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L I F E S C I E N C E S
OTC transformational redesign delivers positive ROI of 1.8
million in profit and 3.5 million in cash flow for
biopharmaceutical major
About the clientMajor biopharmaceutical company
IndustryLife Sciences
Business need addressedUnderstand, define, and manage an
effective and efficient Order to Cash
(OTC) process in support of the function
becoming a value-add business partner
for the organization.
Genpact solutionEnd-to-end OTC process redesign to drive
greater transparency, smarter processes,
and more effective business strategies.
Business impact Increasedprofitby1.8millionannually
through improved recovery of invalid
deductions and disputes
11%savingsfromimprovedcashflow
and6%efficiencysavings
Improvedcycletimeforquery
resolution
Improvedcontrollershipanddata
qualitybuiltintoERP
Enhancedcontrollershipofcash
received
Business challengeThis major biopharmaceutical company sells
products to third-party
customerssuchaswholesalers,privateandpublichospitals,pharmacies,
and other pharma manufacturing companies mainly located in
Eastern
Europe, based on royalties, and delivers export orders to its
international
clients. The client utilized different distribution models
across the different
countries:
PullStrategy:Actualcustomerordersspecificallyrequestedfromclients
manufacturing units
PushStrategy:Third-PartyLogistics(3PL)ownershipmodel:Products
manufacturedandsentto3PLsbasedonhistoricalsalesandforecast
PushStrategy:Clientownershipmodel:Productsmanufacturedand
sentto3PLswithoutchangeinownership.Invoicingandcollections
responsibilitylaywiththeclient,butactivitywasmanagedbythe3PL
Thesemodelswereimplementedusingfragmentedsystems,tools,
andstructures.Theoverallorganizationwasdecentralized,withlocal
accountabilitydowntothefunctionallevelandnoend-to-endvisibility
into the OTC process.
Inaddition,theEuropeanOTCprocessesforthird-partycustomersdidnot
consistently include or apply critical best practices across
different entities.
Afurtherlackofanalyticsresultedinundefinedbusinessstrategies,while
manual processing created long turnaround times.
Inaconsciousmovetowardbecomingamoreintelligententerprise,a
globalbiopharmaceuticalcompanywantedanend-to-endOrdertoCash
(OTC) assessment of its European export entities and U.S.
operations to
helptheOTCprocessbecomeavalue-addbusinesspartnerwithinthe
company.Inacompetitivebidprocess,theychoseGenpactsprovenSmart
EnterpriseProcess(SEPSM) methodology for its logical, holistic
approach
andprocess-levelgranularity.Asix-weekend-to-endassessmentprovided
transparencyintotheentireOTCfunctionandresultedin1.8million
increasedprofitannuallyand3.5millionadditionalcashflowimpactfor
our client.
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IntheU.S.,processeswerehighlyautomated,butgapsinmaster
data creation and dispute management threatened customer
satisfaction, compliance, and cash and cost optimization.
Althoughtheclientembracedend-to-endbusinessprocess
management, they needed to better understand their OTC
functioninordertosupportFinancesglobalcontributiontothe
enterprisesgoals.Theclientsoverallobjectivewastodeliver
tangible,sustainablebenefitstotheenterpriseonkeybusiness
outcomessuchascashflow,customersatisfaction,profit,and
compliance.
Genpact
approachGenpactsgoalistohelpourclientsbecomemoreinnovative,
better able to adapt to challenges, and more globally
effectivewhatwecallanintelligententerprise.Forthis
client,weusedourSEPSMframeworktoconductathorough
analysis of their OTC operations and create an overall
improvement roadmap. We used this granular methodology to
thoroughly diagnose the end-to-end OTC process and identify
opportunities for improvement such as:
Processesweredecentralizedandtherewasalackof
enablingtechnologiessuchasworkflow
Therewasnovisibilityintokeymetricsincashapplication,
such as unapplied cash and payment optimization
Keymetricstomanageandmeasurebacklogsincontracts
werenotimplemented
SAPfeaturesthatcouldhavedrivenmoreprocessefficiency
werenotfullyimplemented
This successful European assessment convinced the client
ofGenpactscapabilities.TheclientthenrequestedaU.S.
assessmenttounderstandimprovementopportunitieswithinits
GrosstoNetaccrualandprocessingactivities.
Genpact recommendation
Genpactpresenteddetailedprocessandtechnology
recommendations that formed a comprehensive OTC
transformationroadmap,alongwithadetailedpriortizationand
implementation plan:
RecommendedatemplatefortheOTCcycletoimprove
keymetricssuchasDaysSalesOutstanding(DSO),dilution,
compliance, and customer satisfaction
Designedacentralized,standardized,andautomatedprocess
across export businesses instead of the current five
entities
managedinfivedifferentways
Implementedmetricsforperformancebenchmarkingand
managementacrossOTC,includingbacklogmetricsfor
contractsandnewmetricsforSAP/BusinessIntelligence
Conducted statistical modeling on multiple linear regression
variablesin8-10majorrevenuedebittypestoreduce
variation and true-up adjustments
Increasedvisibilityintounappliedcashandpaymentmethod
optimization
ImplementedSAPusageenhancementsforbetterorder
management, billing, cash application, claims management,
and dispute resolution processes
Genpactsholisticstrategyforaddressingprocessgapsand
improving end-to-end performance resulted in a phased
implementation of the recommendations based on priority for
all
businessunitsacrossthisclientsU.S.andEuropeanexportbusiness.
3.5 million
Cash flow improvement
Profit impact Net incremental cost
Operational efficiency
Overall impact
**Payback = 5 months
3.5 million in WC 1.8 million in profit**
1.8 million
700K
200K
1. Compliance 2. Customer satisfaction
Export business U.S. business
Order to Cash transformational redesign
3. Cash & cost optimization
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Business
impactTheclientsgoalofmakingOTCavaluedriverfortheenterprise
iswellunderway.BenefitsderivedfromthedualEuropeanand
U.S. assessments thus far include:
Increasedannualprofitof1.8million
Cashflowimpactof3.5million
11%savingsfromimprovedcashflow
6%efficiencysavings
Bettercontrollershipandvisibility
Genpactpowersamoreintelligententerprisethroughprocess.
Our combination of smart analytics, processes, and
technologies
helps our clients become not just more efficient but also
more effective in serving customers, driving higher customer
satisfaction,andgrowth.
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About Genpact
GenpactLimited(NYSE:G)isagloballeaderintransformingandrunningbusinessprocessesandoperations.Wehelpclientsbecomemorecompetitivebymakingtheirenterprisesmoreintelligent:moreadaptive,innovative,globallyeffectiveandconnected.GenpactstandsforGeneratingImpactforhundredsofclientsincludingover100oftheFortuneGlobal500.Weofferanunbiasedcombinationofsmarterprocesses,analyticsandtechnologythroughour60,000+employeesin24countries,withkeymanagementbasedinNewYorkCity.BehindGenpactspassionforprocessandoperationalexcellenceistheLeanandSixSigmaheritageofaformerGeneralElectricdivisionthathasservedGEbusinessesfor15+years.
For more information, visit
www.genpact.com.FollowGenpactonTwitter, Facebook and LinkedIn.
2013CopyrightGenpact.AllRightsReserved.
For More Information, Contact:
Sajeesh
KumarAssistantVicePresident,OTCPracticeIndia:[email protected]
Julia
PshenichnayaAssistantVicePresident,Sales&OperationsUS:[email protected]
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