Executive Briefings

How Merck Is Building an End-to-End Supply Chain

There's no question pharmaceutical supply chains are complicated. Add industry and government regulations — topped with geographical complexities — and it's become more challenging than ever for multinational companies to get beyond node-to-node planning.

For decades, this was the case at Merck, a pharmaceutical company with a vast network of internal sites as contract manufacturers, as well as a large set of distributors bringing life-saving medications to patients. Company executives came to realize, however, if they truly wanted to be patient-focused, they needed to break their node-to-node cycles and aim for end-to-end supply chain planning and visibility.

“Demands keep switching, and you want your manufacturing — your packaging, in our case — and the bulk manufacturing to be as aligned as possible, as fast as possible,” said Mark Talens, Merck’s executive director of enterprise solutions, in an interview at Kinexions, the annual event for Kinaxis customers and partners.

Merck began to look at planning not as a “sales order, purchase order” model, but truly end-to-end — and optimizing the ways to reach patients — by creating a demand requirements planning (DRP) layer on top of its traditional enterprise resource planning (ERP) platform.

Even with the benefit of standardized software across all of Merck’s manufacturing sites, distribution facilities and commercial entities, the company was struggling with data. Investing in an end-to-end planning tool is filling that gap.

The pharmaceutical company hasn’t yet achieved its dream of an end-to-end view of its supply chain, but Talens says they’re “on the journey.”

Transitioning from node-to-node to end-to-end has been a challenge in itself, but Talens says he’s already seeing benefits in three unique areas. First, the inventory.

“As we started implementing these end-to-end tools and creating visibility across our supply chains, we saw where we had the wrong inventory positions and the wrong replenishment models in place,” he said.

Second: visibility of drug discards. Waste can be especially consequential — and expensive — in the pharmaceutical world, Talens says, and Merck is now on track to reduce discards by 50 percent.

Third — and most importantly, he says — is the change in workflow.

“Our planners, being ‘transactional firefighters,’ are moving slowly but surely into that what I call ‘Ph.D of parameter management’ — moving to a higher level,” he says. “Truly what a planner should do — not chasing a truck finding an issue after it occurred.”

See video for full interview

For decades, this was the case at Merck, a pharmaceutical company with a vast network of internal sites as contract manufacturers, as well as a large set of distributors bringing life-saving medications to patients. Company executives came to realize, however, if they truly wanted to be patient-focused, they needed to break their node-to-node cycles and aim for end-to-end supply chain planning and visibility.

“Demands keep switching, and you want your manufacturing — your packaging, in our case — and the bulk manufacturing to be as aligned as possible, as fast as possible,” said Mark Talens, Merck’s executive director of enterprise solutions, in an interview at Kinexions, the annual event for Kinaxis customers and partners.

Merck began to look at planning not as a “sales order, purchase order” model, but truly end-to-end — and optimizing the ways to reach patients — by creating a demand requirements planning (DRP) layer on top of its traditional enterprise resource planning (ERP) platform.

Even with the benefit of standardized software across all of Merck’s manufacturing sites, distribution facilities and commercial entities, the company was struggling with data. Investing in an end-to-end planning tool is filling that gap.

The pharmaceutical company hasn’t yet achieved its dream of an end-to-end view of its supply chain, but Talens says they’re “on the journey.”

Transitioning from node-to-node to end-to-end has been a challenge in itself, but Talens says he’s already seeing benefits in three unique areas. First, the inventory.

“As we started implementing these end-to-end tools and creating visibility across our supply chains, we saw where we had the wrong inventory positions and the wrong replenishment models in place,” he said.

Second: visibility of drug discards. Waste can be especially consequential — and expensive — in the pharmaceutical world, Talens says, and Merck is now on track to reduce discards by 50 percent.

Third — and most importantly, he says — is the change in workflow.

“Our planners, being ‘transactional firefighters,’ are moving slowly but surely into that what I call ‘Ph.D of parameter management’ — moving to a higher level,” he says. “Truly what a planner should do — not chasing a truck finding an issue after it occurred.”

See video for full interview