Merck deal backs BASF IT Services' independence

Related tags Basf Merck kgaa

BASF IT Services, one of the first units of the German chemical
major to be spun out into a separate unit, has signed an agreement
with Merck KGaA that confirms its ability to win major contracts
from companies other than its parent.

The IT specialist is setting up a new IT system at Merck's manufacturing facility in Darmstadt, Germany, designed to improve the efficiency of site maintenance and save both time and money.

BASF IT Services still makes almost all of its €440 million annual turnover from BASF, but plans to grow this to 15-20 per cent within the next two to three years. The financial terms of the agreement with Merck have not been revealed, but the deal is for a large facility - employing 8,000 workers - and is likely to be significant.

The new IT system is based on one that has been in place and operated at BASF for several years, and has cut costs by up to 20 per cent for the group's maintenance services, according to BASF IT Services.

The system is designed to take away much of the time and effort Merck must expend on handling the 36 contractors who supply services to the site. They provide services in the building, industrial construction, electrical, measuring and control engineering fields, as well as heating, air conditioning and sanitation services.

Using the new software Merck would move away from having individual contracts with these companies an instead work to a standardised agreement based on a fixed price for standard services, based on the annual volume of business expected, although additional service volumes can be added as required.

"This has several advantages,"​ said BASF IT Services. "The individual assignments will be safer because the basic requirements are clearer. Also, because the orders are bundled, this usually means a more favourable price for Merck than with individual assignments."

Merck also saves time with the system; its business partners work for a predetermined fixed price and if required, are commissioned 'with just the push of a button'.

And the hope is that a more efficient maintenance service can help avoid costly plant shutdowns. In the UK, for example, it has been estimated that shutdowns are costing companies £6 million (€8.6m) per plant per year.

A survey of the process industries commissioned by BASF IT Services last year found that 13 per cent of respondents had plant shutdowns occurring weekly or more frequently, while 23 per cent saw halts every couple of weeks and 18 per cent suffered seven to 12 shutdowns a year.

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