P2P Excellence

1
P2P Excellence

• 06 February 2006 NAPP Innovamation Conference
• Orlando, FL

2
There was a Company named

• Once Upon a Time..

3
Life is Our Lifes Work
OUR PURPOSE We dedicate ourselves to humanitys
quest for longer, healthier, happier lives
through innovation in pharmaceutical, consumer,
and animal health products.

• PFIZER INC.
• Is the 1 Health Care Company in the World
• 46 B in Sales in Over 150 Countries
• 14 Number 1 Brands
• Pharmaceutical Examples Aricept, Celebrex,
  Detrol, Lipitor, Relpax, Viagra, Zyrtec
• Consumer Examples Benadryl, Desitin,
  Listerine, Lubriderm, Rolaids, Visine, Zantac

4

• Like
• Mickie and Minnie,
• Donald and Daffy,
• Alladin and Jasmine,
• Cinderella and the Prince

We believe that Purchasing and Accounts Payable
belong together and should live . HAPPILY
EVER AFTER
5
Pfizer Procurements Operating Philosophy Guided
by Company Values
Pfizer Values
Sourcings Operating Philosophy
To achieve our Purpose and Mission, we affirm our
values of
Drive Shareholder Value by developing a network
of Pfizer colleagues which harnesses our
collective abilities through a proven strategic
sourcing process

• Integrity
• Leadership
• Performance
• Customer Focus
• Quality

• Respect for People
• Community
• Innovation
• Teamwork

Key Success Factors
Partnering with Shared Services to Achieve Goals
6
Global Shared Services A Strategic Asset
Improve Speed Quality of Decision-Making Fre
e Colleagues from Low-Value Work Make Pfizer
More Efficient
Leader of Change Valued Business
Partner World-Class Supplier of Financial
Information
Shared Services have demonstrated value at Pfizer
and will continue to deliver more to achieve our
goals.
7
The Circle of Life!

• Procure to Pay Processing

8
P2P Activity Is Divided into Upstream and
Downstream Processes

Upstream P2P Divisional Activity

Upstream P2P Divisional Activity
Fulfillment
Not Optimal
Not Optimal
User
User
Supplier
Supplier
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Need
Need
Order
OrderFulfilment
Fulfilment
Source SubmitPurchase Order
Optimal
Optimal
Source
Prepare Purchase Order
Prepare
Prepare Requisition
Prepare
Submit
Approval
Approval
Purchase
Purchase
Requisition
Invoice
Invoice
Order
Order
Receiving
Receiving

Downstream P2P NASS Activity

Downstream P2P Shared Service Activity
Supplier and/or Colleague Inquiries and Response
Supplier and/or Colleague Inquiries and Response
Discrepancy/ Manual Intervention
Supplier
Supplier Set-up
Invoice Entry
Disburse- ment
Pre -Processing
InvoiceProcessing
Invoice
Entry
Disburse
Discrepancy/
Manual
Intervention
Pre
-
Processing
Invoice
Processing
Reconciliation, Accrual and Compliance
Reconciliation, Accrual and Compliance
Administration and Support
Administration and Support
9
ADDRESSING UPSTREAM ISSUES ENABLES P2P VISION AND
BROADER PROCUREMENT SAVINGS

• Cultural and Policy Changes
• Adherence to Preferred Purchasing Matrix
• Adoption of Spend Management guidelines
• Standard Policy Systems training

To Be

• Optimized procurement processes and user-friendly
  systems
• Extensive use of electronic purchase orders
  electronic payments
• Strong policy/process and preferred supplier
  compliance
• Mandated use of preferred purchasing matrix
• Enforcement of colleague compliance
• Performance metrics tracked and actively managed
• Formalized governance and organizational model
• Consolidated view of suppliers

• Reinforcing Tools
• Metric Tracking
• Electronic Payments
• eInvoicing
• Ariba Buyer usage

As Is

• Myriad upstream processes
• Extensive manual activity (e.g. paper invoices,
  manual signatures)
• Limited understanding of purchasing processes and
  low process compliance across Pfizer
• Low enforcement of purchasing processes and
  systems capability (e.g. optional use of POs)
• Fragmented governance (e.g. lack of central point
  for decision making)
• Difficulty in obtaining procurement/ supplier
  performance metrics (e.g. compliance with
  preferred suppliers)

This translates to tremendous value for the
business
10
P2P SUBTEAM PHASE II OBJECTIVES AND DELIVERABLES

• Objectives
• Create detailed P2P process design and recommend
  implementation plan to enable Procurement team
  savings
• Deliverables
• Definition of desired end state, existing gaps
  and overall end to end savings opportunities
• Blueprint for process redesign and automation
  approach based on internal learnings - along
  with IT and Procurement
• Confirmed business case (e.g., economics,
  investments needed, timing)
• Implementation plan including application
  roll-out and other dependencies
• Communication and change management plan

11
P2P A Key Enabler OfSavings And Compliance
Initiatives

• Key Benefits from Implementation of our P2P
  Initiative
• Creation of a tool which ensures we are actually
  getting the savings we projected through use of
  preferred suppliers and standard procurement
  processes
• Supports other key business initiatives
• Ariba is the front end for Oracle implementation
• IT system rationalization
• Standardization
• Learnings from EFSS confirm that P2P has the
  broadest impact on Pfizer colleagues
• Ariba facilitates a culture change to a PO
  environment, reinforcing P2Ps benefits
• Data capture and analysis enable stronger
  negotiations with suppliers
• Significantly reduces total cost of ownership
• Supports strong SOX environment in this major
  process

12
A little like Finding Nemo

• Progress to Date has been

13
Approval for full P2P Global Rollout will
require Streamlined Methods

• Formal Approval and Resourcing means dealing
  with these goals
• 1. Significantly expanded Global geography
• 2. New functionality including Contract
  Creation, eInvoicing, Analysis Reporting and
  Supplier Performance Management
• 3. Merging Instances
• While keeping day-to-day running flawlessly

14
Major 2006 Initiatives
15
THREE BASIC OPTIONS ARE AVAILABLE FOR P2P
DEPLOYMENTEach Involves a Trade Off Between
Benefits and Risks
Deployment Level
B
Minimum Compliance-Driven Deployment

• Excludes catalogs and supplier enablement

Key Differentiator
Definition

• Focus on tightening compliance (e.g. SOX) quickly
  while developing platform for future rollout
• Partial rollout of front-end capability with
  continued reliance on some existing tool

Benefits

• Minimal costs to realize SOX compliance
• Realize at least partial benefits of eBuy system
• Establish foundation for future deployment

Risks

• Requires minimal level of AST resources
• Delay until AST resources availability
• May require additional changes in future
• Not full leverage of eBuy functionality

End state deployment to vary by location based on
defined set of guiding principles
16
Keys to Success /Lessons Learned

• Strong Management Support
• Involvement and Buy-in from Local Colleagues
• Established Governance Process
• Continuous Communication
• Various types of Training are needed

• Nothing is simple
• The most challenging part of projects is dealing
  with the Supplier Master data
• Yes and Head nodding do not mean acceptance
• We have as much experience as many of our
  Partners, Consultants and Software Providers

17
Innovamation at Work
We need to extend our immediate attention to the
global environment

• Plan strategically for next generation
  procurement and financial systems/processes
• Implement and Monitor progress

18

• Its a Small World is my favorite Disney
  attraction (and song!).

Our plans for 2006 2007 have me hoping this is
true!