Purchase-to-pay process with automatic budget control

Klosterfrau Pharmaceutical Group

Klosterfrau is a traditional German pharmaceutical company with almost 200 years of history, almost 1700 employees and over 220 products. It has 15 sites across Europe, with its headquarters and sales office in Cologne and production sites in Berlin and Lüchow. In 2021, the company successfully converted its existing SAP system to S/4HANA for these sales and production locations. As a result, the company sites work with a uniform system and on the basis of harmonized processes. S/4HANA will be rolled out successively for further sites. 

Klosterfrau has been optimizing its order and invoice processing workflows with xSuite workflow solutions since 2014. Martina Grund, SAP key user from financial accounting at Klosterfrau: "As a result, we have shortened processing times, eliminated the previous shadow accounting, and have an overview of the processing status for annual and monthly financial statements at all times." A central electronic document archive enables the complete and audit-proof documentation of processes and approvals.

Paperless from order to booking 

Over the years, the pharmaceutical company has added additional functions to the solution. By mid-2021, it was in use for 14 company codes; more than 8,000 purchase orders and nearly 26,000 invoices are created or entered, released, and further processed in the Purchasing and Accounts Payable modules each year. Both modules interlock to create a completely digital purchase-to-pay process: In the "Feeder" of the Purchase solution, an employee initially enters his or her requirements, which is primarily used for asset procurement. After successful approval, this feeder is automatically converted into a purchase requisition (BANF). Purchasing later generates the purchase order from this. The subsequent receipt of the goods (or service) is followed by invoice processing: Invoices arrive at the company, are digitized, read out, entered in SAP, checked, approved (only cost invoices), posted, and paid - all without anyone at Klosterfrau ever picking up a piece of paper. 

Whereas an invoice used to take around ten days from the day it was received until it was posted, today the financial accounting department often receives it back checked and approved after just 24 hours. These are peak values, but even on average, throughput times have been cut in half. Those involved in the Klosterfrau Group particularly like the flexibility of the xSuite solutions. They can configure the agent determination independently or set up additional processes - without always having to call in IT support immediately. 

Marketing budget now always in the limit

In 2019, the company went live with a new ordering process for marketing. Marketing costs at Klosterfrau are controlled via SAP CO internal orders and were previously manually
planned. The annual budget was stored in SAP, on the basis of which marketing measures were requested separately and later assigned to the invoice manually - instead of matching the two automatically. The result was a high level of reconciliation effort, because Marketing was unable to track which measures had already been invoiced. In addition, there was no automatic overview of the remaining budget. This meant that the budget could theoretically be overdrawn.

This was the starting point for optimizing the process. To this end, the following goals were set: a flexible and automatic release flow with audit-proof documentation, no more duplicate releases of measures and invoices, simple adjustments to organizational changes (without IT support) and integrated budget checks including consideration of actual invoices. The goals were achieved through a standard SAP process with commitment management (for budget monitoring and control) and use of the P2P solution from xSuite. In this way, the company achieved greater transparency and budget control in the marketing area. 

Today, Controlling also enters the total budget at the beginning of the year. The marketing department then creates the purchase order in SAP, which then undergoes a budget check. The system checks how high the stored annual budget is, deducts actual invoices that have already been received, looks up the outstanding commitments (open orders) and checks whether the available residual budget is sufficient. If the budget is exceeded, the xSuite workflow routes the order directly to controlling. A transparent overview of the actual invoices, the commitment and the available budget can be viewed at any time in reporting.

After a successful budget check, the individual persons responsible release the order. The various release levels can be flexibly adapted via the agent determination. As before, this is followed by the invoice part. Invoices for goods receipts with a purchase order reference are posted directly, and in the case of services, Marketing also confirms that the service has been performed. In the meantime, other departments have adapted this process. For example, after the S/4HANA implementation, the medical-scientific area joined in.

Log in once, do it all

Working with the new SAP generation is most tangible for employees of the Klosterfrau Healthcare Group through the new handling via the Fiori interfaces. "We call this the one-stop store.", Martina Grund recounts, "log in once, do it all." Before S/4HANA, the process was not user-friendly for end users. Purchase orders were created in the ERP system, but end users used the xSuite web interface for their approvals. With SAP S/4HANA, all steps are done within SAP Fiori.

More overview is not possible

The two tiles "PO Overview" (overview of orders including releases) and "Inbox" (review/release tasks of an end user) are the Fiori apps of xSuite Group relevant for the process. In these, the information on all documents of the P2P process is collected in a central location - more overview is not possible. The introduction of S/4HANA including SAP Fiori in conjunction with the xSuite apps has further optimized the P2P process.

For the Klosterfrau Group, the xSuite solutions have proven themselves, which is why they are being adopted group-wide. Martina Grund: "With xSuite, we have established a uniform procurement process for services and goods and, thanks to the flexibility, can map different business transactions. We post invoices more quickly thanks to the existing account assignment in the purchase order and benefit overall from transparent budget control and overview. The processes with the xSuite solutions have proven themselves, which is why we are rolling them out to other business areas bit by bit."

About Klosterfrau

The Klosterfrau Healthcare Group is a German pharmaceutical company that can look back on a history of almost 200 years. The Klosterfrau Group includes, among others, the companies Divapharma GmbH (Berlin) and Cassellamed GmbH & Co. KG (Cologne). Production and sales of over 220 products are managed from the company's headquarters in Cologne. The best-known product in the range is Klosterfrau Melissengeist.