TOPIC

SUPPLIERS SELECTION

Topics •Introduction of Merck•Merck in Pakistan.•Segmentation and Products.•Our topic “ Supplier selection”.•Merck suppliers.•Supplier Selection Process.•Costing.•Problems in the process.•KPI & Value added projects.•Recent initiatives.

INTRODUCTION OF MERCK

Merck is the world’s oldest chemical and pharmaceutical company (1668), started by Jacob Merck with Angel Pharmacy.

   

Emanuel Merck, who took over the pharmacy in 1816, made the first step from a pharmacy to a global company. He initiated the move to industrial-scale production.

 

Emanuel Merck, who took over the pharmacy in 1816, made the first step in 1904, Merck was already selling Liquid Crystals for scientific research, but it was not until the end of the 1960s that intensive research resumed on Liquid Crystals for practical application.

MERCK IN PAKISTAN • MERCK has been present in Pakistan for more than 50 years with approximately 1,200 employees,

generated sales over Rs. 6.5 billion in the present era. It comprises of two subsidiaries, these are ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, ISO 27001:2005, ISO 20000: 2005, CGMP certified and present at two major locations:

•The Head Office is based in Karachi, raw material warehouse and manufacturing facility are at Quetta.

•Annual production for solids is 1.6 billion tablets with an increasing trend; liquids – 19 million litres; and injectables – 80 million ampoules.

Merck (Pvt.) Ltd

•This part of business produces soft gelatine capsules in Karachi at Site area.

•It specializes in making multivitamins. The approximate annual production is 500 million capsules.

Merck Pharmaceuticals 

(Pvt.) Ltd

MERCK’S SEGMENTATION OF BUSINESS

Gynae & Fertility Gastrointestinal Care Neuro Care & Oncology Diabetes & Cardio

MERCK PRODUCTS

Merck has segmented their business in different business unitDiabetes & Cardio• Dealing in the therapeutic segments of diabetes, cardiovascular

disorder and central nervous systemGynae & Fertility• Offers a diverse product portfolio in general medicine, female health

care and fertility.Neuro Care & Oncology• Deals with products used in the management of nervous system

disorder (e.g. neurodegenerative diseases, epilepsy etc), metabolic disorders (diabetes), gastrointestinal disorders (gastric ulceration), painful inflammatory conditions of bones, muscles etc and CANCER.

Gastrointestinal Care• This business unit offers a diversified product mix for functional GI

disorder. Vitamin Profile• Its vitamin profile offers B-complex with zinc supplement which is

available in oral and injectable form. It also offers a range of cough syrups for the treatment of dry and productive cough.

What is Supplier Selection?• Supplier selection is the process by which firms identify, evaluate, and contract with

suppliers. • The supplier selection process deploys a tremendous amount of a firm’s financial

resources.

• In return, firms expect significant benefits from contracting with suppliers offering high value.

• Supplier selection criteria for a particular product or service category should be defined by a “cross-functional” team of representatives from different sectors of your organization. In a manufacturing company, for example, members of the team typically would include representatives from purchasing, quality, engineering and production. Team members should include personnel with technical/applications knowledge of the product or service to be purchased, as well as members of the department that uses the purchased item.

Merck’s Suppliersand

Supplier Selection Process2 Sources 

Out of Pakistan In Pakistan

•INDIA : raw material•CHINA: raw material•GERMANY: raw material•TAIWAN: packaging material.•SINGAPORE: packaging material

Supplier for the packaging material like cartons packaging etc.

M/s Techno Ampules, M/s Spotlit printer

Merck’s Suppliers

• The Merck import all it main raw materials like (salts, active pharma ingredients, excipients) from China, India & Germany.

• Merck also import packaging material like PVC ,PVDC film and other coating materials from Taiwan and Singapore.

• Merck only use the packaging materials like cartons, shipment boxes etc from Pakistan.

Supplier selection ProcessFor Existing Supplie

r

Requisition Form

Approval by 

Concern Department

Comes in Procurement 

Department

Issuance Of 

Purchase Order

Mode of 

Payment

CERTIFICATE OF 

ANALYSIS AS PER 

SPECIFICATION

QUALITY ASSURA

NCE DEPARTMENT 

PURCHASING

For New Supplier And

New Material

Requisition FormApproval by 

Concern Department

Comes in Procurement Department

Found the Supplier and Identify its customer

Send the Q.A Team For the

Evaluation (audit)

 Sample testing  & CERTIFICATE OF ANALYSIS

NAME IN APPROVED

VENDOR LIST

QUALITY ASSURANCE 

DEPARTMENT & PURCHASING

E-BIDDING THROUGH MERCK PORTAL The selection of the supplier is also done through E-Bidding. In this process, Merck provides an online platform to their suppliers, called Merck Portal, through which the suppliers can bid their prices. The identity of each bidder is hidden and they are assigned with their respective codes. All the bidders can see the biddings of prices from other bidders as well. The minimum bidder gets the Purchase Order after fulfilling all the required specification.

COSTING

COSTING IN MERCK IS

USUALLY OF TWO TYTPES

RATE COST(At Seller’s premises)

LANDED COSTING

(At Buyer’spremises)

EXPLAINATION OF COSTING

• Rate costing: The 1st method of costing is that the supplier will not bear

the cost of any expense, & the buyer has to bear all the cost including all the charges.

• Landed costing:In this method will deliver the goods to the buyer’s identified

premises and bear all the cost ( taxes, duties etc)

During the whole process of costing the quality of the product or material is considered as the most important thing & the main focus is on the quality not on cost.

Problems In The Process

• The stability issue of the material:( material consistency, Quality when put in to production).• Import Problem & Shipment Problem:( Arrival of shipment in distant countries such as

in Dubai at Jibl–e-Ali port).

KPI, Value Added Project  KPI- Key Performance Indicator • Reduce 10% cost over last year in totality.• Follow the OTIF .• Supplier Selection

  Value added project • JIT theory apply in bulky local items.• Supplier development.• Improvising on ongoing Projects

• Reduction of PVC/PVDC size by 4mm• Elimination of coating material • Reduction of set up time in blister machine

Recent Initiative

•  FOCUS ON JIT .•  COMMUNICATION WITH  ALL THE CONSERNED  

DEPARTMENTS .• CUSTOMER SERVICE.

CONCLUSIONAfter Survey the MERCK Private Limited, we have concluded

that; in order to be effective and efficient in performing operations, the organizations must focus on effective production, long-term relations with the suppliers by sharing relevant / required information and provide better product to its customers to achieve customer’s maximum satisfaction.

The more better the relation with supplier, the more earnings a company can deprive by satisfying their customers.

That’s all we have to share

Thank You