Coca-Cola Beverages South Africa’s Walter Leonhardt will be retiring as CFO at the end of the year. During a tour of the factory, Walter recently chatted with CFO Magazine and shared what his final two years at the beverage manufacturer and distributor have been like, and what the future has in store.
1. How have the last two years been at Coca-Cola Beverages South Africa?
We had a very tough year in 2020 with Covid-19, and while 2021 was somewhat of an improvement, the war that broke out in Ukraine in 2022, and the subsequent disruptions of supply chains as well as a big escalation in costs on diesel, plastic and energy for example, has meant the last two years have been very difficult for us.
That said, we’ve made a couple of adjustments and investments, and so far this year is off to a good start. I’m very optimistic that 2023 is going to end as a good year for us.
2. What have been some of the toughest challenges you’ve had to overcome over this period?
Some of our suppliers were battling to supply raw materials to our operations because of these challenges. However, we only look for alternative suppliers under exceptional circumstances and instead worked with our existing suppliers to help expand their capacity.
We have had to make sure we could provide more certainty on the forecast of the supply into our organisation, because in the past we’ve forecasted a certain amount and then five weeks later we ask for something else. So the forecast accuracy is something we’re working on a lot.
We’ve also buffered our raw materials and inventory stock holding. In the past, we operated with a higher degree of certainty, which meant we could keep a certain level of stock. Now, however, the certainty is less so we’re keeping a little bit more, both in our finished goods and raw materials.
That comes with a lot of cost, though, because it’s not free to hold stock incrementally. So working capital has also had an inordinate amount of focus and we’re making good progress to optimise and reduce it through collaboration with our suppliers and being more efficient internally.
For example, we have agreed with some of our suppliers to buy more stock but over longer payment terms. This benefits both the suppliers and us in terms of working capital.
3. How have you been using technology to help you address some of these challenges?
We have just undergone an ERP replacement. I think any ERP replacement is a major event in any organisation, but we went through a significant amount of disruption to get here. And it’s still very early days for us, so we’re still trying to get our arms around it.
Once the disruption has settled, it will put us in a much stronger position in terms of obtaining data and information, and also making linkages between the various parts of our organisation – which is all on one platform now. The visibility and richness of reporting that we are heading towards is going to be an exciting enhancement.
It should help with the forecasting as well, because the data will be more accurate.
We are busy implementing programmes to help bed down the system across all the functions of the business and to start utilising reporting, which is one of our biggest focus areas at the moment.
4. How have you been balancing ESG targets with the company’s performance over the last two years?
We have made fantastic strides across a variety of areas. What I find especially inspiring is the passion so many people in our organisation have for ESG topics, despite not necessarily being measured on those elements and where we are being measured on elements, there is always an aspiration to go beyond the measure required!
Some of the environmental areas where we have exceeded both our own as well as any mandatory targets like waste management, recycling and water usage. We are acutely aware of the impact our organisation and products have on the environment and we have set ourselves very ambitious goals to mitigate this impact, including a 100 percent recycling rate by 2030, which we are well on track to achieve – today, we are already well ahead of 90 percent.
We have also installed solar panels on the roofs of all our factories that supply approximately 12 percent of our total electricity. We’ve implemented many other programmes to reduce our internal electricity consumption as well.
One of our biggest achievements was to achieve a B-BBEE Level 1 status for two consecutive years in 2021 and 2022, where we had done really very well across all areas. Unfortunately, we recently dropped to a Level 3 status because of the way our employee share ownership scheme is set up. With the economic environment and our results over the last couple of years, the value of the company reduced, hence the value of the share scheme reduced. Because it’s a priority element on the scorecard, and we didn’t meet it, we were discounted a further level.
We have a very diversified workforce across all levels, with 51 percent of our leadership positions held by women, for example.
5. Your time at CCBSA is coming to an end soon. Can you tell us what made you decide to retire this early in your career?
I still have a lot of energy and a lot of time left to make a difference.
I have worked for this organisation for 28 years now. I would like to get involved in some other industries as well and see what value I can bring there – hopefully in non-executive capacities. Our retirement age is 63, but I don’t want to get to that age and then be too tired to take on the rest of my life. I want to start doing something now that I can take beyond 63.
6. What have been some of the highlights of your time at CCBSA?
One of the great things has always been that I get to work with a fun product with endless opportunities.
Meeting so many people across so many different walks of life, and experiencing the different phases the business went through has transformed me as a person, and I will carry that with me into my next adventure.
7. What lessons are you taking with you from your time at CCBSA?
- Not to take everything seriously all the time.
- To think before I speak.
- Face-to-face conversations beat an email or telephone call hands-down.
But most importantly: There’s nothing I can achieve alone. I’m leaving behind a strong team and handing over to a completely capable successor, Michael Wilson.
8. What advice have you given to your new successor?
The biggest responsibility he has as a leader is to ensure that the people in the organisation are capacitated and happy. The CFO needs to ensure that there’s a capable finance team that is able to support the organisation. That requires a lot of coaching, group discussions and time with people individually.
Because it’s not the CFO who gets the job done, it’s the people we lead that do, our only job is to enable and empower them.
To do that, you have to build personal connections with people. You have to know what’s going on in their life, understand their circumstances and accommodate that in the work environment.
It’s also a leader’s job to protect their people. The business demands a lot from finance, and it is the CFO's job to stand up for them when they are snowed under.
9. You’ve already started ticking items off your retirement bucket list. What have these been?
My eldest daughter, who has been obsessed with Formula 1 for the past five years, and I recently went to Amsterdam to watch a race, and it was incredible – an experience of a lifetime.
We were only there for five days, but managed to fit in a 20km afternoon bike ride through the country, where the windmills, farms, channels and cheese factories paint the most beautiful scenes.
I’ve always loved cycling and plan to do a lot more of it, likely a few events too which I’ve never had the opportunity to participate in previously.
This interview was originally published in the second edition of the 2023 CFO Magazine. Read it here.