Processes

When we defined our strategy and focus areas during 2012, we also identified six processes that required a consistent approach across the company. During 2013-2014, our focus was on codifying these company-wide processes and including them in our corporate directives to ensure appropriate governance. In 2015, we focused on deploying these processes throughout the organization. A brief update on these processes follows.

People, product and process safety

As indicated throughout this strategic performance section, Safety is a core principle which engages and unites all of AkzoNobel. The people safety process is aimed at increasing awareness of behaviors that put us at risk. In 2015, we focused on reducing slips, trips and falls across the company (including offices and laboratories) and on-site manager safety leadership via a program called Hearts & Minds. The CEO and senior leaders coached 80 site managers in 2015 as part of this program.

The aim of our process safety program is to identify and control hazards in our operations by avoiding unwanted events at manufacturing sites that result in injuries, waste or harm. We measure our performance on this through a disciplined audit process and are continually improving in our audit outcomes. Product safety incorporates the traditional approach of reactive regulatory compliance and even goes beyond this, enabling us to take the lead in sustainable product stewardship.

Operational Control Cycle

The Operational Control Cycle, which has been in place since 2012, forms the heartbeat of our operational performance management system. We do this through a cycle of regular, sequenced and staged operational meetings, which incorporate structured and standardized operational discussions. By employing this process, we review past performance, but more importantly we focus on a realistic three-month rolling forecast, as well as mid to longer term planning.

Continuous improvement

As mentioned earlier in this section, implementation of the AkzoNobel Leading Performance System (ALPS) is already well underway in our Integrated Supply Chain, with clear signs of progress in terms of deployment within the “Make’’ and “Plan’’ processes. Within the Integrated Supply Chain, our next focus will be on “Source’’ and “Deliver’’ processes. In 2016, we will also begin to deploy our continuous improvement toolkit, including Lean and Six Sigma fundamentals, in our support functions through our Global Business Services (GBS) organization.

Innovation

We have now restructured our Research, Development and Innovation (RD&I) group. As part of the restructuring process, we implemented new RD&I organizations within our three Business Areas, strengthening strategic research capabilities across the company. To support these organizations, we are developing and deploying a standard innovation process which includes best practice stage gate and portfolio management sub-processes. The 2016 focus will be on developing and deploying improved front-end processes, such as idea generation and management and enhancing our innovation metrics. This will give us greater visibility on our portfolio health, stage gate success rate and the strength of our innovation. Coupled with a strong RD&I culture, this will help to stimulate a resilient portfolio of organic growth projects. (More detailed information about our work in RD&I can be found in the Sustainability statements, Note 4).

Procurement

There are three primary components of our Procurement process – strategic sourcing, supplier management and purchase-to-pay. Strategic sourcing forms the backbone of the supplier selection and commercial process. After selection and contracting, a high level of supplier performance is ensured by a strong supplier management process. This process is focused on creating value beyond commercial conditions, including innovation, sustainability, cost, quality and on-time delivery improvements.

We are implementing a more robust purchase-to-pay process and automating this where appropriate. The Procurement organization is also able to keep our businesses well informed of expected movements in the supply market by closely monitoring the market developments of purchased raw materials, enabling appropriate commercial adjustments.

Talent management

In 2013, we developed our Talent management process based on five steps – plan; attract, acquire and on-board; assess performance and potential; develop and retain; deploy. In 2014, we developed a set of tools to support this process and implemented these tools throughout 2015. Our engagement and diversity levels have improved as a result (as described earlier in this section) and we expect to continue making progress on these metrics. Going forward, we will focus on utilizing this process to further develop a high performance culture. This incorporates active talent management and development of leadership and people management capability.