SAP FSCM Credit Collections and Dispute Management Case Study Pfizer

Adam Nice

Sr. Manager & Global Process Driver – Credit-to-Cash

Pfizer Global Financial Solutions

Pfizer, Inc.Credit-to-Cash & FSCM Initiative

• Pfizer Inc. Overview

• Organization Credit-to-Cash Highlights

• Current Credit-to-Cash Systems Footprint

• ERP / FSCM Global Deployment– Global Gap Analysis

– Solution Design

– Module Assessment To-Date

• Q&A

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Pfizer, Inc. – Credit-to-Cash & FSCM Initiative

Agenda

• World’s largest research-based pharmaceutical company

• Headquartered in New York, NY

• Founded in 1849

• Total Global workforce of ~110K colleagues

• 2009 annual sales revenue of ~$50B

– 43.5% U.S. / 56.5% Rest of World

• Select key products:

– Lipitor (Biopharmaceuticals)

– Lyrica (Biopharmaceuticals)

– Revolution (Animal Health)

– Advil (Consumer)

– Centrum (Consumer)

• Completed ~$68B acquisition of Wyeth in Q4, 2009

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Pfizer, Inc. Overview

http://www.advil.com/Default.aspx

http://www.centrum.com/default.aspx

• Pfizer operating model

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Pfizer, Inc. Overview

Biopharmaceutical Businesses

Diversified Businesses

Manufacturing

Enabling Functions

CustomerFocused

Primary CareSpecialty

Care Oncology

Established Products

Emerging Markets

Animal Health CapsugelConsumer Healthcare

Nutrition

Nine Diverse Businesses Supported byTwo Focused Research Organizations

Business Units Including:Development, Medical,

Sales & Marketing

PharmaTherapeuticsResearch & Development

BioTherapeutics Research & Development

• Global trade AR balance of ~$13B at end of Q4, 2010– U.S. domestic trade AR balance of ~$4B

– International (ex-U.S.) trade AR balance of ~$9B

• Global past due as a % of total AR of ~16%– U.S. domestic past due as a % of total AR of ~1%

– International (ex-U.S.) past due as a % of total AR of ~23%

• Pfizer utilizes a Global shared services network to support the following Credit-to-Cash functions:– Accounts Receivable

• Cash Application

• AR Accounting

– Collections Management• Strategic Collections

• Non-strategic Collections

• Deduction Management

– Credit Risk Management• Credit Policy

• Portfolio Risk Assessment / Reporting

• Customer Risk Analysis

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Organization Credit-to-Cash Highlights

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Organization Credit-to-Cash Highlights

Memphis, TN

GFS Americas

Markets Supported:

• Canada

• Mexico

• North Latin America

• United State & Puerto Rico

Dalian, China

GFS Asia

Markets Supported:

• Australia / New Zealand

• China

• Japan

• Singapore

Dublin, Ireland

GFS Europe

Markets Supported:

• Austria

• Belgium

• Denmark

• France

• Finland

• Germany

• Ireland

• Italy

• Netherlands

• Norway

• Portugal

• Spain

• Sweden

• Switzerland

• United Kingdom

Delhi, India

Bucharest, Romania

Dalian, China

Business Process Outsourcing (BPO)

Pfizer's Business Process Outsourcing (BPO) partners are

Genpact and Accenture. Pfizer's processes are supported

from six strategic locations.

Chennai, India

Bangalore, India

Prague, Czech Republic

Shared Services Markets

Pfizer Location

BPO Location

Three shared services operations offices supported by strategically placed BPO offices

• Pfizer U.S. operates with following Credit-to-Cash systems:

– Revenue Cycle System (custom application)

• Sales Order Management

• Warehouse Management

• Billing

• Credit Management

– Revenue Accounting System (custom application)

• Inventory Accounting

• Sales Reporting

– POLARIS (custom application)

• Accounts Receivable Sub-ledger


• Accounting Interface to GL System

– Claims Management System (custom application)

• Biopharmaceutical Deduction and Claims Management

– Various Data Warehouses for Reporting

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Current Credit-to-Cash Systems Footprint

• 24 Pfizer ex-U.S. Markets operate with following Credit-to-Cash systems:

– Oracle e-Business Suite 11.5.10

• Sales Order Management

• Inventory Accounting

• Billing

• Sales Reporting

• Credit Management

• Advanced Collections

• Accounts Receivable Sub-ledger


– Various Warehouse Management Systems

– Various Data Warehouses for Reporting

• Remaining Markets operate with locally defined Credit-to-Cash systems footprints – Global Oracle deployment discontinued in 2010

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Current Credit-to-Cash Systems Footprint

• Pfizer acquired a mature SAP footprint (ECC 6.0) with the 2009 Wyeth acquisition

• Strategic decision by Pfizer ERP Steering Committee in 2009 to deploy SAP to all Global Pfizer sites

– 53 total Markets

– ~98% of revenue

• Multiple functions including:

– Finance and Accounting

– Procurement (Direct)

– Sales Order Management

– Distribution

– Supply Chain Management

– Plant MRP (Manufacturing Resource Planning)

– Quality and Regulatory

– Management Reporting

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FSCM Global Deployment

• Global Gap Analysis (~3 months):– Legacy Wyeth ERP footprint vs. Pfizer systems footprint (requirements)

analyzed in 2009

– High level gaps identified

– Gaps analyzed for potential solutions utilizing delivered SAP products where possible

– Solutions assessed for cost / timing

– Primary gaps identified in legacy Wyeth SAP footprint for Credit-to-Cash:• Credit Management

– Automated credit scoring (risk / credit line)

– Automated approvals management (workflow)

– Trend analysis and customer financial data repository

• Collections– Collection strategy definition / automation

– Automated daily worklist generation / prioritization

– Centralized collections workbench / launch-pad

• Deduction / Claims Management– Automated / manual case creation for applicable deductions / claims

– Automated case routing and data population

– End-to-end deduction / claim tracking and reporting10



• Credit-to-Cash Global Solution:– Implement SAP Financial Supply Chain Management (EhP 4)

• Positive assessment of product with SAP and HighRadius

• Preserves SAP functionality

• Can meet Pfizer systems footprint / requirements – will be customized where gaps exist

• Legacy Wyeth already leveraging SAP BillerDirect functionality (FSCM component)

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• Global Solution Design (~3-4 months):– Target: Global model that covers ~80% of all Market business processes

– Methodology:• Series of Global workshops to identify Global vs. local requirements

• Analysis / approval of scope for delivery of FSCM functionality over 15 month deployment period (Global Model Enhancement “waves”)

• Markets will receive enhanced functionality either via deployment projects or via retrofits (for sites deployed prior to release of full functionality)*

• Wave #1 (February, 2011):– Collections Management (full functionality)

– Dispute Management (~80% functionality)

– Credit Management (~60% functionality)

• Wave #2:– Credit Management (full functionality)

• Wave #3:– Dispute Management (full functionality)

• TBD:– BillerDirect (full functionality)

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*Exception: Credit Management

• Module Assessment To-Date:– Collections Management:

• Pros:– Robust out-of-the-box functionality

– Flexibility to adapt Collections approach based on changing Market / organizational conditions

– Integration with AR, Dispute Management, and Credit Management

– Ability to “rebuild” original invoices (from residuals)

– BI reporting

• Cons:– Lack of correspondence functionality

– Business Partner concept adds additional master data –automation would help master data management efficiencies

– Dispute Management:• Pros:

– Automated dispute case creation

– Case concept with ability to store full repository of information

– Case tracking and analysis

– BI reporting

• Cons:– Manual routing (requires customization)

– Person Responsible / Processor / Coordinator process can be complicated / manual

– Lack of visibility in document flow (adds complexity to managing claims) 13



• Module Assessment To-Date:– Credit Management:

• Pros:– Credit scoring capabilities on internal and external data

– Workflow capabilities for alerts

– Open framework provides flexibility to customize to requirements

– Additional fields on Business Partner facilitate robust credit information

– Ability to import from multiple credit rating agencies

– BI reporting

• Cons:– Global activation – requires large-scale change management effort due to transition from

SD Credit Management integration / functionality

– Open framework requires customization to meet requirements

– VKM1 (order block /release) replacement lacks functionality – requires customization to filter by credit analyst, and to view the reason for order block

– Business Partner concept adds additional master data –automation would help master data management efficiencies

– Less out-of-the box functionality than Dispute Management and Collections Management

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Q&A

Documents

SAP FSCM Credit Collections and Dispute Management Case Study Pfizer