Case Study Details

Inventory Optimisation

Portfolio Information

  • Client :Auchterturra
  • Date :22 Jan
  • Tags :Inventory
  • Demo : see demo

Inventory Optimisation


We completed a supply chain assessment of the demand planning and scheduling functions for a pharmaceutical organisation. The aim was to improve how inventory was purchased, controlled and managed throughout the manufacturing operation.

The pharmaceutical supply chain is highly regulated, with strict TGA or FDA controls for many companies. As raw materials or sub assemblies can only be supplied by TGA approved vendor sites, the amount of inventory that flows across multiple supply chains requires micro management by skilled logistics manufacturing personnel.

The ERP system is the primary hub for managing inventory investment, releasing orders for manufacturing and despatching the final order to a customer. This does sound quite simple and is a standard process for any organisation. The complexity for a pharmaceutical operation increases for a number of reasons:

The bill of materials structure for an end product or a semi finished product is quite complex with multiple layers down to a raw material.
Complex routings that flow inventory through all stages of production need to support both internal and external manufacturing.
Long product leadtime places pressure on the planning function to manage working capital and cash flow to meet customer expectations.
Batch production is driven by the highest goods manufacturing practices for every manufacturing site within the supply chain.
Older ERP planning and scheduling systems are not constraint based, which makes it a challenge to plan accurately for customer order requirements. Changes to safety stock levels, time fence and lead time parameters are made to smooth out demand and supply.
Production vessels, their number and capacity, are planned based on capacity and utilisation. Customer demand requirements are difficult to achieve when an organisation runs lean. Raw material or semi finished inventory level are typically higher to provide flexibility for filling.
Inventory optimisation initiatives such as multi echelon inventory can be complex, making it more difficult to control or reduce inventory cost.

Core Problem

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

Problem Resolution

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