Supply chain scenario modeler: A holistic executive decision support solution

Abstract

McKesson is America's oldest and largest healthcare services company. IBM Research developed an innovative scenario modeling and analysis tool, supply chain scenario modeler (SCSM), for McKesson to optimize its endto-end pharmaceutical supply chain policies. Through integrated operations research (OR) models, SCSM optimizes the distribution network, supply flow, inventory, and transportation policies, and quantifies the impacts of changes on financial, operational, and environmental metrics. The modeling work spawned a roadmap of projects with quantified opportunities, including a new air freight supply chain path, and provided new insights that have been critical to improving McKesson's performance as a pharmaceutical industry leader. A structured data model supporting the OR models has provided a basis for additional improvement projects. The model directly links OR modeling results to a detailed profit-and-loss statement by product category for the different supply chain paths that McKesson uses. Since this effort began in 2009, McKesson Pharmaceutical division has reduced its committed capital by more than $1 billion. © 2014 Informs.