Supplier management

Merck is a global company. We purchase raw materials for chemical and pharmaceutical production, packaging materials, technical goods and components, and services around the world. The purchasing volume in 2010 was around EUR 4.5 billion. We obtain our goods and services from approximately 130 countries; 74% of the purchases (in value terms) comes from suppliers headquartered in the EU, Switzerland and the United States, and the rest from suppliers based in other OECD and non-OECD countries.
 
Supplier management

We place the highest demands regarding compliance with social and ecological standards not only on our own processes, but also on our suppliers. Consequently, we are working on optimizing our supplier management system. The aim is to improve the supplier portfolio by implementing a new evaluation system that includes social and ecological criteria in addition to qualitative criteria. Furthermore, our own Code of Conduct and the Social Charter are an integral part of the terms and conditions of business at Merck KGaA. To implement the Code of Conduct of the German Association Materials Management, Purchasing and Logistics e.V. (Bundesverband für Materialwirtschaft, Einkauf und Logistik e.V., BME), we incorporated the commitment to the Merck Code of Conduct and the Merck Social Charter into our supplier management system. Merck joined the BME in 2009, and the BME Code of Conduct contains international minimum standards that apply across industries. We therefore expect our suppliers to comply with fundamental rules, such as rules to fight corruption and child labor, and we set minimum requirements regarding work standards. We required a supplier self-disclosure from our first suppliers in 2010. We will expand this process to more suppliers in 2011. Our Group Code of Conduct and Social Charter are integral elements of the Merck KGaA terms and conditions of business. In the future, we plan to implement our new supplier management system in our subsidiaries abroad. The overriding goals are to secure long-term supplier relationships, boost quality and use resources more efficiently. In addition, owing to identified weaknesses we conducted a risk assessment of our raw material suppliers in 2010, taking into account country risks, product risks as well as our sales with the respective suppliers. This assessment focuses on aspects such as environmental risks, occupational health and safety risks, and social risks. Suppliers are added to the sustainability audit system based on this risk matrix. We will begin conducting these audits in various countries in 2011.
Procurement itself is reviewed several times during the year. In addition to internal audits, annual ISO (re)certification audits will take place. Group Procurement is certified to ISO 9001 and ISO 14001. The company-wide regulations and guidelines, such as the Code of Conduct and Social Charter, will be communicated within the company and employees will be suitably trained centrally by the Compliance Office via Web-based learning units.
 

MORE INFORMATION

SERVICES