Core Business Services has been launched to drive integrated end to end, customer centric services including IT, Worldwide Real Estate and Facilities, Finance Services, Employee Services and Indirect ProcurementAt the end of 2010 we re-shaped our manufacturing network into just two operating units: one for pharma products and one for consumer healthcare products. We aligned our central functions to support this new model.Working capital (cash tied up in the business) reduced by £1.3 billion (including £600 million of cash from lower pandemic receivables).
What CBS provides as a common core infrastructurePartners positively and effectively with the businessMakes us agile and competitiveLeverages advances in technology and the global marketplaceInvests in global, standard enterprise-wide solutions Has a mature service delivery capability and continuous improvement cultureTransforms the current user experience – providing joined up, easy to access and use services.
Driving Strategic Value through Automation and Collaboration - Al Barbee, NA Finance Director, GlaxoSmithKline
Driving Strategic Value throughAutomation and CollaborationAl Barbee Sean McDermottNA Finance Director, GSK Manager, North America Accounts Payable, GSK
• What’s new and exciting with GSK • Anti-doping laboratory for the 2012 Olympics in London!• Latest news on world health care front? • GSK’s significant commitment to work on neglected tropical diseases in developing countries!• Did you know… • Advair – top selling GSK pharmaceutical product! • Sensodyne / Aquafresh – top selling GSK oral care products!
Agenda• GSK– Who We Are• Strategic Priorities• Case for Change• Success to Date• Key Learnings• Questions
GlaxoSmithKline • World leading research-based pharmaceutical and healthcare companies • Leading the way in Consumer Healthcare for our OTC, oral care and nutritionals products • 2010 total company sales £28.4bn (~$45bn) • Emerging Markets: 24% of total GSK turnover • One of the largest development pipelines in the industry with approximately 30 late-stage assets* Our Mission To improve the quality of human life domore feelbetter* As of March 2011 livelonger
GlaxoSmithKline – The Global Company 96,500 employees in over 100 countries
NA – CBS Finance Group• Delivers services to 95% of GSK business in North America• Processes include: • Procure to Pay • Accounts Payable • Travel & Expense • Record to Report • General Accounting • Fixed Assets• Outsourced processing to BPO (India)• Procurement under CBS and partners with finance
Strategic Priorities External Internal Our business is focused around the delivery of three strategic priorities, which aim to increase growth, reduce risk and improve our long term financial performance
GSK Structure CBS Finance HR Procure- ment Real IT Estate R E North Europe Asia G I America Pacific O N A L Business Service Centers G L O B Business Process Outsourcing A L
Benchmarks Invoice Volume ~ 500k CBS P2P Benchmarks (BPO) NA SFS (15) 87% 95% 95% E-invoicing % Accounts Payable Manager NA UK (1) 17.5K 19K inv Productivity per FTE ~ 5-7 K GENPACT Accounts Payable Accounts Payable Retained to pa. (51) (3) UK NA % First pass yield 69% 74% 95% E-invoicing Team (6) NA UK Invoice Processing (31) PO compliance % 84 % 98% Customer Inquiry (10) UK & NA Banking/ Credit Recovery/ P-card (10) Best in Class Benchmark GSK
The Case for Change• Challenge • Invoice mix consisted of half paper and half electronic. Processing cost of paper significantly more expensive. Expansion of existing electronic solution not cost effective. BPO solution required document conversion of paper to electronic image• Solution • Automate invoice processing and increase PO usage• Why Ariba: • 60% Match on Suppliers that made up 80% of existing paper volumes • GSK already using Ariba Buyer module for Purchase Orders • Integration with JDE (E1) System (one pipeline forward) • Flexibility of submission option for suppliers (PO flip, EDI/CXML and CSV)
AP Processing – Moving Beyond EDI Need solution to address paper invoice vendors EDI – 52% 240K invoices/year Paper 48%, 220K invoices / year Almost maximized Very long tail of paper invoice vendors Paper Ariba To improve AP productivity Per invoice cost to process (SFS only) $4.47 $1.72 Avg Time to receive invoices in AP ~ 21 days ~ 2 days • Need to improve efficiency & effectiveness of paper invoice process AP Cycle time ~ 11 days ~ 7 days Payment within Terms (2010 average) ~ 70% ~ 94% Big Opportunity * Based on data of last 15 months
Success to Date Paper vs. Ariba Inflows Total e-invoicing Penetration Paper Ariba e-Invoices EDI % Total e-Invoices20,000 100%18,000 90%16,000 80%14,000 70%12,000 60%10,000 50% 8,000 40% 6,000 30% 4,000 20% 2,000 10% 0% 0 Aug… Sep… Nov… Dec… Feb… Mar… Aug… Sep… Nov… Dec… Jan-… Jun-… Jan-… Oct-… Apr-… May… Oct-… Feb-11 Mar-11 Jan-11 Jun-11 Jan-12 Oct-10 Apr-11 Oct-11 Aug-10 Sep-10 May-11 Jul-11 Aug-11 Sep-11 Nov-10 Dec-10 Nov-11 Dec-11 Jul-11 1500+ suppliers enrolled in 9 months; Net Ariba inflows outstrip Paper inflows in May ’11
Invoice Inflow Analysis Success to Date Paper Invoice Ariba Invoice EDI Invoice POT Trend100 93 93 94 93 93 93 95 91 92 92 63% 90 90 90 17% 90 85 20% 80 75 70 65 9% 60 55 21% 50 70% Dec09 Dec10 Jan11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11 Dec11 Jan12 12-Feb Paper EDI Ariba POT Over All Target Electronic Non-PO online PO Flip
Benefits Delivered• Major contribution to 20% savings goal in GSK shared financial services• Vendor Portal (self service) – call/query reduction by 30%• Improved Paid-on-Time vs. paper• Faster new supplier implementation at lower costNext Steps:• Evaluate remaining paper invoices: • Supplier noncompliant (working with Procurement) • Move expense to alternative solution (i.e. Pcard) • Decision to continue image process “as is” or look at alternative scanning solutions
Lessons Learned – Key Takeaways Lessons Learned Takeaways• Data collection needs to • Strong communications start prior to initiative • Internal/External• Continue change • Dedicated team to deliver management communication process • Paper rejection process after Go Live for “enabled suppliers”• Manage of high volume • New supplier on-boarding suppliers (EDI/CXML) takes needs to included longer on-boarding process E-invoicing process