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Harnessing the Power of Technology Highly Commended: Abbott Malaysia

Published: Feb 2023

 

Photo of Marlene Low, Abbott Malaysia and Ankur Gupta, Bank of America.

Chin Hock Meng

Finance Director

Abbott is a US-headquartered multinational healthcare and medical devices company with revenues of US$43bn.

in partnership with

Technology delivers AP/AR solution at Abbott’s largest CRM site in Malaysia

The challenge

Since 2010, Abbott’s Penang operation has focused on the manufacture of cardiac rhythm management (CRM) devices (pacemakers, defibrillators, and other associated accessories for heart-related solutions).

Abbott Malaysia is a complex operation and is the only end-to-end production site globally, supplying finished products to clients and parts to sister sites in APAC and EMEA. It contributed close to US$700m of revenues to Abbott’s US$2.4bn CRM business in 2021 and has 1,200 employees on site, from factory operatives to management. The challenge was to establish an effective cash management system to handle the multitude of payments and receipts. Adding to the complication was its SAP ERP system, which struggled to communicate effectively with the incumbent bank.

This created a labour-intensive process in which the accounts payable (AP) team needed to extract information from its ERP, manually key the data into a template and then upload that to the bank every time it needed to pay a vendor. The process was similar for receivables.

The solution

Abbott’s finance team turned to Bank of America (BofA) for an end-to-end integrated solution that would require minimal manual intervention. The automation allows Abbott to save on manhours by as much as 50% to approximately 1.5 days per month and frees up the team to undertake more value-added roles.

It also boosts compliance as far as internal and external auditing is concerned, taking error-prone manual entries out of the process and mitigating fraud risk. In terms of visibility, the team is now able to easily access invoices whenever cross-referencing transactions is required. This compares with a legacy system where the incumbent bank had to manually sort through invoices to identify the payer.

Abbott’s account team says the new system could easily handle twice the workload whereas the legacy system needed more headcount to operate even at current capacity.

Implementation was seamless and swift taking just three months to switch to its new system, transferring its processes from a deeply embedded system it had been using with the incumbent bank for more than 12 years.

The finance team believes the functionality of the system allows scope for even greater use cases; for example, further integrating the front-end solutions with its vendors and reducing paper-based processes. Ultimately, the hope is that the new system could take Abbott in new directions so that the scope of the technology can be taken beyond merely AP and AR.

Best practice and innovation

In changing to a different bank, Abbott’s objective was to switch to a new cash management paradigm and the company needed a solution that would make a difference and not simply “replace apples with apples”.

Innovations have resolved major pain points around manual processes, helping mitigate risk and improving resiliency. The company also wanted to simplify routine tasks and so the bank customised its platform in order that Abbott could add regular payees making it easier to make payments to key vendors. It also implemented electronic signature which the team finds a tremendous value-add.

With the team managing an average 2,000 vendor invoices per month, there was no room for mistakes. Abbott attributed this to the bank, who anticipated challenges and proactively offered solutions before they arose and ran detailed tests to ensure the system worked as intended.

“We learned the hard way during the pandemic when our team was working from home. This has been a welcome change,” says Chin Hock Meng, Finance Director.

Key benefits

  • Headcount savings.
  • Process efficiencies.
  • Increased automation.
  • Risk mitigated.
  • Improved visibility.
  • Errors reduced.
  • Manual intervention reduced.
  • Increased system connectivity.
  • Future proof solution.
  • Exceptional implementation (budget/time).

The Adam Smith Awards Asia is the industry benchmark for best practice and innovation in corporate treasury. The 2022 awards attracted a record-breaking 416 nominations. To find out more please visit treasurytoday.com/adam-smith-awards-asia

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