Complexity management and standardization

M. Fischer: Merck is a global pharmaceutical and chemical company that operates in a highly regulated market. The complexity of the supply chain is continuously growing. More and more countries are issuing their own dangerous-good handling requirements, which are not globally harmonized. Country-specific formats and handling requirements are the result, and this is increasing both complexity and cost enormously. Country-specific labeling in local languages and specific import processes are two examples.

At the same time, customers want specific packaging designs, delivery conditions, labels and documentation. Customers that operate globally require from their suppliers globally harmonized standards, for instance standardized quality, delivery documents and barcodes. Increasing complexity leads to increasing cost pressure.

How can a company like Merck deal with increasing demands such as these? The answer is: through more standardization of processes and master data supported by a globally harmonized IT system. At the same time, logistics processes of a global company need to be managed globally as well.

Merck uses several transport and warehousing service providers. More collaboration with them is necessary in order to meet customer expectations. Therefore, our strategy is to reduce the total number of service providers to be able to increase the level of collaboration. Using IT interfaces and a track-and-trace system is a must.

With these requirements, making use of ad hoc freight tenders is not possible. We prefer more strategic partnerships with service providers, however, we tender or benchmark our services every two to five years, depending on the type of service concerned.