Outsourcing the Indirect Supply Chain

sdi_wp_outsorcing_072516cover300pxThis in-depth whitepaper takes you through the journey that Smith & Nephew – a global research, development and manufacturing company of medical devices and products – underwent when initially looking for a provider to manage their tool cribs and eventually decided on an end-to-end supply chain management firm.

Managing a high-volume tool crib operation that encompasses more than 7,500 unique part numbers is a top priority for Smith & Nephew’s Memphis manufacturing operations. A global research, development and manufacturing company of devices and products for the fields of orthopedics, wound management and endoscopy, the company’s Memphis operations include two tool cribs situated about 20 miles apart – each of which relies on a third-party MRO/Indirect supply chain management firm to keep them running smoothly and seamlessly. It’s important to note here that tooling for Smith & Nephew doesn’t just mean the hammers and wrenches that their maintenance technicians use to fix their production equipment. Their tooling includes the drill bits and assembly parts needed to make the critical medical devices that healthcare providers and patients depend on – it’s essentially part of their finished goods and vital to the success of their business.

For years, Smith & Nephew’s employees managed the tool cribs themselves. As the volume of tools and products held in those repositories increased, and as the company continued to grow and expand globally, the need for a reliable third-party service provider became more apparent. At the time, the company had about 5,000 stock keeping units (SKUs) in its tool crib – enough to push the company to seek outside help.

“Like any decision to outsource, this one was based on the fact that our competency is in manufacturing, not inventory management,” says Daniel Strini, Commodity Leader. “In an effort to increase efficiency and reduce costs, we started shopping around for a provider to manage our tool cribs.” What they eventually ended up with was an As-a-Service supply chain solution.

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