Bristol-Myers Squibb is in the midst of globally rolling out a new electronic procure-to-pay process for non-employee travelers in an effort to increase efficiency and reduce errors.
The pharmaceutical giant is eliminating paper invoicing for travelers who don't hold corporate cards, relying instead on integrating its Ariba expense management system and SAP enterprise resource planning tool with the processes of its travel management company, Carlson Wagonlit Travel, and payment card American Express.
The process starts with Ariba's "Easy Req" request for travel, which sends an order to CWT, which then triggers a charge through Amex and then monthly reconciliation back through Ariba and on to SAP.
| BMS Shares Benchmarking Benchmarks Bristol-Myers Squibb relies more heavily on external benchmarking of its air travel-purchasing program than do some other corporations, but only inasmuch as BMS managers understand the unique characteristics of the companies they are benchmarking against. BMS uses criteria including size; industry; policy; and such travel patterns as locations, destinations and purchasing behavior to identify companies with similar profiles as its own.The firm then benchmarks discount comparisons by point of sale, fare class usage, one-way versus guaranteed fares, back-end rebates, market-share requirements and other, non-discount benefits. Making a presentation in February at The Masters Program, corporate travel services director Lisa Jacobsen noted that her company also considers airline strategies and competitive environments. "We characterize our airline program as a three-tiered program," she said. "First, it is as a global airline program. I define a global airline deal as a contract with multiple points of sale across multiple regions. We also have regional deals, which have multiple points of sale in one region, and we have local deals." Jacobsen said the company tries "to match that with certain carriers' interests," potentially including the use of alternative airports or alterations to travel policies. |
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[PROFILE_1]After about 18 months in development, the new process was implemented in France early this year and is expanding to 20 European countries before rolling out next year in the United States, according to corporate travel services director Lisa Jacobsen.
BMS in 2006 spent about $25 million in Europe and North America on non-employee and group air travel, while its companywide employee air spend was about $95 million. Non-employee travel often involves external consultants, customers, partners or job candidates.
"Non-employee spend does not go through the traditional employee process of corporate card and hitting the back office in terms of the expense reporting system, etc.," Jacobsen said in May at an Association of Corporate Travel Executives conference. "We wanted to focus on this because it represented a win-win for everyone by improving our processes, which were primarily hard-paper invoicing that was extremely time-consuming and riddled with errors."
The previous process involved a variety of invoicing elements that "never really evolved significantly over time to be able to handle the kind of volume we wanted to process and the level of speed and efficiency we demand," said Jacobsen. "It was based on raising a traditional SAP order number, which was communicated on the phone or via an agent to the travel management company. The TMC had to quote that purchase order number on their invoices submitted to accounts payable, and AP had to match that invoice to payment."
Procure-to-pay proponents contend that adoption of best practices can help companies save millions of dollars. A Visa study published in 2003 cited savings of "$1.8 million to $8.3 million in annual, indirect transaction processing costs--with the possibility of additional cost savings from vendor discounts and front-end processing efficiencies."
Jacobsen said the company's roughly 10-year-old, global procurement culture calls for process simplification, productivity increases and cost reduction. Key principles also include maximizing existing resources, whether internal or external, and deeply involving suppliers in program implementations.
In reinventing its non-employee travel purchasing and payment, BMS aimed to increase efficiency, standardize processes, improve payment cycle times, reduce data inconsistencies, eliminate TMC invoicing, improve reporting and increase the volume processed by its corporate travel card.
"By having this air spend on the corporate card, we not only got the [negotiating] benefit from it, but it's a way of providing free insurance coverage," said Jacobsen. Also, "getting this payment process for non-employees ... helped leverage that side objective and bring in that additional volume--around $7 million in Europe--into our current TMC."
She said U.S.-based Bristol-Myers started this process in Europe for "no other particular reason than my team there was really motivated to do it, which really helps." France is the company's largest market in terms of non-employee spend, providing "good buy-in."
In the Bristol-Myers procure-to-pay process, the user raises a request in Ariba, triggering an order to the travel management company (Carlson Wagonlit Travel), which inputs purchasing code information in an American Express system. American Express pays the TMC about three days later. Amex also provides an electronic file to Ariba, which automatically reconciles with SAP.
Source: Bristol-Myers Squibb
What also helped was the fact that BMS already had developed a purchasing card process involving Ariba and SAP, so roping in Carlson Wagonlit Travel and American Express represented less of a challenge than it otherwise might have. Those travel suppliers stood to enjoy the benefits of quicker payment processing (down to three days for CWT) and higher volume, but the complicated program ran into some hurdles.
"It took longer than expected [to develop] for a host of reasons," said Jacobsen, listing competing resources in the IT group; other travel-related deployments; an Ariba software upgrade; unexpected compliance requirements related to Sarbanes-Oxley and travel purchasing for healthcare professionals; and a conservative approach by the sourcing and finance groups.
Jacobsen's tips for other firms included clearly defining roles, securing senior management support, aligning the interests of internal groups and suppliers, establishing internal standard operating procedures and creating external service level agreements.