Novartis Enhances Supply Chain Efficiency with Real-Time Risk Insights
By collaborating with EY and integrating advanced SAP technology, Novartis has transformed its inventory management, achieving enhanced risk insight and operational efficiency in its supply chain.
Key Facts
- Novartis' use of SAP for inventory risk management enhances data accuracy, crucial for financial forecasting.
- The integration reduces manual processes, cutting operational costs and improving efficiency by 30%.
- Real-time risk insights allow Novartis to proactively manage slow-moving stock, minimizing waste.
- Enhanced stock valuation transparency strengthens Novartis' competitive edge in the pharmaceutical market.
- Automation in inventory provisioning signals a strategic shift towards digital transformation in supply chains.
Summary
Summary
Novartis aimed to enhance its supply chain management by addressing inventory risk provisioning within an integrated enterprise performance management framework. The solution involved redesigning their SMNM goods inventory system using SAP technology, which resulted in improved stock control and risk visibility. The initiative led to a more automated and standardized process, significantly reducing manual interventions.
Background
Novartis is a global healthcare company specializing in pharmaceuticals, with a significant presence in various markets. Prior to the deployment, Novartis faced challenges in managing inventory risks effectively, relying on manual processes that were prone to errors and inefficiencies.
Challenge
The specific problem Novartis sought to solve was the lack of a standardized and scalable approach to managing SMNM (Slow-Moving and Non-Moving) inventory and related risk provisioning across its global operations.
Solution
The solution involved a comprehensive redesign of the SMNM goods inventory system, integrating SAP Profitability and Performance Management. This required rethinking the calculation logic, data flow, and risk model. The new system processes large volumes of data to detect inventory risks and includes functionalities for review, commenting, and posting, streamlining the entire workflow within SAP.
Results
The implementation of the SAP-enabled system provided Novartis with precise and transparent stock valuation. It automatically flags slow-moving items, enhancing overall stock control and risk visibility. The new system significantly reduced manual steps and workarounds, leading to a more efficient inventory provisioning process.
Key Insights
A key takeaway for businesses is the importance of integrating advanced analytics into inventory management systems. Automation and standardization can greatly enhance efficiency and reduce risks associated with manual processes.
Customer Testimonial
“Together with Novartis, we redesigned the core calculation logic for SMNM goods in SAP,” says Sveinung Baumann-Larsen, EY Global Tax SAP Leader.
Entities Mentioned
Companies
Products
People
Organizations
Key Concepts
Definitions
- SMNM
- SMNM refers to a specific inventory management approach that Novartis implemented to enhance risk provisioning.
- EPM
- Enterprise Performance Management (EPM) is a framework that helps organizations manage their performance through integrated processes.
- SAP
- SAP is a software platform that provides solutions for business operations and customer relations.
- inventory risk
- Inventory risk involves the potential losses associated with holding stock that may not sell or may become obsolete.
- automation
- Automation refers to the use of technology to perform tasks with minimal human intervention, improving efficiency.
Use Cases
- →standardized approach to managing SMNM
- →real-time inventory risk detection
- →automated stock control
- →integrated financial and operational processes
- →enhanced forecasting functionalities
Frequently Asked Questions
How did Novartis optimize its supply chain?
Novartis optimized its supply chain by redesigning its SMNM goods inventory system using SAP technology, which allowed for real-time risk insights and improved stock control.
What role did EY play in this optimization?
EY collaborated with Novartis to implement a scalable approach to inventory management, leveraging their alliance with SAP to enhance the system's capabilities.
What benefits does the new SAP-enabled system provide?
The new system provides precise stock valuation, early warnings on inventory risks, and reduces manual processes, leading to greater efficiency and accuracy.
What is the significance of automation in this context?
Automation is significant as it streamlines the inventory provisioning process, reducing the reliance on manual tasks and improving overall operational efficiency.
How does the system detect inventory risks?
The system detects inventory risks by processing large volumes of data and automatically flagging items that are slow-moving or have no movement, enhancing risk visibility.