2013 Edelman Finalist McKesson

McKesson: A Holistic Supply Chain Management Solution

McKesson is America's oldest and largest healthcare services company, helping its customers achieve better health. IBM Research developed an innovative scenario modeling and analysis tool (SCSM) for McKesson to optimize its end-to-end pharmaceutical supply chain policies. Through its integrated OR models, SCSM optimizes the distribution network, supply flow, inventory, and transportation policies; quantifies the impacts of changes on financial, operational, and environmental metrics. This solution provided new insights into the supply chain's profitability that have been incorporated into other pricing models. The modeling work spawned a roadmap of projects with quantified opportunities, including a new Air Freight supply chain, and provided new insights that have been critical to McKesson's improved performance as a Pharmaceutical industry leader. As important as the modeling work has been, the new structured data supporting the model has provided a rich basis for additional improvement projects. This model was the first to directly link OR modeling results to a detailed profit and loss statement by product category for the different supply chains used by McKesson. Since this effort began in 2009 McKesson pharmaceutical division has reduced its committed capital by over $1 Billion.