Case Study: Regional Health System Transforms Procurement with SAP Ariba and EXP B2B

Introduction

Regional Health System (RHS), a multi-hospital network serving a large metropolitan area, was grappling with outdated and inefficient procurement processes. With thousands of purchase orders and invoices processed annually for critical medical supplies, pharmaceuticals, and operational services, their reliance on manual, paper-based systems created significant bottlenecks, increased the risk of errors, and hindered their ability to effectively manage spend and ensure regulatory compliance.

The Challenge: Manual Processes and Lack of Integration

RHS faced several critical challenges stemming from its manual procurement operations:

• Paper-Based Requisitioning: The process for requesting goods and services relied heavily on paper forms, requiring manual routing for approvals, which often resulted in significant delays and lost paperwork.
• Manual Purchase Order Creation: Once requisitions were approved, purchase orders (POs) were manually created and often faxed or mailed to suppliers, further extending procurement cycle times.
• Invoice Processing Delays and Errors: Incoming supplier invoices, mostly paper-based, required manual matching against POs and receiving documents. This three-way matching process was time-consuming, prone to errors (like duplicate payments), and frequently led to late payment penalties and strained supplier relationships.
• Lack of Spend Visibility and Control: Without a centralized electronic system, RHS had limited visibility into purchasing patterns and struggled to enforce negotiated contract pricing or preferred supplier usage, leading to maverick spending and missed savings opportunities.
• Compliance Risks: The manual nature of the process made it difficult to consistently enforce internal controls and ensure compliance with healthcare regulations regarding purchasing and documentation.

The leadership at RHS recognized that these inefficiencies were not sustainable, particularly in a cost-conscious healthcare environment. They needed a modern, integrated procure-to-pay (P2P) solution to automate processes, improve control, and reduce operational costs.

The Solution: Integrated SAP Ariba Buying and Invoicing

RHS partnered with EXP B2B to implement a streamlined P2P process powered by SAP Ariba Buying and Invoicing. EXP B2B proposed a solution focused on automating the entire cycle from requisition to payment, tightly integrated with RHS's existing SAP ERP system.

The key components of the solution were:

1. SAP Ariba Buying Implementation: Deploying the guided buying capabilities to provide an intuitive, user-friendly interface for employees to search catalogs, create requisitions, and manage approvals electronically. This included setting up catalogs for frequently purchased items and configuring approval workflows based on RHS's delegation of authority.
2. SAP Ariba Invoicing Implementation: Implementing the module to enable electronic invoice submission by suppliers (via the Ariba Network or other methods) and automate the invoice matching and approval process. Rules were configured to automatically match invoices against POs and goods receipts, flagging exceptions for review.
3. Integration with SAP ERP: Establishing robust integration to ensure that approved requisitions generated POs in the ERP, goods receipts were recorded accurately, and approved invoices triggered timely payments from the ERP system.
4. Supplier Onboarding and Enablement: Developing a strategy to onboard key suppliers onto the Ariba Network to maximize the benefits of electronic invoicing and collaboration.
5. Change Management and Training: Providing comprehensive training and support to end-users and suppliers to ensure smooth adoption of the new system and processes.

The Implementation Journey: Phased Rollout and User Focus

EXP B2B executed the implementation over an eight-month period, adopting a phased approach to minimize disruption to RHS's critical operations:

• Phase 1: Design and Configuration (Months 1-3): Intensive workshops were held with RHS procurement, finance, IT, and clinical department representatives to map existing processes and design the future-state P2P workflow within SAP Ariba. The system was configured based on these requirements, including catalog setup and approval rules.
• Phase 2: Integration and Testing (Months 4-5): Integration points between SAP Ariba and the SAP ERP were built and thoroughly tested. System Integration Testing (SIT) and User Acceptance Testing (UAT) were conducted involving key users to validate functionality and data flow.
• Phase 3: Pilot Rollout and Training (Month 6): The solution was initially rolled out to a pilot group of departments. EXP B2B delivered role-based training to users and provided targeted support during the pilot phase. Feedback from the pilot was used to refine configurations and training materials.
• Phase 4: Full Rollout and Supplier Enablement (Months 7-8): Following the successful pilot, the SAP Ariba solution was rolled out across the entire health system. EXP B2B assisted RHS with a focused supplier onboarding campaign to encourage electronic invoicing via the Ariba Network.

EXP B2B's focus on user experience and proactive change management, including clear communication and dedicated support resources, was crucial in overcoming resistance to change and ensuring successful adoption across the diverse user base within the health system.

The Results: Efficiency Gains and Improved Compliance

The implementation of SAP Ariba Buying and Invoicing, orchestrated by EXP B2B, yielded significant improvements for Regional Health System:

• 60% Reduction in Invoice Processing Time: Automation of invoice submission, matching, and approval workflows dramatically reduced the average time taken to process an invoice, freeing up accounts payable staff for more value-added activities.
• Improved Compliance and Control: Electronic workflows and automated checks ensured adherence to purchasing policies and contract terms, significantly reducing maverick spending and improving overall compliance.
• Enhanced Spend Visibility: The system provided real-time visibility into requisitions, orders, and invoices, enabling better spend analysis and budget management.
• Reduced Errors and Duplicate Payments: Automated matching rules significantly decreased the incidence of manual errors and virtually eliminated duplicate payments.
• Improved Supplier Relationships: Faster invoice processing and more timely payments strengthened relationships with key suppliers.
• Increased User Satisfaction: Employees benefited from a simplified, user-friendly interface for creating requisitions and tracking their status, leading to higher satisfaction with the procurement process.

Conclusion

Through its strategic partnership with EXP B2B and the implementation of SAP Ariba Buying and Invoicing, Regional Health System successfully digitized and automated its procure-to-pay cycle. This transformation eliminated manual bottlenecks, reduced processing times and errors, enhanced compliance, and provided crucial spend visibility. RHS is now equipped with an efficient, scalable procurement platform that supports its mission of providing high-quality patient care while managing costs effectively.