Cardinal Health prescribes inventory optimization to improve its distribution

March 28, 2005
Cardinal Health Pharmaceutical Distribution, a division of healthcare giant Cardinal Health Inc.

Cardinal Health Pharmaceutical Distribution, a division of healthcare giant Cardinal Health Inc., has installed an inventory optimization solution to improve its inventory planning decision support. Cardinal is using the Multistage Inventory Planning & Optimization (MIPO) software solution from SmartOps Corp.

“SmartOps allows us to continue to advance our supply chain as a strategic source of value for our stakeholders,“ says Mike Kaufmann, executive vice president of supply chain of Cardinal Health Pharmaceutical Distribution. “The use of SmartOps is integral to our newly built National Logistics Center.”

MIPO will function as an add-on to Cardinal’s current purchasing and replenishment system.

Cardinal is now able to dynamically and automatically optimize how it deploys inventory across its supply chain, allows the company to improve its service level without tying up cash in unnecessary inventory, Kaufmann explains. Specifically, MIPO is dynamically creating the optimal inventory targets for over 32,000 items at 25 different distribution locations for each of eight forward-looking time periods.

MIPO enables users to determine the best possible inventory and product availability plans given inherent uncertainties, time-varying data, multi-location and inventory stage complexities, and aggressive customer service goals. The solution dynamically generates optimal inventory targets for each stage of the supply chain, while providing visibility into each reason inventory is needed -- including safety, cycle, pre-build, pipeline and merchandising stock requirements, by item or stock-keeping unit (SKU) -- to meet desired service levels.

The MIPO optimized inventory targets serve as critical inputs into enterprise resource planning (ERP) and advanced planning & scheduling systems.