Inventory Management Case Study for CDMO

This case study outlines the inventory management challenges faced by a midsize contract development and manufacturing organization (CDMO) and the solutions provided by Thermo Fisher Scientific. The CDMO was experiencing potential increases in capital expenditure due to the need for expanded raw material warehouse capacity to support customer growth. The organization was holding excessive safety stock to manage long lead times and variable on-time in-full (OTIF) performance from suppliers, which negatively impacted working capital. Thermo Fisher assessed the inventory levels and proposed a stocking agreement for critical chemicals, allowing for off-site inventory management in a CGMP-compliant warehouse. This approach aimed to reduce capital requirements, improve lead times, and enhance OTIF performance. The implementation of this solution resulted in significant cost avoidance, improved delivery performance, and more efficient use of warehouse space, ultimately enabling the CDMO to better allocate resources for customer portfolio growth.