Novartis Automates Slow-Moving Inventory Management with SAP to Strengthen Global Supply Chain Resilience
核心洞察
Novartis has redesigned its slow-moving and non-moving (SMNM) goods inventory system using SAP Profitability and Performance Management within an integrated enterprise performance management framework.
The new system automates previously manual, error-prone provisioning processes, reducing manual effort and improving risk identification across more than 35,000 stockkeeping units and over 100 locations worldwide.
The SAP-enabled tool provides early warnings on inventory risk, enabling precise, transparent, and forward-looking stock valuation while supporting accurate, compliant financial reporting.
Novartis, one of the world's largest pharmaceutical companies, has completed a redesign of its slow-moving and non-moving (SMNM) goods inventory system, replacing manual, labor-intensive processes with an automated solution built on SAP technology. The initiative, developed in collaboration with EY teams drawing on their alliance with SAP, aims to standardize and scale inventory risk management globally while supporting the company's commitment to uninterrupted patient supply.
Novartis operates in an environment shaped by complex production processes, strict regulatory requirements, and global supply chains. To deliver on its commitment to ensuring uninterrupted patient supply, the Swiss company maintains efficient, compliant, and resilient supply chains and a high level of inventory, totaling over US$5 billion across more than 35,000 stockkeeping units and spanning over 100 locations worldwide.
Addressing a Manual, Error-Prone Process
Despite its scale, Novartis had partly relied on manual, fragmented processes for managing SMNM goods. "Until recently, inventory provisioning required countless manual steps: Excel files, error-prone calculations and a lot of manual time invested," said Subbu Ramakrishnan, LDC IT Lead, Finance and Procurement at Novartis.
The company set out to create a standardized, scalable approach to managing SMNM and related risk provisioning globally, within an integrated enterprise performance management (EPM) framework. The solution lay in redesigning the SMNM goods inventory system using an innovative approach that combined SMNM functionality with SAP technology, including SAP Profitability and Performance Management. The initiative required rethinking the logic, the data flow, and the risk model.
"Together with Novartis, we redesigned the core calculation logic for SMNM goods in SAP," said Sveinung Baumann-Larsen, EY Global Tax SAP Leader.
An End-to-End Automated Solution
EY teams implemented SAP Profitability and Performance Management as the core solution. The software integrated seamlessly with existing systems and is capable of processing large volumes of data at a highly detailed level to detect inventory risks categorized by various reason codes. With built-in review, commenting, and posting functionalities, the entire process now runs end to end in SAP, reducing manual steps and workarounds outside the system, such as emails and spreadsheets.
The new calculation logic enables precise, transparent, and forward-looking stock valuation that Novartis can rely on. "This advanced analytical tool uses sophisticated calculations to provide early warnings on inventory risk," said Alex Gomes, LDC, Core Enablement and Finance Lead at Novartis. The SAP-enabled system automatically flags items that are slow-moving or have no movement at all, thereby improving overall stock control, risk visibility, and consistency.
Operational and Clinical Impact
The SMNM module provides much-needed automation to a process that was highly manual, offering a comprehensive, standardized solution for inventory provisioning with the analytics and forecasting functionalities needed in a solution that is truly integrated across finance, operations, and technology.
For Novartis, this has resulted in standardized and automated global processes, improving operational efficiency and helping ensure accurate, compliant financial reporting with full transparency for audits. The automation of previously manual, error-prone provisioning processes has also reduced manual effort and improved risk identification, allowing the company to respond more swiftly to patient and business demands.
Customers benefit from a more reliable supply chain that ensures timely delivery of medicines, while the improved inventory management supports Novartis' commitment to maintaining an efficient, compliant, and resilient supply chain across all locations.
Positioning for Future AI Capabilities
The unified data model created through this initiative also unlocks potential for future AI use cases by leveraging inventory-related information, positioning Novartis to further enhance its inventory risk management capabilities.