Rob Bullen
I’m from Bayer. I’ve been with Bayer for two years leading the order to cash organization, I joined right at the start of the pandemic, which is an interesting time to join a new company. My history is 20 years consumer goods companies, most of the confectionery and cookies and biscuits and things like that. So joining Bayers was a new journey for me a journey into the pharmaceutical industry. But in a place that I guess I was quite familiar with, which was order to cash. So I spent probably half of my career in order to cash, half in supply chain and shared services and things like that. Every company’s journey is a little bit different. So I’ve been kind of watching and listening today, like you all have thought, well, that doesn’t sound like my order cash organization. And maybe this won’t sound like your cash organization. So if it doesn’t, I apologize. But I hope there are some things in there that might be interesting for you, as I share the journey we’ve been on in Bayer, actually one of the things that might be different or two things, maybe when we say order to cash, we mean order to cash, we don’t mean bill to cash or order to bill, we mean the end to end order to cash. And even in that context, we’ve got change ahead of us, because we’re trying to get into sell to cash. So I heard a few of you talking about a plan to cash and the different options you have, we’re very much looking upstream into the sales organization and trying to make sure it truly is end to end. The other thing around order to cash in Bayer is its part of product supply. So it’s not a finance function, we’re not FNA, we’re supply chain, which may be different from some of your companies. So there’s a lot of content in here, I’ve got probably 15 minutes, I’m going to skip through really quickly. There is some time for questions at the end, we can do it over cocktails if you prefer.
So I’m going to skip really quickly through Bayer. So when I say I look after an order to cash at Bayer, I look after two-thirds of the order to cash it by her. So we have a crop science business, which many of you will probably know is going through its trials and challenges at the moment, particularly in the US with some of the glyphosate products that we run. So we treat Crop Science at the moment as a separate business that is going through a huge integration. I look after pharmaceuticals and consumer health order to cash at Bayer.
The group about 40 billion in sales, we spend a lot on research and development. We’ve got 100,000 employees, we operate in 80 countries, that’s probably all you need to know.
In terms of the order to cash, consumer health, and farm and that’s what the CH and PH stand for. We’re about 1000 people and crop sciences also about 1000 people. So if you look at the total group, we’re about 2000 people in order to cash. When I joined two years ago, we’ve been through a transformation, heavily used a word I think today, but we’d got into Shared Service organization, so captive shared services at Bayer. So order to cash was either in the 60 countries, it was in the headquarters in my global team, or it was in seven shared service centers around the world that had 150,000 customers. One of the stats that I asked for when I joined is how often do we credit block an order? Too much was the answer. And it’s a few 100,000 dish but probably a few 100 years and about 22 billion in cash and a DSO that made my eyes water when I saw it two years ago. So that might not make some of your eyes water. But it did make my eyes water coming from a consumer products company. So those were some fast that’s what I inherited two years ago. I’m not a tech expert. I’m not really an order to cash expert. But what I did was light a fire under the organization and said Do we want to be better and I see Sharon’s here from Hackett. Hackett helped me light that fire because we just did some benchmarking. And we said, okay, there are some numbers. We’ve got some costs associated with it. We were about double the Hackett top quartile cost. So we had some interesting conversations. Do we want to stay at double Hackett’s top quartile cost? Or do we want to strive for better? The answer was like strive for better. So we started to light, some fires around cost, revenue generation, cash flow, that kind of thing.
But just as I started lighting those fires COVID happened. And I’m not sure if any of you actually had similar slides and similar discussions with your CFOs. But we looked at this sort of in March 2020 and went out bigger. We might be in for a rough ride here. COVID might be like some of the other world events, let’s say whether that’s the global financial crisis dot com bubble, Iraq War, they’ve all tended to cause chaos in the financial markets and therefore caused a higher level of bad debt. Basically, you can see the arrows going up, whether it’s overdue or whether it’s bad debt, they tend to double during periods of crisis around the world. So we were concerned, you know, the first
quarter of last year that our receivables team are really gonna have to step up to the plate and do something different. But at the same time, I’m busy lighting fires and, and trying to transform the organization. So definitely an interesting few months having just joined a new company.
So you can call it bill to cash, you can call it receivables. Here we call it receivables. But the challenges we faced all the same as yours really, you know, the economy was uncertain. Customers were starting to do quite erratic things they wanted to hold on to their cash for some reason. And we wanted to encourage them to release that cash, and then our workforce. So 1000 people around the world suddenly went to work from home, we had to check whether we had the bandwidth to allow all those VPN accesses to our ERPs. Lots and lots of relatively small challenges. But when combined on top of each other. March April last year was an interesting time for all of us.
So we did some simple things. We focused on the past few collections risk mitigation strategies, we really said okay, what’s it going to take to get our receivables in good shape, ready to face what’s likely to happen with a pandemic. We were at the time around double-digit overdue, so 10 to 12% of what we would do to be paid we weren’t. And again, go talk to Hackett. That’s not a good place to be. So we also looked at automation. So how can we use automation to really free up people’s time to focus on the risk? Like most companies, we spent the same amount of time on low-risk transactions as high-risk transactions. And we really wanted to flip that around and focus on where the risk was. And also focus on giving our customers a better experience, we actually extended payment terms at the start of the pandemic, because customers needed us to because they were small pharmacies, they were hospitals, they were people who, frankly, didn’t have time to worry about paying invoices. So we tried to give them a better customer experience at the start of the pandemic.
So three things really to talk to you about today, I will tread very lightly on these. So customer-centricity a few people have talked about but when we think about order to cash, we tend to think internally about how do we deliver the best process the most optimized, most automated, we’re starting to think a lot more and it’s a journey, about the customer experience through all of our order to cash operations. Frictionless is a word I heard earlier, we use friction miss a lot. We don’t want customers to experience any friction when they deal with Bayer, we want it to be smooth, seamless, and easy to do business with. Automation became really key, not just from a cost point of view. But really from an error point of view from a quality point of view. And also sales growth. The previous presenter talks about revenue growth. And RPAS was talked about earlier, I love RPA. Because they can help you grow your business, not just because they could take out one or two FTEs here or there. And then optimizing our Receivables Management. So a cash flow program was born at the start of the pandemic.
So when we think about customer-centricity, maybe we start with a question, Is it in your top priorities in order to cash? I guess thumbs up? If yes or is it thumbs down? If it’s not?
Half and Half, half and half look about right? We don’t very often talk about customer experience, we probably don’t even measure it actually, in a lot of companies, how do you measure customer experience. And I’m not talking about the experience of your CFO here talking about the people who buy your products, or your services. We didn’t measure customer experience in order to cash we do now. And we’re going to do it a lot more in the future.
So when we think about the customer experience of Bayer, the first point is, Bayers have a lot of alternatives, you know, some of us make proprietary products that can’t be bought elsewhere. But actually, a lot of the products we make can be purchased elsewhere. It’s a competitive landscape. We don’t a buyer want to lose any of our customers or consumers or patients, because we don’t give them a great experience. And the second point is we weren’t talking about the experience within Bayer. We weren’t even measuring customer satisfaction. So for an order to cash organization, that was a fundamental shift for us to really talk about costs, of course, cash of course revenue, which is a quite new first buyer and then the experience. So revenue costs cash and experience is the new mantra at Bayer.
We looked at our end-to-end process flow. This is the bill-to-cash one. There are lots of examples of where you can give a poor experience. One of the things that really drew my attention, almost off the screen inaccurate billing. So I think you saw the stat earlier two and a half million invoices we issue every year. I don’t know if any of you actually take the time to look at them. We print a lot of invoices and stuff in envelopes and send them out. We took the time last year to take a look at some of those and frankly it was frightening. The wrong language on so many invoices the wrong customer name
wrong discounts all sorts of inaccuracies on something as simple as sending an invoice out. But the opportunities for failure, the opportunity for poor customer experience, honestly, is 100 fold. So we started to look at those loss buckets, those failure points, and really start to understand what it means to give a great customer experience.
So some things that we did differently. If you’re not doing them, they’re dead easy, make a start. If you are, then hopefully you’re on an improvement journey. So we didn’t do many surveys. So now we do in order to cash survey in every single country at least once a year. And we ask simple questions like, did the product arrive? Did it arrive in the right quantity? Did you get an accurate invoice? Were you happy with your experience, we also buy various data that are available through different survey companies? But we try and do as much as we can ourselves. We’ve redefined our KPIs. So I mentioned earlier revenue, cost, cash, and experience and make sure that people in our organization are talking much, much more about the experience. Customer understanding for me coming from consumer products was a bit of a revelation arriving at Bayer, you can walk into an office similar to this one may be, and you can’t see the products and you don’t get a feel for the customers. So one of the things that we’ve changed is really making sure everybody in order to cash, whether they’re working in a country or a shared service organization, understands the customer, what makes them tick, what their priorities are, and how we as a supplier can support that customer journey and that customer being successful. So we’ve done a lot more on product understanding and customer understanding. And then we’re trying to use automation. And I think was Paul talked earlier about the experience AstraZeneca, we already moved half of our organization to shared services. So we’d also been through a transformation. But we’ve done very little on technology. Five bots, when I joined by, I got five bots in order to cash. We were nowhere in terms of automation. And then it’s hard to drive a business case, because you’ve taken all the arbitrage savings, and people become a bit wary about further transformation. So one of the fires we’ve led is to really accelerate our automation journey. And we’ve done that through an outsourcing project. So we pulled the trigger on an outsourcing project in May of this year. We partner with Accenture six months ago and is going very well.
So automation probably wouldn’t have got accelerated unless we did something a little bit radical, because the business cases struggled to be achieved. So we linked automation without sourcing and experience. And we said, we really want to accelerate transformation and buyer. Therefore we’re going to be quite radical in what we do.
This is a simple roadmap journey. I guess there’s a horrible-looking one in a minute. But we’re kind of at the start of that journey. So we’ve done to shared services, we’ve moved 50% of our people in order to cash to shared services. But we moved the as his process just to a lower-cost country. We didn’t change any of the systems, the tools, the capabilities. So having now moved to Accenture, we’re about 50% Run by Accenture, we will be 70% operated by Accenture by the end of 2023. So we’re now looking at operational efficiency projects RPA’s, we’ve actually got a list of 700 different projects that have been born out of this transformation work with Accenture, from simple bots and algorithms, right through to off the shelf tools like HighRadius. So this year was all about setting that partnership, but with Accenture, next year is about the scale and transformation. And then we get into what we call intelligent operations, a lot more predictive AI-enabled. And obviously, we’re getting ready for an S4/HANA implementation in a few years’ time.
That’s a nice slide, isn’t it? You know, I like it just because it scares people. And that’s the point. So this is only bill to cash and order to bill is even more horrible. But it just tries to articulate some of the technology, the digital roadmap that we’ve got. Some of it is simple things like using celonis. So we spent a lot of money on celonis in Bayer, but we weren’t really using it to drive any change. So we’ve now got a whole team that’s using celonis to actually drive insights into action. We’ve got all sorts of E-payment tools, we’ve got further deployments of HighRadius. There’s a lot going on. I’m really happy to chat with anyone afterward about our digital roadmap. But I like the fact that we put it on a slide and people can see some of the complexity that we have on the journey ahead.
Had to put this up because it’s a HighRadius event. In fact, I think they put it in for me so thanks. So we’ve done with cash apps, actually, a Bayer, and I’m sure many of you guys probably have to we actually did it really well and you were before my time, so I take zero credit for it. But all of the markets have gone through Cash App automation. We already centralized a lot of it in Manila. So in terms of deployment, it was a single Operations Unit essentially. Gone? Well, we’re about 80% to 87%. I think the first time match right now is in the cash app, you know, the final couple of percent will come. But we’re world-class, I guess, at the moment in the cash app. So not a huge amount of value for us, given the resources, a very low cost. And we’re already highly automated but been a really good, successful journey. I wish we got more suppliers like HighRadius, honestly, that can give you a solution that works across all your markets.
We’re on 3 ERP systems, 63 countries were covered by the HighRadius solution, nearly a million payments a year. Yeah, we’re at seven with the latest stats in terms of hit rates. So going well, we’re looking at other tools in the order to build space. I love things like Eska. And on the prompt for order automation, a little bit trickier now in in the bill to cash, obviously, collections suite, deduction suite, things like that. But probably cash app is the biggest success we’ve seen.
And then finally, just to come on to the cash piece. So all of you, I think we’re thumbs up when it came to is your CFO talking more about cash since the pandemic at Bayer? Absolutely, it was one of the fires that I lit when I joined because I joined a company with nearly 40 billion in net debt, and double-digit overdue, so he kind of look at it and say, Well, why don’t we start collecting cash on time? It might help. So that’s what we did.
Before we get into that, so I think, yeah, you’ve all given a thumbs-up earlier, we’re all talking a lot more about cash flow. So you don’t have to put the thumbs-up. I don’t think you can be in order to cash leader at the moment and not be having a cash flow conversation. And one of the things that really surprised me at Bayer was just how sneaky my order to cash team works. So, we start to measure overdue, we take away all the grace days because I don’t know whether you have grace days. But that’s just you know, that’s been in the system, right? That’s just cheating the numbers. So we took away the grace days, and we said we’re going to measure you from day one overdue. And then suddenly the overdue started going down. And we started looking at the baseline date changes. So oh, people are changing the baseline dates on invoices, so they don’t look overdue, stopped doing that. And then we started looking at how often are people changing the payment terms, changing the payments over they’re stopped doing that. So I have a very sneaky order to cash organization that wants to look good, which I applaud them for. But we’ve just had to keep tightening the measure because it’s no good looking good if you haven’t got the money in the bank.
So when we look at cash flow, actually, we’ve done the sort of pyramid of growth, profitability, and cash flow, we’re not just looking at cash flow in isolation, because it’s always a trade-off. Sometimes you have to sacrifice cash in order to, to drive growth. And we’re well aware of that, that need to do trade-offs. So we have a company-wide initiative. For us. It’s called Project Lift. But it helps us balance those trade-offs around growth, profit, and cash. And it makes your cash is always in the conversation. And people don’t just give it away or trade it without understanding the implications on the business.
Going pretty well. A couple of things to point out as a double-digit. Overdue is low-hanging fruit. So we’ve done a lot of work on overdue and just collecting on time. Now we’re getting into the countries talking to the sales organization and saying, Okay, your terms versus peers and competitors are longer. Therefore, why don’t we rein them in and things like that? In fact, I know EY here today, EY has been helping us to drive this journey, do a phenomenal job, actually. So we think we can find 300 million stranded cash. That’s with suppliers, that’s with customers, and that’s in our own warehouses and inventory. And we’re actually making great progress on that without having to do anything too difficult. But it’s a top-down sponsored initiative. It’s the right project at the right time. And we in order to cash, you’re really able to play a leading role in optimizing our receivables. It’s not just about overdue. It’s about payment terms and baseline date changes and all of these things that that we do in big companies.
So I guess in summary, there are three things that we’ve been working on through the pandemic that by one is bringing the customer to the heart of our operations. The second is about driving automation and really having clarity about what the next couple of years are going to look like. And the third is about a relentless focus on cash. We’re playing catch up actually. So you’ve probably just seen a lot of stuff that you were doing a few years ago. For us a Bayer it’s been a journey to catch up. We started some fires we were glad we did when we did it because during the pandemic it’s really helped us to tighten up our operations are really improve performance. So thanks for listening. I just wanted to share some thoughts with you. And yeah, any questions.
Audience-1
I just would like to know, what was the what’s biggest enabler, you’ve got to be able to bring the change? Did you mention? Endorsement top down. I just wonder whether that’s one of the biggest enablers, you see that opened the doors for all those opportunities you’ve identified?
Rob Bullen
Yeah. So I guess there’s a little bit of luck involved. So there’s a great thing at Bayer that after 100 days when a new person joins, you get an opportunity to talk about what you see what you observe, and what you think the opportunities are. So my 100 days time, more or less exactly where the pandemic and I was able to say, there’s a burning platform here at Bayer, why don’t we do something about it? I think it was also how we frame the opportunity. Because when I, when I joined an ask people, What do you want from order to cash, every single person said, reduce the cost, reduce the cost, reduce the cost, reduce the cost, and they thought they were on the right journey, but we were still double the benchmark on the cost that we should have been. So the conversation I had with our board members was, do you want us to reduce costs further because it’s within a gift to do that, we actually think there’s a couple of 100 million of cash flow that you’re not even looking at, do you want to improve cash flow, customer experience, is anyone interested, you want to take a look at it, we could use order to cash to drive that. So we now frame the audit cash strategy about how we can help grow revenue, how we can improve cash flow, how we can reduce cost, and how we can improve customer experience that gets board members more excited than the race to the lowest possible cost. So I think we’ve reframed what order to cash is about a Bayer. And I think people are really starting to believe that actually, it’s a function that is core to the business, and one that’s worth investing in and supporting and paying attention to.
Audience-2
Hi, I really like the customer-centric idea. I’ve been sitting here wondering to myself, What is the customer to Bayer. So you’re selling presumably to pharmacies, hospitals.
But you’re the products that they buy from you, perhaps determined by GP’s, perhaps by patients. So I’m just quite intrigued to understand who you would classify as your customer.
Rob Bullen
Yeah, I mean, our order to cash strategy, or the vision is to win with customers, consumers, and patients. And if it was crop science, and farmers, because some of our products go, you know, direct to consumer, we have a direct to consumer business. If you want to go online, you can order some of our products directly from betterment and self-care. Some go directly through hospitals and wholesalers. So we have quite a complex route to market. So we have to think about the paying customer to the person that obviously buys our product, usually in bulk. We also have to think about consumers and patients that may have some choice in the products that they decide to purchase. So we try to win with customers, consumers, patients, and farmers and in the crop.
Audience-2
and the measuring that
Rob Bullen
I can hear. So are we measuring that performance? Each of those was, I wouldn’t say we’re complete yet. So in retail, so there’s a lot of people here from retail, so selling to Walmart and people like that. You could buy the advantage survey data every year, and Walmart will tell you exactly what they think about you as a supplier. And they’ll rank you in a list of one to 50 suppliers, and they’ll tell you what’s good, what’s not. So we started to acquire that kind of data from companies that do the voice of customer type surveys. But we also started to do it ourselves. So we use Qualtrics. And some of these kinds of survey formats. And we just go to every customer, every country at least once a year, every route to market. Except for consumers, we’re not really dealing with consumers and patients in terms of feedback yet other than through Consumer Relations, which is not part of order to cash. It usually isn’t in most companies, but we’re trying to gather all that data. And I think in the future we’ll use our GBS organization a lot more for things like social listening and really trying to hear the voice of the consumer and patient as well as the paying customer.
Do you not want to cut down? Okay. After this.
Audience-3
Rob, in your experience, having embarked on a multi-year audit cash transformation journey? How important is it to maintain a balance between being rigid to the initiatives at hand with we looking at being agile or flexible to the engagements? So is that a balance at all? Or do we have a very single-focused approach and say Get this done.
Rob Bullen
I’m more pragmatic than then rigid. Obviously, we’ve known each other for a while,
I tried to get one standard process around the world among the least, which for my last company, I failed miserably. So here at Bayer, I’ve not even tried. I mean, you can standardize things like cash apps and things like that, which generally don’t touch the customer. But the minute you get a customer involved, they want a different format, or they want to, you know, they want to give you something a bit later than the other customer or whatever. So we try and standardize where it makes sense. We actually try and use technology where we think we need some, some complexity, or some customer adaptation. So the kind of drive now for perfect, consistent process, we’ve given up on we don’t get the payback anymore, because most of our operations are really low cost. But also we’d rather use technology to get around that. So things like OCR for us are brilliant, because whatever the format, customers can send you the voicemail and email and EDI or fax doesn’t matter anymore. Send us the order however you want to. And we’ll use technology to standardize that nonstandard input, which means we can tailor our processes a little bit more flexibly to the customer needs. Not the right answer for a lot of people I know but I’m, I’ve never been a GPO. I care more about the customer experience than the perfect process I think both.
Okay, well, thanks for listening guys. Thank you.
