Impact of a SKU rationalization on Ethicon’s inventory entitlement, a Johnson & Johnson franchise.

Details

Supervisors

Chevalier, Philippe

Faculty

Louvain School of Management

Degree label

Master [120] en Ingénieur de gestion

Abstract

The thesis consists in analyzing the impact of a SKU rationalization (portfolio reduction) of Ethicon and especially on the level of inventory. The project through the consolidation of SKUs was launch in order to reduce the total amount of inventory and therefore the costs. The thesis is composed out of different parts. The first part focuses on the consolidation and includes the analyzing of the impacts on the safety stock through demand and supply variability as well as the batch size. Secondly, for regulatory reasons, there is a need to go to a dual production which has a negative impact on the level on inventory by increasing it and therefore would reduce the total amount of savings of the SKU rationalization project. An analysis would also be performed on this second part to evaluate its (negative) impact. Those two parts would allow to compute the total amount of savings of the SKU rationalization project. The savings obtained through the computation (savings of the consolidation – extra cost of the dual production) will be compared with results that have been computed by Ethicon in order to compare the computed savings in the thesis to the predicted savings.