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Success in Leveraging Supplier Diversity


Business Case for Supplier Diversity Reduce costs / Increase ... and policies including Merck s Diversity and Inclusion initiatives It s the right thing ... – PowerPoint PPT presentation

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Title: Success in Leveraging Supplier Diversity

Success in Leveraging Supplier Diversity
  • October 12, 2010

Tom Cummins Director - Commercial Services
Forward-Looking Statement
  • This presentation includes forward-looking
    statements within the meaning of the safe harbor
    provisions of the United States Private
    Securities Litigation Reform Act of 1995. Such
    statements may include, but are not limited to,
    statements about the benefits of the merger
    between Merck and Schering-Plough, including
    future financial and operating results, the
    combined companys plans, objectives,
    expectations and intentions and other statements
    that are not historical facts. Such statements
    are based upon the current beliefs and
    expectations of Mercks management and are
    subject to significant risks and uncertainties.
    Actual results may differ from those set forth in
    the forward-looking statements.
  • The following factors, among others, could cause
    actual results to differ from those set forth in
    the forward-looking statements the possibility
    that the expected synergies from the merger of
    Merck and Schering-Plough will not be realized,
    or will not be realized within the expected time
    period, the impact of pharmaceutical industry
    regulation and healthcare legislation the risk
    that the businesses will not be integrated
    successfully disruption from the merger making
    it more difficult to maintain business and
    operational relationships Mercks ability to
    accurately predict future market conditions
    dependence on the effectiveness of Mercks
    patents and other protections for innovative
    products the risk of new and changing regulation
    and health policies in the U.S. and
    internationally and the exposure to litigation
    and/or regulatory actions.
  • Merck undertakes no obligation to publicly
    update any forward-looking statement, whether as
    a result of new information, future events or
    otherwise. Additional factors that could cause
    results to differ materially from those described
    in the forward-looking statements can be found in
    Mercks 2009 Annual Report on Form 10-K and the
    companys other filings with the Securities and
    Exchange Commission (SEC) available at the SECs
    Internet site (

Todays Merck
  • Merck is a global healthcare leader working to
    help the world be well
  • We provide innovative medicines, vaccines,
    biologic therapies and consumer and animal health
    products to help improve health and well-being
  • We work with customers in approximately 140
    countries to deliver broad-based healthcare
  • We demonstrate our commitment to increasing
    access to healthcare through far-reaching
    policies, programs and partnerships to help
    people around the world lead healthier lives
  • The Company is known as Merck in the United
    States and Canada. Everywhere else, we are known
    as MSD

Business Case for Supplier Diversity
  • Reduce costs / Increase revenue / Leverage
  • Demographic shift customers and suppliers
  • Support wealth creation in the communities in
    which we do business
  • Build brand loyalty brand visibility
  • Enables us to better understand and anticipate
    the needs of the people we serve
  • Supports Mercks Corporate Social Responsibility
    goals and policies including Mercks Diversity
    and Inclusion initiatives
  • Support Commercial and Government contracts
  • Its the right thing to do

Perspective on Supplier Diversity
  • Competitive advantage vs. social program
  • Global businesses depend on strong national
  • Inclusion of all communities of suppliers creates
    stronger economy and an innovative supply chain
  • Global strategies do not necessarily equate to
    one global supplier diverse suppliers can
    partner for the optimum solution
  • 2nd tier drives supplier diversity throughout the
    supply chain AND enables diverse supplier
    opportunity and development

Supplier Diversity Case Study
  • CASE 1. Diverse Supplier Provides Managed
    Service for Temporary Labor Requirements
  • Merck is collaborating with a certified diverse
    supplier who performs a managed service for
    sourcing temporary labor requirements through
    their web-enabled vendor management system.
    Merck utilizes the expertise of the diverse
    supplier to drive delivery of quality resources
    and market pricing while achieving best in class
    Tier 2 diversity performance.
  • The supplier has demonstrated an eagerness to
    grow with Merck and has invested in program
    enhancements to deliver more value. The annual
    spend volume with this supplier has doubled in
    three years. Merck manages the relationship with
    this supplier through its Supplier Value
    Management program and has identified other
    potential areas to collaborate for total work
    force solutions with this diverse supplier.
  • Example demonstrates opportunities to
    collaborate and grow business with existing
    diverse suppliers.

Supplier Diversity Case Study
CASE 2. Merck teams with Large Corporation on
driving significant diverse supplier
opportunities across Integrated Facilities
Management portfolio Mercks sourcing effort for
IFM services in North America required the prime
suppliers commit to achieving significant share
of their spend with diverse suppliers. This
requirement was a key decision maker in the
selection process. From the outset and still
today, Merck collaborates with the IFM supplier
in the sourcing across its scope of services
specifically targeting diverse supplier solutions
- including landscaping, janitorial, mail room
services, and other site maintenance activities.
This strategy has resulted in the building of
strong relationships, cost reduction delivery,
and the enhancement of the IFM suppliers
corporate supplier diversity program. Example
shows that building aggressive diverse supplier
expectations into major sourcing opportunities
can prove to be very successful and ultimately
provide competitive advantage for all involved.
Supplier Diversity Case Study
CASE 3. Merck partners with a lead
Transportation Management Services provider,
driving diverse supplier opportunities in the
trucking category. To be distinguished as Mercks
lead supplier of domestic trucking services, this
supplier was required to adopt Mercks supplier
diversity program and carry out the policy as a
commitment under the Master Services Agreement.
This supplier is enrolled in Mercks Supplier
Value Management program as a top tier supplier,
due in large part to its proactive stewardship of
a program to qualify, subcontract and cultivate
diverse carriers in its TMS. This carriers
diversity program is rigorously tracked via
monthly governance meetings. This supplier is
required to use commercially reasonable efforts
to spend a minimum annually of the total of
that years spend for US based (including Puerto
Rico) diverse subcontractors. Example shows
how aggressive targeting can drive results in a
category (logistics) traditionally challenged to
contribute to company diversity goals.
Opportunities and Challenges in Logistics
  • Supplier diversity opportunities in the Logistics
    category are typically limited to carriers under
    the North American domestic trucking area.
  • Large logistics suppliers with expansive carrier
    network are well served to invest in a supplier
    diversity program as a means of landing and
    growing business with companies such as Merck.
  • Long term Services Agreements must include strong
    supplier diversity language
  • Language adopting companies diversity definitions
  • Requirements to develop and maintain rigorous
  • Required and realistic diversity commitments are

Weighing Options
  • Joint ventures
  • Strategic alliances or partnerships
  • Carve-out
  • 2nd Tier

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