost and maintaining our license to operate
  • Product safety incorporates the traditional approach of reactive regulatory compliance, but also goes beyond this, enabling us to take a lead in sustainable product stewardship

In all three cases, our process steps include assessment, analysis, actions to remove barriers, assurance and continuous improvement. The Safety process is a permanent way of working and, in addition to setting clear process steps, we are also addressing organizational infrastructure, business enablers and culture.

Operational Control Cycle

In place since 2012, this is a cycle of regular, sequenced and staged operational meetings. It is already having a significant impact because it incorporates structured and standardized operational discussions. The objectives of this cycle are:

  • Drive operational performance and continuous improvement throughout the organization and across the value chain
  • Align views on the outlook going forward
  • Make relevant operational decisions to deliver on strategic focus areas

By employing this process, we operationally review past performance, but primarily focus on a realistic three-month rolling forecast, as well as mid to longer term planning. This in turn helps us with our AkzoNobel value, Deliver on commitments. By doing this, we create a review “heartbeat” which incorporates a monthly series of business, functional and country reviews.

Continuous improvement

To ensure that continuous improvement is embedded throughout the company, we are creating a common and consistent approach, with standardized process methods, toolkits and terminology, involving employees across all of AkzoNobel. By introducing this approach, we will boost organic growth and operational effectiveness while increasing employee engagement, thereby increasing our competitive strength.

Through the Continuous improvement process, we will deliver both step-change improvement projects and small but meaningful improvements in daily business and functional processes. The process for doing this will differ depending on the circumstances, but in all cases the main priority is to move from our current performance to our internal best practice levels and from there to industry and world class performance standards.

In order to achieve this, we will utilize a robust toolset, based on Lean and Six Sigma fundamentals. For example, in most situations we will evaluate a process based on value stream mapping to identify and address any effort which is not required for customer value, thereby creating a “lean” process. As this is closely linked to our Planet Possible sustainability agenda of creating more value from fewer resources, it is particularly relevant for AkzoNobel. Once we have ensured that the process is as lean as possible, we will use a Six Sigma approach, which seeks to improve quality by identifying and removing the causes of errors and minimizing variability. Each Six Sigma project follows a defined sequence of steps and has quantified value targets, such as reducing process cycle time, costs and resource use, while improving customer satisfaction.

Innovation

A Center of Expertise (CoE) for Innovation, Partnerships and Complexity Reduction was established in 2014 as part of our new Supply, Research and Development (SRD) function. The SRD organization was created to enable speedier innovation-based organic growth by reinforcing the links between our Research, Development and Innovation, Procurement and Supply Chain organizations. The CoE is driving the development of a standardized, four-stage Innovation process, as well as putting supporting company-wide portfolio and project management tools and programs in place.

Four-stage AkzoNobel Innovation process

Four-stage AkzoNobel innovation process (graphic)Four-stage AkzoNobel innovation process (graphic)

The four-stage Innovation process starts and finishes with customer input, which is consistent with our Customer focused company value. The four stages are ideation, selection and prioritization, execution, and implementation and support. To support delivery of truly leading outcomes from our Innovation process, we have also strengthened the strategic research capabilities of all three Business Areas by reconfiguring the company’s corporate Expert Capability Groups, which perform longer range and underpinning research in partnership with our businesses.

Procurement

There are four primary components of our Procurement process – strategic sourcing, key supplier management, purchase-to-pay and raw material price forecasting. Each of these elements is described in more detail below.

Strategic sourcing

Strategic sourcing forms the backbone of the commercial procurement process. It starts with the requirements defined by our businesses based on market demand and also incorporates supplier selection and negotiation, signing and implementing contracts and reviewing results.

Key supplier management

To support delivery of strategic sourcing, we must manage our key suppliers. This allows us to jointly drive value from innovation, sustainability, procurement, sales and supply chain improvements.

Purchase-to-pay

We are commited to increasing efficiency and control of our transactions in our purchase-to-pay process, ensuring that our orders are right-first-time and compliant with AkzoNobel policies. The process starts with a disciplined creation of a purchasing requisition, continues with receiving of goods or services and is completed with the supplier payment.

Raw material price forecasting

Keeping our businesses well informed about expected movements in the supply market is crucial. Buyers are typically the first people in AkzoNobel to pick up information on this topic and we must have a robust process for ensuring that it is passed on to relevant individuals, so that they can make appropriate commercial adjustments.

Talent management

In 2014, we developed a set of tools to ensure that AkzoNobel is able to continously attract and motivate a highly talented workforce.

Plan

Human Resources (HR) business partners work within the businesses on strategic workforce planning and are charged with identifying the HR needs in terms of size of workforce and individual and collective capabilities in the context of the external environment. This workforce planning process is intended to address short-term needs, but also long-term requirements.

Attract, acquire and on-board

In many parts of the world, recruitment is now supported by an e-recruitment technology platform as part of an integrated suite supporting our Talent management process. This ensures process standardization and helps to increase direct sourcing, thereby reducing costs and improving quality. The focus on quality and consistency of recruitment activities is further supported by the availability of online assessment tools.

Assess performance and potential

The assessment of individual performance within AkzoNobel is supported by our global Performance and Development Dialog (P&DD) process. The P&DD process ensures that an employee’s performance is measured against agreed objectives, which are linked to the goals of their team, and ultimately to the company strategy, vision and targets. Employees are also evaluated on how they live the company values and behaviors.

In order to ensure that we also specifically identify and develop employees with potential to grow into more senior roles, we now use a consistent talent rating approach globally which will be extended to all management levels over time. The rating is reviewed each year by the line manager and calibrated with the support of HR to ensure an equitable outcome. The process is further strengthened by the use of standard assessment centers to validate potential. The outcome of the talent review is an individual talent profile and development plan which is now fully shared with the employee in order to support greater process transparency.

Develop and retain

At AkzoNobel, we are committed to the principle that all employees, at all levels of the organization, should have the opportunity to develop. To do this, we make use of the three E’s – experience, exposure and education. Experience is the most important (roughly 70 percent of development), but exposure is also meaningful (roughly 20 percent of development) and incorporates coaching, mentoring, feedback, high profile projects or short-term assignments. Education makes up the remaining 10 percent of the development agenda and is based on the AkzoNobel Academy, along with external conferences and seminars.

Deploy

Formal career and succession planning is carried out at least once a year to match an individual’s capabilities, development needs and career aspirations with the company’s needs. An important aspect of this process is employee input. At all levels of the organization, increasing emphasis is placed on creating high performing, diverse teams. All actions related to people are recorded and followed up quarterly by talent managers in our global Talent management Center of Expertise (CoE).