Key Results
The Opportunity
Streamlining Procure-to-Pay Operations in a Global Pharmaceutical Leader
A Japanese-based global health solutions holding company, with a focus on neuroscience, oncology, cardio-renal, and medical devices, faced significant challenges in its procure-to-pay (PtP) operations. The existing process was inefficient, segmented, and difficult to measure. The company utilized numerous external vendors who were not collaborating effectively and did not understand each group’s deliverables and desired outcomes. This led to a lack of standardization and integration, resulting in hundreds of millions of dollars spent on contractors and an overall inefficient process.
Key challenges included
Inefficient resource utilization
Lack of accountability and data transparency
Missed sourcing management opportunities
Absence of an integrated end-to-end procurement process
Limited strategic evaluation for best practices and pricing
Recognizing the need for change, the company sought to improve quality, provide standardized procurement practices, shorten cycle times, and optimize resource utilization while realizing significant cost savings.
The Solution
Comprehensive PtP Transformation and Outsourcing Strategy
We developed a strategic approach to transform the PtP operations. This comprehensive solution was designed to consolidate resources, improve processes, and enhance overall efficiency.
Key Components of Success
01. Performed Gap Analysis
We performed a gap analysis on the process and metrics for each major PtP functional component. We also identified performance gaps, inefficient resource utilization, and excessive costing.
Success driver: Thorough understanding of existing processes, identification of inefficiencies, and data-driven analysis.
02. Long-Term State Vision
We developed a long-term vision supported by a consolidated outsourcing service company. We proposed a new streamlined organizational structure, including a new vendor (BPO) relationship manager role.
Success driver: Clear vision for improvement, strategic restructuring, and focus on streamlined operations.
03. Comprehensive RFP Process
We created a three-stage process: RFP content development, evaluation criteria establishment, and recommended negotiation steps. We developed a detailed RFP including a current state overview, future state requirements, volume metrics, and more.
Success driver: Structured approach to vendor selection, comprehensive RFP development, and clear evaluation criteria.
04. Change Management Strategy
We proposed a communication plan to facilitate the transition of the current organization. We developed a change management strategy for ensuring successful transition to the approved BPO.
Success driver: Proactive communication planning, stakeholder engagement, and structured transition management.
05. Performance Metrics
We calibrated performance metrics based on evolving business objectives. We established regular tracking and reporting mechanisms.
Success driver: Alignment of metrics with business goals, continuous monitoring, and data-driven decision-making.
The Results and Impact
The implementation of this comprehensive PtP transformation strategy resulted in significant improvements in efficiency, cost savings, and management insight.
Substantial Cost Reduction
The transformation achieved approximately $100M in cost savings in one quarter, with an additional $20M saved through outsourcing, parts of the process. This substantial cost reduction significantly improved the company’s bottom line and freed up resources for strategic investments.
Enhanced Management Insight
The new system provided significantly improved data for business and process management. This enhanced insight enabled more informed decision-making and strategic planning, allowing the company to respond more effectively to market changes and opportunities.
Improved Focus on Core Business
The transformation allowed the company to focus employee resources on evaluating sourcing and process improvement opportunities. This shift in focus facilitated further reduction in company expenses and improved profit margins, enhancing overall business performance.
Scalable Operations
The new PtP system established a scalable operation capable of responding to evolving business needs. This scalability ensured that the company could adapt to growth and changes in the market without significant additional investment.
Operational Improvements and Business Impact
- Improved internal focus on core business and internal customers
- Implemented contractually committed service levels and savings, including future savings triggers
- Shifted delivery risk to the outsourced partner
- Enhanced quality user experience, including multi-level 'concierge' support
- Improved business continuity
- Positioned the company to absorb several related, non-process activities without additional cost
- Prepared the client to execute the selection of a full-fledged business outsourcing partner
- Enabled implementation of the future state PtP operation in less than one financial quarter
This strategically aligned PtP transformation addressed the initial challenges of inefficiency, lack of standardization, and missed opportunities in the company’s procurement processes. By leveraging a comprehensive approach that encompassed process improvement, resource consolidation, and strategic outsourcing, we delivered a solution that resonated with the organization’s global strategy. This approach not only streamlined operations but also fostered a culture of continuous improvement, positioning the pharmaceutical company for enhanced efficiency and competitiveness in the global healthcare market.
Rediscover the power of personalized consulting with alliantConsulting. Contact us today to schedule an initial consultation and begin your journey towards improved profitability and long-term value.
