The Johnson and Johnson journey deploying SmartOps for multi-echelon inventory optimization

Abstract

Multi-echelon inventory technology enables firms to significantly reduce inventory costs. It gives managers the ability to make tradeoffs based on information from the entire supply chain, which results in a more powerful supply chain strategy and stronger competitive advantage. This thesis provides a case study exploring the deployment of SmartOps multi-echelon inventory optimization technology in Johnson and Johnson's Medical Devices and Diagnostics supply chain. The basis for this thesis is an internship project that focused on implementing SmartOps in the Transfusion Medicine and Mainframe Slides businesses within Ortho Clinical Diagnostics, a group within the Medical Devices and Diagnostics sector. Through a pilot program, this internship analyzed the level of complexity involved in deploying multi-echelon inventory optimization tools such as SmartOps. In addition, this internship identified key challenges associated with data quality, especially in decentralized supply chains. The results of this study show that while IT investment decisions are challenging, senior executives should strongly consider investing in multi-echelon inventory optimization software. Recommendations for implementation include automation, people development, and forecast data centralization.