Inventory management optimization

Project Lead Fabian Lutz , Director Client Service Europe

Vision

To regain control of rapidly rising inventory and a warehouse at near capacity, a leading CDMO needed to quickly implement a robust inventory management program, and longer term, create a more transparent and agile Supply Chain.

Challenge

• Over ordered materials and reduced market demand resulted in high and excessive inventory including obsolete and near expiry materials with a risk of significant write-offs.
• Gaps in supply and demand data and a lack of SAP adoption resulted in monthly forecasting inaccuracies of up to 20%, manual materials planning, and on-paper calculations.
• A lack of capacity and capability had roadblocked global standards and supply chain transformation.

Solution

The Global Head of Supply Chain partnered with us to stabilize inventory, support SAP re?mplementation, and the broader supply chain transformation. Together, over nine months we:

• Partnered across global and local supply chain teams, global procurement, and warehousing to establish the scale and root cause of the problems
• Assessed processes, systems, and data to identify gaps that would impact materials planning, supply, demand, and inventory forecasting, and supply chain transformation
• Gained clear oversight of uncancelled POs that would further escalate inventory levels and worked with procurement and suppliers to facilitate cancellations and avoid significant write-offs
• Smoothed processes to ensure swift obsolete/expired materials destruction to reduce warehouse capacity
• Deepened communication and cross-site materials sharing before obsoletion or expiration, working with quality to overcome tax, customs, and regulatory barriers and establish a scalable process
• Re-implemented SAP for real-time data to enhance forecasting and sharpen focus on materials planning
• Partnered with the Supply Chain Center of Excellence (CoE) to meet the required global process standards and enable supply chain transformation.

Impact

• Cancelled high amounts in obsolete POs to reduce inventory and write-offs.
• Successful roll out of compliant inventory sharing processes across 4 key sites, with a robust framework to extend to 20+ remaining sites.
• Met the CoE standard of supply chain processes and re-implemented SAP for more accurate data management and materials planning and forecasting.
• Created a cross-functional supply chain management community to share best practice, with tighter processes and controls and the agility to pivot quickly in the face of future supply and demand changes.
• The program delivered a 15x return on investment.

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