Merck: Global Supply Chain Management
Wk 2 Assignment
MGT 323 Principles of Supply Chain Management
Merck: Global Supply Chain Managemt
What is Global Supply Chain Management? This is a management function that help to focus on a a wider view of the global market and the supply chain including the distribution of goods and services. This type of management includeds purchasing and storage of raw materials, inventory management of supplies, as well as the overall point of origin to the consumption of the finished product. Understanding your global supply chain and its management are very important to any organization because it helps to optimize your operations allowing you to maximize the speed of delivery of the finished product, ensure efficiency and optimize on cost reductions. The importance of global supply chain management is not lost on one of the largest pharmaceutical companies in the world, Merck and Co.
Merck’s mission statement is, “Our vision is to be the most trusted and competitive supplier of pharmaceuticals, animal health products, vaccines and biologics to the world’s patients and customers” (“Manufacturing & Supply Chain”, 2019). Merck is commited to ensuring that patients and customers receive the most reliable and safe products by leveralging both internal and external manufacturers (“Manufacturing & Supply Chain”, 2019). By utilizing Lean and Six Sigma projects throughout the organization as well as internal and external manufacturing , Merck has been able to ensure that quality, safety and environmental standards are met as well as the reduction of procurement spending and improvement of supply performance.
Merck uses a flexible supply chain that will allow them to take into account global and local market supply needs. This allows them to cut costs as well as forge relationships in different global markets and select partners that meet the Merck standards of Good Manufacturing Practices and Good Packaging Practices. These relationships provide them with access to 32 corporate alliances globally, as well as 94 regional alliances that help to provide better access to supplies.
Merck employees five principals elements in their supply strategy; stability, responsiveness, innovation, biologics, and diverse talent. Stability helps them to strive for safety as well as regulatory compliance and a reliable supply chain. Responsiveness is an important part of the supply manangement strategy because it allows Merck to advance the end-to-end supply chain as well as have a best-in-class cost of goods sold and working capital. By advances in technology and new approaches in both operations and customer servce, Merck allows for new innovations to broaden the supply chain. Advancements in Biologics helps Merck to build on their large-molecule capacities. Lastly diverse talent within the supply chain management helps to broaden and enhance development and other areas of the business.
Another way that Merck focuses on their supply chain management is by leveraging relationships with vendors making key alliances, ensuring top quality. For instance, in 2011 Merck announced a strategic alliance with UPS for distribution, warehousing, and transportation services in North America. This collaberative relationship helps to reduce the number of companies they deal with from a global supply chain standpoint. This also helps to focus attention on parts of the world that need better access to quality medicine and vaccines so that Merck and UPS can work together to open up locations for distribution in these countries making it easier to get drug to patients that needed it. According to our text, “Third-party logistics and wholesale food and grocery distribution share one thing in common: both industries operate on razor thin margins. That puts a premium on squeezing as much cost as possible out of warehousing, distribution and transportation operations” (Wisner, Tan, & Leong, 2012). By creating alliances such as the one between Merck and UPS, it allows them to create contract with associated costs of services and cut down cost were possible. Merck also utilizes transportation brokers in some countries such as Brazil and Argentina. Since these brokers are legally authorized to act on Merck’s behalf, they assume responsibility for the shipments to get from customs to the clinical site. These brokers are hired based off of their knowledge of the different transportation alternatives and can help get the supplies to the site as the lowest costs.
In conclusion, understanding your supply chain is very important to your organization. Merck strives to create and manage their supply chain in the best most effective way possible. By utilizing different approaches in distribution and logistics, such as strategic alliances and the utilization of brokers among other innovations, Merck is able to meet their vision of Safety First, Quality Always.
Wisner, J.D., Tan, K.-C., & Leong, G. (2012). Principles of Supply Chain Management (3rd ed.). Retrieved from https://www.vitalsource.com/