UPS and Merck extend relationship with a global supply chain focus

Taking steps to further leverage a relationship that has been intact since 2003, UPS and global pharmaceutical giant Merck said today they are expanding their distribution and logistics agreement on more of a global supply chain basis.

Prior to this announcement, UPS managed the distribution, warehousing, multi-modal, and transportation services of Merck’s North America-based medicines and vaccines, as well as package transportation and delivery services.

And with this new agreement, UPS will provide these services to Merck in certain markets in Asia and Latin America, as well as the emerging markets of China and Brazil, and transportation services in Europe, according to UPS officials.

“This has been a few years in the making,” said UPS Vice President, Global Strategy, UPS Healthcare Logistics, Bill Hook, in an interview. “Merck had been looking for more of a collaborative relationship and reducing the number of companies they deal with from a global supply chain standpoint.”

This effort began in earnest in 2009, with a North America project between UPS and Merck, when UPS took over control of Merck’s distribution centers in the U.S. and related transportation services as well.

Hook said this problem was viewed as a real test, with innovative processes driving the value-creation goals UPS and Merck put together, with the idea that this partnership could be expanded and become a true global collaboration.

“For us, this relationship impacts every region of the world where we do business with Merck,” said Hook.  “There are, or will be, facilities on the main continents in North America, Asia, and Latin America. Regarding the international movement of Merck’s vaccines and medicines, we will provide service to every region and market they serve. From that standpoint, it involves origin and destination lanes in every continent and most countries and our brokerage operation for clearing a product into these markets.”

With several Merck products being temperature-sensitive, UPS has had to do a comprehensive training program for all of its global offices for products that require strict temperature and environmental controls, said Hook. And in some cases, UPS is opening new facilities and distribution centers in locations where they are needed, including ones in China and Brazil, where capacity is needed.

Hook said the key part of this deal for Merck is based on how the industry is facing unprecedented change with the market dynamics around regulation and the globalization of healthcare and pressures from government are creating an environment where companies need to change and think outside of the box for how to go forward.

“This expanded agreement with UPS allows us to focus on our core business as a global healthcare leader that looks for innovative ways to bring our medicines and vaccines to patients in emerging markets and markets around the world,” said Willie A. Deese, executive vice president and president, Merck Manufacturing Division, in a statement. “UPS has the proven logistics expertise to deliver Merck’s products with speed, consistency and care to our customers and patients.”