Challenge

A New Jersey-based, global pharmaceutical company was anxious to automate and streamline its accounts payable system. Its overall objective: to eliminate a largely paper-based, time-consuming invoice-payment process that required numerous manual work steps and multiple hand-offs. Ultimately, the company wished to create a paperless accounts payable environment.

Under its old system, the company was sending invoices for approval through interoffice mail and manually monitoring the approval/receipt process. Occasionally, paperwork got lost.

Departments entered invoices on Excel spreadsheets, each using its own departmental vendor address book. Invoices were sent to Accounts Payable via spreadsheet, while vendors were paid through the legacy AP system. Consequently, any vendor inquiries were routed to the already overburdened AP department, as no one in the originating unit could track invoice status.

Because of this painstakingly inefficient process, the company was generating less than $1 million annually in early-payment discounts on supplier invoices – well below the level of more efficient AP systems in companies of comparable size.

With an automated system and Internet billing, the company stood to reduce payment cycle times and non-value-added work – and to gain significant cost-savings from expense reductions and early-payment discounts.

Solution

The pharmaceutical company decided to scrap its legacy system in favor of J. D. Edwards OneWorld Xe, Release B7333 Service Pak 22. The company learned about the work of Integrated Concepts, Inc., from a highly regarded medical distributor that had undertaken a similar project. After conferring with the distributor about its experience with the JDE project, the pharmaceutical company contracted with ICI for consulting and implementation.

ICI customized a two-way automatic match process and a streamlined, automated, Web-based invoice approval process, using the company’s intranet portal. This reduced 130 interfaces in and out of the old AP system to just 25. Gone are the use of interoffice mail and the manual monitoring of the approval process. Gone, too, are the departmental spreadsheets, the Excel interface and the vendor file interface – with all vendor data now centralized in the J. D. Edwards address book.

Finally, ICI integrated an imaging application with the J. D. Edwards accounts payable system. The application gives the AP staff a data-entry process that eliminates handling paper invoices. It also enables company employees to “view,” on a real-time basis, any invoices that are charged to their department. An invoice originator now can look up a copy of an invoice to obtain the check number and date paid – and furnish that information in a timely manner in response to a supplier inquiry.

The entire implementation was completed, on budget, in just 18 months – three months ahead of schedule. The customized AP program integration with imaging now serves as a model for rollout to the company’s international locations. And the customer has called upon ICI for a number of new projects since the successful conclusion of this one.

Results

In addition to improving work-life quality for Accounts Payable employees with efficient online processes, the biggest payoff to the company is in real dollars. The customer currently processes more than 3,800 invoices per day, with costs reduced substantially from those for the old manual approval process. In addition, payment cycle times are significantly shorter. In the first year following implementation, the company’s early-payment discounts on invoices increased by 78 percent.

Suppliers appreciate being able to invoice the company via the Internet, which eliminates paper invoices, enables processing status checks and speeds the payment process. Vendors that use electronic invoicing are paid within 30 days, while those not using it normally receive payment in 45 days.

back to top