Streamlining foreign exchange deal workflows: A journey of efficiency and innovation at Keurig Dr. Pepper
Discover how the treasury team at the American multinational beverages company, Keurig Dr Pepper revolutionised its foreign exchange management by implementing an automated FX trading solution, overcoming challenges, and reaping significant benefits.
In a world where financial markets are becoming increasingly complex and treasurers face a myriad of challenges, Texas based multinational beverages company, Keurig Dr. Pepper’s journey in streamlining foreign exchange deal workflows stands as a testament to the power of innovation and the value of efficient systems.
The company, born out of the merger between two large organisations in 2018, embarked on a transformative journey to optimise its treasury functions and minimise manual intervention. Speaking at EuroFinance’s 9th annual Global treasury Americas West Coast, Félix-Antoine Marchildon, Director of treasury at Keurig Dr Pepper spoke about how the implementation of new systems, including a Treasury Management System (TMS) and an electronic trading platform for FX, have significantly enhanced efficiency and created a centralised, accessible source of truth for the entire organisation.
Before implementing the automated FX trading solution, Keurig Dr Pepper faced several challenges in managing its foreign exchange exposure. One of the primary concerns was the inefficient and labour-intensive manual processes associated with executing trades, managing exposure, and ensuring compliance. These traditional methods demanded significant time and effort, making it difficult for the treasury team to stay on top of its FX transactions and maintain the necessary level of control.
The manual processes made it harder to maintain a clear overview of the company’s FX positions and effectively manage the associated risks. The lack of real-time market data further complicated informed decision-making regarding FX transactions.
Furthermore, compliance and internal control issues also posed problems for Keurig Dr Pepper. Ensuring that all trades were executed in accordance with internal policies was challenging due to the manual nature of the processes. This increased the likelihood of errors and made it harder to enforce the proper segregation of duties and maintain a clear audit trail.
Lastly, the company faced difficulty in achieving competitive pricing for its transactions. Sourcing quotes from multiple banks and executing trades manually often meant that the company might not secure the best possible pricing.
These challenges prompted the treasury team to explore and ultimately implement an automated FX trading solution and embarked on a multi-stage implementation process that encountered a few obstacles along the way. Initially, the company conducted extensive research to identify the most suitable automated FX trading platform for its needs. This involved evaluating various vendors based on factors like features, ease of use, compatibility with existing systems, and cost. They eventually selected a platform that met their requirements and offered the necessary support and customization options.
The critical step of integrating the new automated FX trading platform with Keurig Dr Pepper’s existing systems and processes required close collaboration between the company’s IT, finance, and treasury departments to ensure a seamless transition. Establishing data flows between the new platform and the company’s ERP system, as well as any other relevant systems, such as risk management and compliance tools, was essential.
To implement an automated FX trading solution, the treasury team had to ensure that its platform adhered to relevant regulatory requirements and internal policies. The company worked closely with the platform provider to guarantee that the system was configured correctly and met all necessary compliance standards.
The implementation of the automated FX trading solution has yielded several key benefits for Keurig Dr Pepper, transforming its approach to managing foreign exchange exposure. With improved risk management, the treasury team can now execute hedges more effectively and with greater precision, minimising losses and maximising potential gains.
“After the implementation of this system, we were able to double our trade volumes without adding headcount or changing anything else.” Marchildon told delegates at the conference.
Furthermore, the system has enhanced operational efficiency as the reduction in manual processes has led to cost savings, lower transaction costs, and reduced errors and potential losses from mismanagement.
Automation has streamlined operations and freed up employees to focus on more strategic tasks and decision-making. The treasury team has been able to save more than 120 hours per year handling outstanding deals, trading, and settling deals at maturity.
Increased transparency and control has been achieved through real-time visibility into foreign exchange transactions and risk exposure, allowing for better decision-making and more effective management of financial risks. Furthermore, the automated FX trading solution is easily scalable, ensuring that the treasury team remains agile and competitive in the global market.
Going forward, the treasury team plans to continue monitoring and optimising its automated FX trading solution to ensure it remains effective and delivers ongoing benefits and also stay abreast of industry trends and technological advancements to identify new opportunities for improving its foreign exchange management strategy. By doing so, Keurig Dr Pepper will maintain its competitive edge in the global market and continue delivering value to its shareholders.
The world’s largest and most influential treasury event will return this September in Barcelona. Join more than 2000 senior-level professionals representing over from more than 50 countries to exchange experiences, learn best practices and meet best-in-class financial and technological partners. This year we will explore the theme “Navigating a new world,” empowering treasurers to manage today’s new and complex challenges and optimise treasury for the new economic cycle. Find out more.