Procurement Digital Transformation (DX)

Strengthening the Management Foundation Through Procurement Digital Transformation (DX)
— Transforming Indirect and Direct Procurement Operations

To address security challenges caused by aging procurement systems and eliminate inefficiencies created by having separate systems for each category of goods, we launched an initiative to digitally transform our procurement operations. Covering all SHIONOGI Group companies within Japan, this project integrates the procurement processes for both indirect and direct materials, aiming to strengthen our management foundation through standardized operations and enhanced governance.

1. Challenges Faced by Fragmented Procurement

The following issues led to insufficient internal controls, dependence on individual expertise, and barriers to overall optimization:

● Security risks due to outdated systems

● Systems fragmented by product category

● Inconsistent procurement processes across SHIONOGI Group companies

2. Three Initiatives That Enabled Procurement DX

Absorbing Complexity and Unifying Operations

We consolidated the various business requirements that differed by category and redesigned purchasing scenarios and system integrations. This enabled unified operations while absorbing underlying complexity.

Governance Framework That Enhances Transparency

To prevent fraudulent orders, ordering, receiving (inspection), and invoice processing are now performed by different individuals.
(Previously, the same person could handle both receiving and invoice processing, creating a workflow that made fictitious invoicing possible.)

The Challenge of Adopting Standard Product Functions

Rather than customizing the system to fit our internal specifications, we adopted a policy of aligning business processes with Coupa’s standard product functions. By engaging end users throughout the implementation, we achieved compliance with 221 out of 224 requirements (98.7%) using standard functionality.
Leveraging standard features enhances maintainability and ensures we can fully benefit from Coupa’s automatic feature updates.

Note: Coupa is a cloud-based SaaS application that receives major feature upgrades every four months.

3. Outcomes Achieved Through Procurement DX

● Standardizing previously fragmented procurement processes eliminated operational complexity and improved efficiency

● Assigning different individuals to ordering, receiving, and invoice processing (three-way segregation of duties) reduced the risk of fraud such as fictitious orders

● Consolidating disparate procurement systems reduced system operation burdens

● Eliminating SHIONOGI-specific customizations maximized the benefits of automatic system enhancements

4. Further Improvements and the Future Vision

Improving Usability Together With Users

Based on issues identified in a survey conducted four months after go-live, we will strengthen user manuals and training to improve usability.

Building a System Platform Resilient to Change

Changes in required procurement information—such as adding “Qualified Invoice Issuer Registration Numbers” under the new invoice system—may necessitate modifications to the ordering interface. When procurement processes span multiple systems, system integration becomes essential.
Designing the integration in a way that minimizes the impact of such modifications is critical. Doing so will improve the maintainability of our system integration architecture.