Case Study

Global life sciences major quadruples ROI from contract management enabled by process transformation and technology

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About the client:
A global life sciences company with expertise in medical devices, pharmaceuticals, and biotechnology

Industry:
Life sciences

Business need addressed:
Improve productivity, revenue, and document security across contract management and chargeback processes

Genpact solution:
Genpact’s process expertise enabled process transformation for key contract management functions, supported by technology

Business impact:

  • Improved accounts receivable (AR) collections by 50%
  • Productivity gains of 15% per full-time employee (FTE)
  • Realized incremental benefits of nearly $4 million

The medical devices division of a global life sciences company was looking to revamp its contract management and chargeback operations. By using a diagnostic framework to identify gaps in the company’s people, process, and technology, Genpact was able to roll-out a comprehensive solution roadmap, including initiatives such as process reengineering, partnership transition, web portal enhancement, and best-in-class technology for document management and workflow, to improve productivity and increase the efficacy of chargeback recovery.

Business challenge

A global life sciences company was looking to improve its contract management and chargeback operations; at the same time, the company was experiencing challenges related to sub-optimal efficiency and invalid chargebacks with process-transitions already underway. Interviews and supplemental data revealed the following process gaps:

  • The current contract management process was labor-intensive and required frequent manual intervention, resulting in decreased efficiency and invalid chargebacks
  • Contract management was in need of stronger controls and a method for streamlining or segregating incentive disbursements
  • The data feed on the accounting systems required approximately one-quarter of each FTE’s time, and inaccurate accounting information was leading too often to duplicate payments and overpayments
  • Within chargeback operations, one-third of each FTE’s work was given over to error remediation
  • Missed traces necessitated extra research time
  • New analysts were slow to achieve proficiency, and additional quality control (QC) was commonly requested for FTEs during their first six months on the job

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Genpact solution

Based on process mapping of the as-is state, the client pursued a strategy that mixed process re-engineering with technology interventions in order to evolve their contract management operations towards best-in-class metrics and processes, including:

  • An incentive payout system to clear variances from the AR ledger and increase focus on collecting chargebacks
  • Lean six sigma processes for contract management to increase accrual accuracy, reduce duplicate payments, and more clearly detail reconciliations
  • A process-complexity heat map within chargeback operations to document and standardize processes, improve price change notification (PCN) efficiency, and reduce errors and missed traces
  • Scanning technology to speed up document input and retrieval, bolster security, and enable auto-population of accounting information
  • Documenting processing at keystroke level to improve staff effectiveness, reduce turnover, and improve QC by training partners
  • Workflow tool to support pair-off matches, dispute resolution, and forwarding, with automated follow-up as well as cycle-time metrics

Business impact

With strong executive backing, Genpact’s process and technology improvements generated significant business impact, including:

  • Improved collections by 25%–50% through increased recovery of invalid chargebacks, while enhancements to AR collections resulted in a payback time of less than one year (and increasing progressively over a five year period)
  • Increased productivity gains with each phase of technology implementation. Document management alone delivered savings of nearly $500K annually, supplemented by savings from knowledge management, workflow tools, and web portal
  • Accelerated learning curve through more effective technology, with per-FTE productivity increasing by 15%, over and above other gains
  • Upfront productivity gains from projects as re-engineering took hold. A modest one-time cost yielded ongoing gains in contract management (reduced overpayments, accruals, and controls) and chargeback operations (fewer missed traces, improved PCN efficiency, and other gains from standardization)
  • Quadrupled program ROI by the second year, with incremental benefits of almost $4 million expected by year five. These results highlight the power of process expertise in combination with technology enhancement in performance-based partnering frameworks

For more information, contact, lifesciences.solutions@genpact.com and visit, genpact.com/what-we-do/industries/life-sciences

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