Developing global inventory and resupply forecasting policies for the vaccines industry

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Dept. of Mechanical Engineering; in conjunction with the Leaders for Global Operations Program at MIT, 2011.Cataloged from PDF version of thesis.Includes bibliographical references (p. 55).Appropriate inventory management is important for many businesses throughout the world. For the vaccines industry, appropriate inventory policies impact both the business' profitability and people's lives. An optimal policy must consider challenges such as product expiration, country specific SKUs, and a challenging regulatory environment. This thesis discusses an inventory forecasting tool developed for Novartis Vaccines that can be used to determine appropriate inventory policies and forecast resupply needs. Novartis Vaccines factories ship vaccines to Novartis operated warehouses throughout the world. The inventory at these warehouses is used to meet customer demand. Each country's warehouse is responsible for managing its local inventory and forecasting orders to the manufacturing team. Changes to the forecast can lead to costly manufacturing rework and local stock-outs. Inappropriate inventory policies can lead to high inventory holding costs and product expiration leading to scrap. The results of this project show that the best inventory and resupply planning methods differ for different types of vaccines in different markets. The tool developed looks at differences such as sales volume and seasonality, distribution methods and costs, product shelf life, and the transfer price to provide an optimal inventory and resupply forecast. The tool was tested in four countries with several SKUs in each country and identified approximately 50,000 Euros in savings per country. If the tool was applied to all 25 countries and similar savings were seen in each country, the organization will save 1.25 Million Euros.by Julia Stark.S.M.M.B.A