Baxter International Inc. announced yesterday that it has embarked upon two new initiatives to increase efficiencies and enhance its distribution supply chain from end-to-end to better meet customer needs. Baxter's principle United States operating subsidiary, Baxter Healthcare Corporation, signed a U.S. distribution agreement with Allegiance Healthcare Corporation, a subsidiary of Cardinal Health, Inc. (NYSE: CAH). In addition, Baxter's Canadian subsidiary, Baxter Corporation, signed a distribution letter-of-intent with Livingston, a subsidiary of UPS Logistics Group. Financial terms were not disclosed.

"Our customers' distribution requirements have changed dramatically in terms of flexibility needs, access to new market segments and cost-effective processes," said Bob Hribernik, vice president of Baxter's global supply chain. "We have been evaluating our distribution processes and relationships over the past several months and believe our agreement with Allegiance and our letter-of-intent with Livingston best serve the needs of Baxter and our customers. We expect these relationships to enhance flexibility and improve customer satisfaction, while maximizing Baxter's financial efficiency."

Allegiance will act as an agent and distributor for Baxter's Medication Delivery, Renal and Fenwal businesses in the United States, and handle some of the related administrative processing. The six-year agreement will commence on July 1, 2001.

Hribernik said, "This agreement will help us better meet the flexibility needs of our customers in this ever-changing health-care supply/demand environment. Our long-standing relationship with Allegiance, and their knowledge of our customers, make this a strategic advantage for Baxter and the people we serve."

Baxter Corporation expects to sign a Canadian logistics agreement with Livingston to manage Baxter's customer order fulfillment, inventory, deployment and returns for most of Baxter's products across Canada.

Serge Maltais, supply chain vice president for Baxter in Canada, said, "We recognize that to enhance our leadership position in the health-care marketplace and to continue to anticipate customers' needs, we have to constantly reassess and improve our products and our services. Our letter-of-intent with Livingston demonstrates this commitment and we look forward to finalizing an agreement."

The Allegiance and Livingston announcements are part of a global supply chain strategy to help Baxter continually improve its ability to meet dynamic customer distribution and ordering needs and requirements. Other elements of the strategy include a distribution business process redesign, the formation of a customer advisory council and continual reviews of Baxter's distribution processes.

Hribernik said, "Our supply chain review over the past several months has been conducted with one goal in mind - improved flexibility and satisfaction for our customers. These announcements put us well on the path to achieving this goal and will help us toward continually evaluating and improving our distribution processes."