How WNS Procurement Delivers Transformation for Merck KGaA
WNS Procurement has been working with pharmaceutical giant Merck KGaA for nearly six years, delivering a comprehensive tail spend management programme that has handled around US$1bn in spend to date. Through its support, it has delivered a foundation for business operations and driven significant bottom-line impact.
Addressing complex procurement challenges
WNS Procurement has supported Merck KGaA, alongside other Global 2000 and Fortune 500 clients, throughout its growth, managing ~$1 billion in total spend over the years (approximately $200 million annually).
But with a constantly-growing operation come plenty of procurement challenges.
Mita Gupta, Executive Vice President and Global Business Unit Head at WNS Procurement, explains: "It's a large company, which has completed several acquisitions, leading to numerous ERP systems, creating silos across the business."
This fragmentation was creating visibility issues and supplier proliferation that caught the attention of Merck KGaA's leadership. Its CFO was being forced to contend with data scattered across multiple systems and a supplier base expanded well beyond industry benchmarks relative to their spending levels.
It became the procurement function’s mission to optimise the supplier base, while addressing additional pain points including lengthy procurement cycle times and a sub-optimal user experience that affected efficiency across the organisation.
Comprehensive tail spend approach
The WNS Procurement programme manages Merck KGaA's tail spend, focusing primarily on site-related categories including MRO, CapEx, site services and facilities management.
The initiative targets transactions below €100,000—a threshold that has evolved from an initial €50,000 "in order to drive more of that tail under management," according to Mita.
She continues: "In areas like tail spend, the key elements that are part of best practice include spend visibility. It's absolutely critical to understand the spend, uncover any hidden costs and understand spend behaviours."
Measurable business outcomes
The partnership has delivered impressive results for Merck KGaA:
- Cost savings at a consistent 7-8% annual rate
- Improved cash flow of US$50-60m through payment term optimisation
- Reduced requisition turnaround time to less than two days
- Enhanced compliance with procurement policies and processes
Beyond cost savings
Mita highlights that modern procurement transformation extends far beyond cost reduction: "Procurement should always have an ongoing focus on total value creation. It includes cost optimisation, risk mitigation, compliance to policies, process efficiencies, reducing supplier fragmentation and even items such as payment term rationalisation and optimising delivery timelines."
This brings procurement to the forefront of the agenda, with its extensive reach across all business functions and spend categories. Enabling collaboration ensures that both hard and soft financial benefits directly impact the bottom line.
The WNS Procurement-Merck KGaA partnership exemplifies how procurement functions are evolving in response to changing business landscapes.
As Mita highlights: "We've not seen such a fast-evolving environment, especially when it comes to changes in the geopolitical and global environment, as well as the evolution of Gen AI and how to use it."
By combining human expertise with advanced technology—what Mita calls "AI plus HI” (human intelligence)—modern procurement teams can navigate complexity while delivering strategic value.
She concludes: "These are all part of the overall equation that procurement can bring to the business to, as we say, to be that top value creator in the organisation.”
To read the full Merck Group Digital Report, click HERE.
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