Inventory Optimisation

Inventory Optimisation - Pharmaceutical Supply Chain

We completed a supply chain assessment of the demand planning and scheduling functions for a pharmaceutical organisation. The aim was to create an integrated demand planning and scheduling system that supported a multi vendor manufacturing operation to achieve agreed inventory investment targets. As the final product goes through multiple stages of production as raw materials and sub assemblies, the manufacturing cycle tends to build up inventory at each stage due to lengthy sourcing and production leadtimes. The challenge is to balance these constraints against market driven demand.

Inventory Optimisation Project Roadmap

This phase involved a deep dive into all aspects of the operation in order to understand the workings of systems that drove this pharmaceutical supply chain. The challenge is to understand how a multi tiered pharmaceutical supply chain model operates from initial forecasting through to final product development in readiness to market. This involved navigating core system functions to develop a centralised data hub as a single source of truth to support the sales and operations process. This was achieved by understanding these challenges and constraints:

• • 1. The bill of materials structure is quite complex with multiple layers down to a raw material.
    2. Complex routings that flow inventory through all stages of production to support manufacturing.
    3. Long product leadtime places pressure on the planning function to manage working capital and cash flow.
    4. Batch production is driven by highest GMP standards for every manufacturing site within the supply chain.
    5. ERP scheduling system is not constraint based, which is problematic when smoothing out demand and supply.
    6. Production vessels capacity are planned based on capacity and utilisation by ERP.
    7. Customer demand requirements are difficult to achieve when an organisation runs lean.
    8. Raw material or semi finished inventory level are typically higher to provide flexibility for filling.
    9. Inventory optimisation initiatives can be complex and difficult to control inventory investment.

Core Problem

1. Back order levels and high & customer service below acceptable target level.
2. Demand management including forecasting and execution needed attention.
3. Production planning and scheduling required alignment and precision.
4. Inventory write off's were excessive and amounted to millions of dollars pa.
5. Planning parameters in Movex ERP not working correctly due to lack of systems knowledge.

Problem Resolution

1. Complete development of an AS IS current state workflow plan of the entire supply chain.
2. Developed a future state model covering all workflows, documents, data and cost controls.
3. Developed a centralised data management system for sales and operations planning.
4. Implemented new sales and operations planning process to bring together all functions.
5. Work groups established to refine planning parameters, resulting in more accurate projections.
6. Cleansed Boms and Routings to increase planning integrity for production.
7. Provided Movex ERP training to up skill personnel in MRP and DRP planning.