How has the finance function changed in response to current conditions?
There are more demands on the finance function than ever before. If you talk about things like accessing capital markets and liquidity, this is a much bigger challenge than it used to be. Risk management is much more rigorous. And, when you have the kinds of pressures that companies are feeling it creates an opportunity for control lapses. You have to double down on the focus on your internal controls and make sure that people aren’t cutting corners. It’s like this is the World Series for finance folks and we have to step up to the plate and deliver.
How does finance interact with the business to facilitate that “stepping up to the plate”?
Our finance folks are actively participating in all the operating and management decisions that are being made. They are sitting at the table and I expect them to sit up straight. In most of our operating groups the finance folks are, in a way, co-general managers. We have a general-manager structure, so there is a general manager and the right hand to that general manager is the finance person.
You mentioned risk management as a prime focus. Can you say more about that?
We’ve had a pretty rigorous risk-management process in place for a number of years now, since it became a governance topic about five years ago. We look at more than 100 risks worldwide, across strategy, operations, financial, corporate compliance, control, and the like.
One aspect that’s new for us, however, is worrying about counterparty risk. We monitored it in the past but now it’s much more heightened. The example that I site is that Lehman Brothers used to participate in our revolver; out of $1.2 billion they had $100 million. So when they disappeared, that was $100 million of liquidity that just went away for us. In the scheme of things it’s not that big a number, but if you’d asked me 18 months ago would we lose our committed lines because one of our major banks was going to disappear, I never would have conceived of that. So this counterparty risk, which financial-services companies have been very sophisticated about, now presents a whole new set of challenges for operating companies like us.
Given all the challenges that companies face today, how do you rally your staff?
We focus on controlling what we can control. We can’t control what happens to the ruble or the peso, but we can control our emphasis on productivity, on revenue and margin management, on capital spending and working-capital management, and on the essence of this business: customer service and execution at the point of sale. That’s not necessarily a finance function but that’s what the organization can control. We try to be very prepared and granular, because this is a transaction-intensive and people-intensive business. It’s not about building 747s, it’s about selling 85 billion servings of beverages a year.
What’s your personal consumption like?
Well, I’m drinking a Diet Pepsi right now, with our cool new graphics on it. I’m good for several bottles of Diet Pepsi and Aquafina a day, and I dabble in some of our other products.