Procurement Policy

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Case Study
Miscellaneous
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Without a doubt, one of the most prolific strategies which prove to be most successful within the pharmaceutical industry is that of extensive alliance during early product development. Much of this alliance is aimed at acquiring early development compounds from start-up companies…

Introduction

rights to a startup company's new drugs which was later turned into a new corporation worth $500 million a year. The end result of this engagement was that Merck sold 50 percent of its shares in the new corporation to Astra (Ghauri, 2001, p. 40). In so doing, consumers are able to acquire life-saving and life-altering pharmaceuticals in a timely manner. At the heart of this alliance is the notion that in order to effectively and efficiently manage a business such as Merck, there is a need for strategic supply management. In recent years Merck has embodied a strong shift from a predominantly domestic supply management strategy to one which has entailed global management strategies. This strategy operates under the assumption that procurement policy is central to the success of the company. This strategy can be characterized by two main elements:
Arnold (1989) illustrated one of the most concise conceptualizations of the global supply management strategies utilized by Merck by delineating four very distinct procurement policy development stages. These stages are as follows:
1. The Traditional Procurement Policy. In this phase, the scope of the procurement policy is narrowly define and limited to domestic sources. ...
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