Carolina Anestam, Opuscapita - 07 Dec 2010 - Originally Published in Opuscapita Journal

Carolina Anestam, OpusCapita - 07 Dec 2010 - Originally published in OpusCapita Journal

When the acquisition of additional companies put pressure on the efficiency of the netting solution used by Mölnlycke Health Care, the company was faced with a rapid transformation project.

Being in a desperate hurry is seldom the best way to start a major new project. But as Karin Marklinder, treasury analyst at Mölnlycke Health Care, can verify, being pressed for time helped to set up a new netting and factoring system very quickly and effectively.

The reason for the rush was related to the company’s history. Mölnlycke Health Care used a netting solution within the IT system that was introduced when it left SCA in 1998. The heavily centralised SAP environment functioned very well as long as everyone was using the same technical solution.

“The problems started in recent years after we acquired companies not using SAP. A broader mix of different solutions meant that we had to supplement the system with manual processes,” explains Marklinder.

In the beginning of 2009, SCA announced that it would change its system, which meant that Mölnlycke Health Care had to find its own solution. The deadline was 31 December of the same year. “We were truly pressed for time, especially as we knew that we could not run a new system in parallel with the old one,” she says.

Mölnlycke Health Care

• Mölnlycke Health Care is a world leading manufacturer of single-use surgical and wound care products and services for the professional health care sector.
• It is owned by Investor, the largest industrial holding company in the Nordic region. Around 6200 employees work in 25 offices across the world.
• The headquarters are based in Gothenburg, Sweden, and manufacturing sites are located in Belgium, the Czech Republic, Finland, France, Malaysia, Thailand and the UK.

Double Trouble

The way Mölnlycke Health Care operates is that all of its subsidiaries use their local currency (15 in total) and sell their invoices to the netting centre at the head office, which also involves an exchange rate risk.

“It is our principle to gather as much risk as possible at the Swedish parent company. Our marketing companies sell and buy at set prices in their local currencies, at rates of exchange that we establish annually. This facilitates their budgeting,” explains Marklinder.

When the changeover arrived, it took place very quickly. With 10 years’ experience (five as a consultant and another five as an employee) of the company, Marklinder knew exactly what was needed. An important requirement for the new system was to be able to retain the principle of one payment per company per month. The assignment was to combine two sub-projects: a new netting system and a new technical solution for invoicing.

“We worked hard on the preparation and estimated that we would have to begin implementation in August to make the deadline of 31 December. Obviously that was a schedule I would not have chosen myself,” Marklinder says.

Solid Recommendation

At first it appeared difficult to find a system that would meet Mölnlycke Health Care’s needs. “We heard that SKF had an interesting solution, so we discussed how it worked with them. They were very pleased with their co-operation with OpusCapita. If they could operate the system with hundreds of subsidiaries, a large number of currencies and a more complicated organisation, then we should feel confident with the same solution,” details Marklinder.

A combination of a factoring and a netting solution is rather unusual but Mölnlycke Health Care sees many benefits in it. “The alternative would have been to create and adapt a solution ourselves, but we wouldn’t have had time to do that and it is often a much more expensive alternative in any case,” Marklinder says. “Without SKF’s recommendation we would have had to carry out more technical analyses and tests.”

Stress Test With Answers

Co-operation with OpusCapita started with a joint kickoff event in August. Work started on a timetable that was as short as it was demanding: a couple of months for development and implementation, a month for testing, piloting in January and finally going live in February, with the first major netting in March, only a month later.

“Since we altered the technical interface to enter invoices, there was absolutely no room for errors and the test period was extremely demanding, with more than 500 different test cases. But it all went well,” Marklinder reports. The pilot was conducted at three companies during one month to ensure that everything was as it should be.

"That was when we had to either stop or continue. But we felt that everything was going well and launched the ‘big bang’, which included most of our companies,” she says. All that remains is to bring aboard the companies that Mölnlycke Health Care has acquired in recent years.

More Time for Analysis

Mölnlycke Health Care has carried out a number of additional analyse's, but by and large this system is the standard solution that was sought. All invoices are sent to the OpusCapita system several times a day and when they are sent to SAP, they are recorded automatically. “The next step is to work more on follow-up and analysis so that we can make even better use of the benefits,” reports Marklinder. “My job includes examining and following the internal currency flows in every company and the new system gives me much better reports. Before I had to use a number of different sources but now everything is much simpler.”

Other new internal features include the adjustment routines and handling of cost sharing invoicing or the central costs shared by the companies. “Above all, we now have a system that is much more user-friendly. The fact that the new system is web-based is a major improvement on the older system that was, in principle, just a step up from paper,” Marklinder says.

Eyes on the Future

In terms of the future, opportunities connected to change are what matter. Mölnlycke Health Care is in a state of continuous change and is expanding with new units. “The environment is much more dynamic nowadays and systems must adapt. This is something we had wanted to do for several years but the investment was difficult to justify as the old system was, after all, perfectly functional,” Marklinder explains. “In the end, it was a good thing that we were kicked out [of the previous system] as we quickly ended up in the goal.”

Flexible Project Team

Karin Marklinder, treasury analyst, project managed the system change but had a number of people helping her at the different stages of the project. The core group comprised some 10 people, including Niklas Rahm, who is currently responsible for the system and handles netting in practice. Additional resources were acquired as needed.

"Since it was our strategy to go live with a ‘big bang’ and there was no room for error, we had more than 40 people testing the system," Marklinder says. The project management team also included people from OpusCapita, CapGemini and SAP, as well as Karin Högberg, group treasurer, and Mikael Sjöqvist, manager financial service centre.

"I reported internally to the executive team. The project management and leadership were suitable, well-functioning and formal, just as I like it, so we stayed in control of the project," Marklinder concludes.