A subunit manager said the following:
“In the Americas Customer Operations [Central and South America], the US dollar is
our functional currency.
We make all our trades in dollars and our accounting based
performance measures are in dollars. We work off a PDR (plan development rate), which is
our reference point for all translations. We update the transfer prices on a quarterly basis.”
An example of the complexity of the transfer pricing, currency translation, and
performance measurement system is the following.
The Venray, Netherlands, facility regularly sold or transferred copiers to the US
marketing unit. The Venray plant was legally part of Rank Xerox, but for performance
purposes the general manager reported to Manufacturing Support (MS), a central corporate
function. Corporate management explained the following:
“The Vanray site director currently reports to MS through the Rank Xerox
Manufacturing Operations organization. We are currently working on recommendations on
how to align and transition focus factories to report to the business teams/business divisions.
The Venray product array does, however, support more than one business division. There
will be areas that are not included in the focus factories and that will remain reporting to
MS.”
Note that within the Venray site (Exhibit 1) there were functions that reported to the
Venray site director as well as to organizations outside Manufacturing Support.
Performance measures were driven by the Manufacturing Support organization with
Supplies and the Materials and Supply functions being driven by the respective organizations
managing them as indicated on the organization chart. This responsibility will transition to
the divisions in line with the reporting structure referenced above with ongoing support form
MS, Supplies, Integrated Supply Chain, and Customer Operations organization. In essence,
central support organizations provided services for the business divisions and sustained the
performance measures as appropriate.
How does this influence your performance measures?