Photo of Susan Dunne and Ping Chen from Pfizer and Margaret Yao, J.P. Morgan.
Pfizer has a strong presence in the Asia Pacific region with operations in 15 countries and territories. This solution showcases an ambitious treasury transformation initiative that has moved them from managing treasury operations from a complex multi-format, multi-system platform to an efficient centralised, single format, single system structure with some impressive results.
Ping Chen
Director, International Treasury
Ping Chen is a Director, International Treasury at Pfizer. She manages capital structure planning, financing, liquidity, financial risk and cash management for Pfizer’s subsidiaries in Asia. Chen has worked in the banking industry providing financial services to multinational corporate clients. She holds a Bachelor of Science (BSc) degree from Beijing University of Aeronautics and Astronautics and an Master of Business Administration (MBA) from New York University.
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Pfizer’s treasury team faced considerable challenges when it came to managing cash operations across Asia. Local finance teams were responsible for managing the company’s tremendous number of bank accounts across multiple banks in 15 countries where Pfizer has a presence in Asia.
Once the treasury team set out to transform Pfizer’s treasury structure across the region, the following objectives were established:
- To centralise treasury operations in the region, shifting operational treasury processes to a shared service centre (SSC) model.
- To align an enterprise resource planning (ERP) migration along with the SSC migration and regional treasury model deployment.
- To optimise the use of the company’s in-house bank in Dublin for foreign exchange (FX) management, liquidity and investments.
The team hoped to streamline the company’s bank account structures and pooling mechanisms by moving to a single banking partner. Standardisation would be achieved through the adoption of ISO 20022 as the global payment format. Also, a single ERP system would be adopted, as would uniform business processes.
Ping Chen, Director of International Treasury, explains: “By eliminating manual processes and optimising the company’s technology infrastructure, we looked to achieve greater visibility, gaining access to real-time information and developing better cash forecasting and insights into business operations.”
The team began its ambitious treasury transformation, rolling out the implementation across the region. The key stakeholders of the regional treasury strategy include international treasury based in New York, the company’s in-house bank (IHB) in Dublin, global SSC in Dalian, China and the financial teams in the markets. Corporate treasury oversees the regional treasury model implementation and global documentation negotiation and manages regional bank relationships.
Using a single bank platform, Pfizer gains critical visibility into cash enterprise-wide and insights into business operations. The SSC in China manages in-country bank account structure and in-country cash pooling. SSC also provides forecasts on cash flow and FX exposure. The IHB manages the regional multicurrency notional pool, and the regional liquidity is managed as part of the global liquidity management. The treasury team further established the corporate policy mandating FX transactions and in-country liquidity investments. In Asia, all of these transactions and investments are now managed through the company’s IHB in Dublin, Ireland. With its end-to-end trading infrastructure, the Dublin treasury centre is responsible for executing FX and investment transactions. While most FX transactions and investments, as well as regional bank relationships, are now managed centrally, local market finance teams still support FX settlement activities where needed and manage any local bank relationships required by regulation.
The team’s ambitious and successful work to date in China, Hong Kong, South Korea and Singapore has set the stage for Pfizer to roll out the transformation initiative to Japan in 2014 and the rest of Asia by 2017.
Chen concludes: “Pfizer has learned numerous lessons in the process of implementing this treasury transformation best practice. Amongst the areas that proved critical were gaining a clear understanding of regulatory requirements and operational constraints that would impact the project at the local level. This knowledge was crucial for overcoming obstacles encountered along the way.”
“These lessons learned have proved instrumental in the overwhelming success of the initiative thus far and are a significant driving force in helping to meet the future objectives of this on-going programme. The size, scope and complexity of the project highlight the impressive nature of Pfizer’s achievement in implementing this initiative,” says Chen.
The global team effort to centralise and streamline operations in the Asia Pacific region is a best practices case study on how to execute a critically important project and underscores why Pfizer is a deserving winner of the Adam Smith Award for its impressive achievement.
