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Pharmaceutical Spend Under Management at Boehringer Ingelheim

PROACTIS helps Boehringer Ingelheim gain control and visibility of indirect spend.

Profile

The Boehringer Ingelheim group is one of the world's 20 leading pharmaceutical companies. Headquartered in Ingelheim, Germany, it operates globally with 137 affiliates in 47 countries and more than 38,000 employees.

The company's UK operation is one of the top ten within the group, in terms of turnover. BI UK's annual expenditure on purchased goods and services is in excess of £75 million, much of which is spent on Marketing, Engineering, IT, Facility and Consultancy Services, as well as materials for production use.

Challenge

Before PROACTIS, the UK site had a basic system in place for raising and approving purchase orders, but the process of tracking these, allocating purchasing and financial codes, and matching these to invoices received from suppliers was a paper-chase that took up valuable business time. Gaining an overall view of spending and the processing of payments across the entire UK organisation was no mean feat.

Although the company had a stringent purchasing policy in place, with an approval hierarchy spanning eight divisions and up to eight authority levels, the lack of automation made this difficult to manage and staff would often place orders over the phone and on an informal basis. These purchases would therefore go unrecorded until the invoice arrived in the Accounts Payable department, making order management, financial planning and expenditure control extremely challenging.

Boehringer also found it difficult to keep records and audit trails relating to goods and services purchased and the authorisation procedures followed for each purchase. This was particularly tricky for certain non-tangible purchases such as consulting services, and could have left the company open to fraud and poor corporate governance.

Why PROACTIS?

Jack Smith, Head of Purchasing at Boehringer Ingelheim UK, had the task of finding a solution that would automate and streamline the complete purchase-to-pay cycle whilst supporting the company's existing policies and procedures.

"Not only did we want to eliminate the paper chase and improve efficiencies, we also needed a system that would help us to enforce our policies and procedures to give us the level of financial control and visibility of spend we needed," explains Smith.

Having evaluated a number of competing purchase-to-pay solutions, Smith chose PROACTIS, a well-established, standard but highly configurable software, with a unique ability to meet the majority of Boehringer's key complex requirements.

Requirements included:

• Support for the organisation's elaborate coding systems: Every item/service purchased has to be allocated with a cost centre code, account code and purchasing code. These need to be consistent across the organisation's international offices because HQ needs a global view of spending. The complexity of the coding systems can leave these open to inaccuracies, so Boehringer needed a system which could allow users to cross-reference different combinations of codes, to help them reduce and identify any coding errors.
• Adherence to the organisation's purchasing policy: Boehringer's procurement approval hierarchy 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. Added to this, for purchases above £20k/year the Purchasing department has to be involved. Boehringer needed a solution that could not only mirror and ensure compliance with the approval tree, but that could also provide an audit trail to record every stage of the purchase and payment processes.
• Corporate governance: Boehringer needed a solution that would enable it to securely store purchase orders, quotations and invoices, all held as computer records accessible only to those with the appropriate authority.
• Spend visibility and data compatibility: The software needed to enable Boehringer to capture data easily, and in a format that would be compatible with other procurement and financial systems in use across the global organisation.

Jack Smith comments: "We chose to work with PROACTIS for a variety of reasons, but were particularly attracted by the fact that PROACTIS specialises in spend control technology - unlike many other vendors who sell a whole host of financial and ERP (enterprise resource planning) systems, PROACTIS is able to offer specialist software which can easily be linked to our other systems. We were also impressed by the high degree of customisation that the company could offer by configuring the software to meet our requirements within the standard software specification and price."

Results

Since implementing PROACTIS, Boehringer Ingelheim has noticed a number of benefits. Jack Smith concludes: "The software has met all our key requirements. It is user friendly with an attractive layout and quick response times, making the purchasing process easier to use. Without these features I'm sure it would have been much more difficult to secure end user buy-in. I think it's fair to say that the UK organisation is now leading the way in eProcurement for Boehringer Ingelheim."

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