Merck's end-to-end supply-chain vision centers around efforts to build an unbroken flow of information and inventory throughout its supply chain - "making sure all the nodes are connected, so they don't work in isolation," Walker says. The company is determined to take true customer demand data and drive it all the way up to manufacturing sites and suppliers. In the process, says Walker, it can respond more quickly to doctor and patient needs.
The pharmaceutical industry has undergone dramatic change in recent years. Walker cited increases in imported medication, and a large number of drugs coming off patent. With the entry of new competition into the market, those trends are resulting in lower margins. Merck and others need to response by boosting the efficiency of their delivery systems.
The last 20 years have seen relatively few leaps in technology to support such efforts, says Walker. Now, though, new tools are on the market that are “one step ahead of the game, in terms of our ability to connect all the dots. We’re very excited about the possibilities.”
Merck’s “whole new approach to demand planning” has allowed it to view all the information that it needs to run its supply chain in a single place. The company can more easily see where things are “broken” – such as excess or inadequate inventories – and take corrective action. The tool from Kinaxis has been “very important in its contribution to our P&L [profit and loss statement],” Walker says.
Merck’s biggest challenge in adopting the new technology was altering nearly 20 years of standard business practices. “It flips people’s heads in terms of what you can do,” says Walker. “As a consequence, they get nervous.”
Merck headed off the problem by involving key staff in the design of the new capability. In the event, says Walker, “they can see the fruits of their labors, and the outcome.”
