Case Three. A serial manufacturer of
pharmaceutical products is a systematic
and enthusiastic user of VMI. A comprehensive
IT and supply chain strategy has
helped Novartis relentlessly pursue its
goals of integration, inventory reduction
and velocity. Novartis implemented
VMI as part of a drive to automate
the repetitive work while focusing its
resources on value-added processes. Its
VMI implementation required no additional
software since Novartis created
a collaborative platform in its existing
SAP system.
Its suppliers were granted access to
data that previously was available only to
internal procurement staff. Inputs to the
Novartis MRP algorithm, like current
prediction and reality
Figure 3: Companies with a higher VMI readiness score benefited from using the
supply chain strategy.
100%
75%
50%
Using, but with
some challenges
Using
with success
Use and degree
of success of VMI
Not using
VMI
readiness score
RUAG
Framework recommends
not to use
Firm does not use
ODLO
Framework recommends
considering
Firm uses with challenges
Novartis
Framework recommends
considering
Firm uses successfully
P&G
Framework recommends
using
Firm uses successfully
44 Industrial Engineer
are you ready for VMI?
demand, bills of materials, quantities in transit and current
levels of inventory, become transparent to the trade partner.
With this insight, suppliers can decide either to ship in toto,
as ordered, or adjust quantities to align with their own production
schedule. The strong and mature ties with Novartis’
suppliers helped create this win-win solution. Novartis’ trade
partners produce in their most optimal way while Novartis
specialists rely on high service levels and dedicate their time
to exception handling. Their business decision is in line with
the 51 percent to 75 percent (247) score on the questionnaire
framework. Although Novartis is not suited completely for a
VMI solution, its comprehensive efforts turn that borderline fit
into a successful case.