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."
