SmartOps solutions allow pharmaceutical companies to manage the uncertainties, constraints, and complexities across their global supply chains on a continuous basis to reduce over-inflated inventories while maintaining highly reliable service levels.
Unlike most other industries, the pharmaceutical industry traditionally has not felt the economic pressure to cut costs tied up in inventory; the standard practice has been to always make sure more than enough of each product was available to meet customer needs. But the requirement to meet those very high service levels has resulted in extreme over-buffering on inventory levels in the pharmaceutical supply chain.
Now as competitive pressures are growing, pharmaceutical companies are seeking ways to improve their performance, reduce waste in their supply chains, and maintain the highest possible service levels required by this industry. That means reliable, scalable analytics -- not just rules of thumb or "gut feel" experience, spreadsheets, or arbitrary top-down reductions -- are needed to determine the right inventory targets.
What has been missing from existing planning software solutions and from internal approaches is a comprehensive, analytical view of the global supply chain to continuously determine optimal target inventory positions. Because SmartOps lets companies calculate and understand how much inventory they should carry, why, where, and when, pharmaceutical companies can address common challenges that have inhibited improvements in supply chain performance and operating income:
Pharmaceutical Supply Chains Are Typically Large, Global Supply Chains
The global nature of these companies, characterized by numerous product supply chains with different markets, makes it difficult to gain visibility into the overall inventory picture and optimize "total chain" inventory plans on a periodic basis. SmartOps provides a scalable, enterprise platform that simultaneously coordinates plans across all nodes, from active/inactive ingredients through primary manufacturing, secondary manufacturing, packaging, warehousing, and market distribution stages.
High Product Availability and Customer Service Levels Are Mandatory
The pharmaceutical industry tolerates little risk when it comes to service levels, but throwing more inventory at the supply chain does not always guarantee the product availability targets are met. Where to put inventory, and when, how much, and why -- given demand forecasts and supply chain variability -- are what SmartOps allows planners to determine with much greater accuracy.
Capacity Constraints MUST Be Considered in Inventory Plans
Capacity in these manufacturers is expensive, which means excess inventory has often been the buffer against supply chain uncertainties and periods of high demand. Because SmartOps looks at all the reasons inventory is needed in the supply chain -- safety stock, cycle stock, pre-build stock, and in-transit inventories -- companies can more accurately determine optimal inventory targets, given capacity limitations at any planning period. When to start building up inventory, and by how much, when, and why are planning decisions SmartOps MIPO supports with great accuracy.
Inherent Uncertainties in Demand Further Complicate Planning
Uncertainties and variances in demand over time -- as well as unexpected supply chain disruptions -- make it that much harder for planners and executives to decide with confidence how much inventory they should carry at any point in their supply chain. To consider such complexities, the solution approach must be able to account for all the drivers of inventory to adequately manage safety stock levels and other purposes for carrying inventory. SmartOps optimization algorithms manage uncertainties in the data and offer visibility into what causes inventory to be held at the item-location-time period level of detail.
SmartOps Multistage Inventory Planning & Optimization (MIPOTM) is an advanced software solution for optimizing total chain inventory targets to meet desired customer service/product availability targets, while accounting for capacity constraints, multistage interdependencies, and supply and demand variability.
MIPO fills a persistent gap in the supply chain planning landscape by generating improved inventory targets:
- across all products and SKUs
- for all locations in the global supply chain
- for each planning period
- for the reasons you might need to carry inventory (safety stock, cycle stock, in-transit/pipeline stock, merchandising/dealer stock)
- providing better inputs into existing systems and processes
Example Supply Chain Planning Activities Supported by the SmartOps Solution:
- Annual and quarterly inventory budgeting
- Sales & operations planning
- Continuous improvement initiatives and scenario analysis for Six Sigma teams
- Weekly or monthly safety stock optimization
- Cycle stock planning and optimization
Pharmaceutical
