A bulk drugs manufacturing company wanted to expand business by taking up new molecules for commercialization. This entailed capex of upto Rs 300 Crores (approx USD 43 million) – over one year. Delays in completing the project would adversely impact revenues, profitability and cash flows.
- Estimation of capital expenditure for building and equipment
- Getting all stakeholders such as Project engineers, finance, production, planning, supply chain including warehousing on the same platform
- Adhering to timelines
- Coordination and Completion
Standardization and Automation of Capital expenditure
A Standard Operating Procedure (SOP) was developed which covered all aspects of the capex budgeting-to-project-implementation life cycle – covering budget allocation, preparing the Bill of materials (BoM), raising indents, approval and issue of purchase orders / work orders, raising of Goods Received Notes (GRN / MRN) and accounting of all the capex purchases till capitalization.
The system was designed to have minimum manual intervention with proper internal controls focussed on both proper authorizations and ensuring that prices were properly negotiated among all available vendors. The process was configured in the ERP system to achieve the goals of accuracy, maintaining audit trails for approvals and ready access to scanned documents along the entire chain and saving time.
The cross-functional team led by Finance – included engineers, procurement staff, warehouse staff and accounting staff who were given necessary training in the ERP platform.
Before roll-out, mock runs were conducted on the ERP platform to identify and mitigate possible issues that may arise during implementation. This enabled quick resolution of issues when they arose during the project. Frequent meetings attended by top officials of the entire team where any policy adjustment decisions were required to be taken to helped handle unforeseen issues.