Pharmaceutical Executive Europe - November/December 2007 - (Page 54) 54 The Mix Nov/Dec 2007 Pharmaceutical Executive Europe Establish internal control Applying internal budget controls and an effective approval hierarchy to the purchasing process can be an important first step towards establishing spend control. Purchase-to-pay (P2P) solutions are specifically designed to manage all non-payroll spend. Best practice P2P solutions streamline purchasing and invoice handling processes, whilst imposing vital controls over spend and delivering constant cost-base visibility. At the same time, replacing paper-based processes with an electronic system will bring savings from process efficiencies and economies of scale. Drive accountability and traceability Once all spend is being channelled through an automated P2P system, not only does the organisation achieve control, but gaining visibility of spend becomes much simpler. Being able to produce detailed reports gives organisations the ability to provide basic information on spending patterns and committed expenditure. When integrated with information from existing financial and enterprise resource planning (ERP) systems, these reports become powerful spend analysis and financial planning tools. A fully integrated system will produce reports that are vital to providing staff and management teams with the visibility of their expenditure against budget, allowing them to track important key performance indicators. These reports can include: ● Budget and commitment tracking dashboards, enabling the monitoring of spending and commitments against budgets. ● Real-time analysis of spend with drill-down capabilities. ● The ability for any user to produce their own report. Realise savings When successfully implemented, with buy-in across the entire organisation, eProcurement has the potential to drive savings. Not only will process efficiencies be achieved, but maverick spend will be reduced and procurement professionals will have the time to focus on value-add activity, such as negotiating improved supplier discounts. eProcurement, when integrated with wider systems, can deliver improved visibility of the cost pipeline and greater procedural control. Terry Wilcox Real-life benefits The benefits of eProcurement in the pharmaceutical sector become clear when we consider the example of Boehringher Ingelheim, whose UK headquarters implemented an eProcurement solution in 2006. The new system has achieved: ● A more efficient back-office. The purchase-topay cycle is now fully automated and the paper chase that once ensued has been eliminated. This has driven internal efficiencies and ensured that suppliers are always paid on time. ● Improved accuracy of financial coding. Boehringer operates on an elaborate coding system that is used across the global organisation. The process of tracking and allocating purchasing and financial codes and matching these to invoices is now seamless. Users can cross-reference different combinations of codes to help them identify and reduce coding errors. Every item or service purchased is now allocated with the correct cost centre code, account code and purchasing code, making visibility of global spend a reality. ● Improved financial planning. Thanks to improved visibility of expenditure and commitments, financial planning has become much more effective, impacting the organisation’s bottom line profitability. The software enables Boehringer to capture data easily, integrate it with data from its finance and ERP system and produce reports in a format that is easy to read and compatible across the organisation. ● Reduced maverick spend. The eProcurement software ensures automatic adherence to Boehringer’s purchasing policy. It mirrors and ensures compliance with the approval tree, which spans up to eight different levels of authority across eight divisions, governing who has the authority to approve purchases in specific categories and at various value thresholds. ● Corporate governance. The solution also provides an audit trail to record every stage of the purchase and payment processes. It allows Boehringer to store purchase orders, quotations and invoices (which are all held as computer records accessible only to those with the appropriate authority) securely. Driving value The potential benefits of eProcurement are clear, but the true value will not be realised simply by replacing a paper-based system with an electronic one. Like Boehringer, organisations should take a wider view and integrate procurement systems with other established processes. In this way eProcurement technologies can help to drive visibility and control on a global scale. About the Author Terry Wilcox is commercial director at Proactis, with responsibility for managing the company’s commercial operations in the UK and developing new channels-to-market across EMEA and the USA.
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