Inventory Valuation for Life Sciences Company

The Finance Department required a significant effort to reconcile the value of inventory in the inventory sub-ledger and the general ledger. Failure to complete this reconciliation could create risk for Sarbanes-Oxley compliance.

Challenges

Many of the client's manufacturing steps are quite lengthy and require multiple steps. Often the time between the consumption of raw materials and the recognition of value for an enhanced product can take the ledgers out of sync. Delays in getting information from contract manufacturers added additional complexity. Further, the organization had recently migrated to a new ERP system that contributed to some of the reconciliation challenges. The combination of these factors created a significant challenge with reconciling sub-ledger to general ledger values. Their existing processes were prone to the potential of human error and required extensive manual review and scrutiny to ensure compliance.

Results

The client can now access the appropriate cost information in a secure and timely manner. The accuracy of the information is more trusted since the details can all be confirmed and cross referenced with other sources. The client is already benefiting from sharper forecasts and better access to manufacturing costs and has plans to use this information to optimize several aspects of their manufacturing process. This has paved the way for a shift to standard costing which will help the company scale in an efficient, consistent and compliant manner related to inventory valuation.

How We Helped

Triverus’ knowledge of Life Sciences supply chain, inventory tracking and inventory cost evaluation associated with the pharmaceutical manufacturing process and our experience with ERP systems allowed us to analyze the existing systems and processes and to make clear recommendations.  During this process, we explored many alternatives to determine the most pragmatic and effective approach. We worked closely with the client to implement those recommendations and to verify the results.

Tags
Life Sciences
Technologies
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