Cardinal Health Advances Its Supply Chain

Supplier of healthcare products uses SmartOps for inventory optimization

Supplier of healthcare products uses SmartOps for inventory optimization

Pittsburgh, PA — March 25, 2005 — Cardinal Health Pharmaceutical Distribution, a division of Cardinal Health Inc., has purchased and installed the SmartOps Multistage Inventory Planning & Optimization (MIPO) software solution, which is designed to improve inventory planning decision support.

Cardinal Health, headquartered in Dublin, Ohio, develops, manufactures, packages and markets products for patient care; develops drug-delivery technologies; distributes pharmaceuticals, medical-surgical and laboratory supplies; and offers consulting and other services that improve quality and efficiency in health care. Cardinal Health employs more than 55,000 people on six continents and produces annual revenues of more than $65 billion.

SmartOps allows us to continue to advance our supply chain as a strategic source of value for our stakeholders, said 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.

With SmartOps, we are able to optimize how we deploy our inventory across our supply chain, which allows us to continue to improve our service level without tying up cash in unnecessary inventory, added Kaufmann. Specifically, he said, MIPO is creating the optimal inventory targets for over 32,000 items at 25 different distribution locations for each of eight forward-looking time periods.

SmartOps explained that MIPO determines 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.

MIPO then 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 and scheduling systems so they function efficiently, delivering better intelligence for inventory planning and execution.

Cardinal Health is another example of a leader in its industry that faces the common challenge of managing millions of inventory item-locations across a multi-echelon network, commented Dr. Sridhar Tayur, CEO and founder of SmartOps. We are excited to add Cardinal Health to our roster of companies, including Kellogg, Deere & Company, Bayer and Hewlett-Packard, that recognize how managing supply chain uncertainty is a key to optimizing inventory levels in ways that create lasting value.