Global Supply Chain

Management
7L0515
Introduction
• The process of facilitating supply and demand is not an easy task as it may
seem. In the past, it was easier since most companies opted for geographically
proximate suppliers from which to acquire goods and services.
• Today, we live in a global marketplace, and while to many people ordering a
product and having it delivered may seem like an easy task, it’s a complicated
process involving numbers of stakeholders and thousands of miles.
• In order to produce predictable and measurable outcomes, each tiny part of
the supply chain needs to be carefully managed. This is important for
providing a consistent supply.
• To a common person, supply chains may seem straightforward. You order
something, you pay for it, and you get it delivered to you. In reality, it is a far
more complex process. That's the challenge that confronts Johnson & Johnson.
Definition of Supply Chain
• Every time you swallow a pill to ease pain or take an injection for an illness, you
are the last in a long network of places and people- from manufacturers of the
medications to the distributors who delivered them to the retailers all over the
world, who in turn sells them to the consumers.
• That network is what is called supply chain. A company can never exist without the
supply chain.
• Without the supply chain, companies cannot be able to source or assemble
fragments of different components into high quality products , that can reach
people when and where they are needed without the supply chain network working
effectively and efficiently.
• This supply networks between organizations can be viewed as a new form of
organization exhibiting complex connections between the players. This has given
rise to the concept of supply chain management (Supply Chain Management ,
2008).
Johnson & Johnson Company
• Johnson & Johnson, incorporated in the US, is a company that deals with
a wide range of products, especially health and well-being products.
• Due to sound supply chain policies, J&J has continued to grow steadily
and has held its place regardless of the growing competitive
environment.
• The company has enjoyed over a hundred years of continued growth and
service to its most loyal customers. Their wide range of products is used
by at least a billion people worldwide every day (Our management
Approach, 2008).
• J&J credits its endurance and strength to its innovative business
approach process and its supply chain strategy.
Johnson & Johnson Global Supply
Chain
Johnson & Johnson have invested heavily in supply chain both upstream and downstream in
order to improve customer experience and create a competitive advantage by levering
advanced capabilities within the supply chain. These are;
a. End-to –end supply chain technologies
• J&J has been in the forefront of developing new technologies to ensure end-to-end product
traceability.
• To be able to trace every element of a product from production to the end product,
Johnson& Johnson has fully serialized its products i.e. monitors are embedded in vaccines
to make sure the vaccines remain frozen when shipped to sub-Saharan Africa.
• Just as Wengel explained that, “It is still rare to be able to fully trace every element of a
product from origin through to individual patient outcomes via digital health records and
real-world evidence”. She continues to reiterate that , “The rapid advancements in
computing, Big Data and technology are enabling rapid innovation, we’re not just making
products anymore, we also make a product’s digital twin, this twin is the basis for how we
collaborate across the healthcare supply chain” (Wengel, 2017).
b. Operational Technologies
• Internet of Things(IoT) has enabled J&J to change its manufacturing process by ensuring an
operational supply chain.
• IoT is one of the reasons why J&J is the first pharmaceutical manufacturing company to get
FDA approval to shift a product from batch to continuous manufacturing.
• This is accredited to J&J’s IoT in-line sensor technology which evolved the way they
manufactured Prezista, an HIV medication which made them to gain FDA approval.
• Before the introduction of this technology , the drug was produced in batches and production
had to be paused in various stages when samples were sent to a laboratory to be tested.
• IoT in-line sensors have eliminated these steps by enabling tests to be performed online in real
–time and it also enabled continuous manufacturing and supply flexibility leading to a dramatic
reduction in cycle supply time.
• Wengel explains that J&J’s IoT-enabled continuous manufacturing ,opening up a much greater
world of flexibility, a dramatic reduction in cycle time, and allowed the company to use people
resources more efficiently (Wengel,2017).
c. J&J’s Commitment
• In J&J’s 2014 annual report, it was stated that with almost half of its employees
(more than 50,000) working in supply chain, more than 15,000 customer orders
per day and around 350,000 customers globally, Johnson & Johnson committed to
build the best end-to-end supply chain in the world (J&J, 2014).
• Johnson & Johnson are known worldwide of their commitment to build the best
end-to-end supply chain in the world.
• They have combined different technologies such as cloud computing ,Internet of
Things(IoT)sensors, and advanced analytics .
• They have literally connected the entire supply chain to achieve this challenging
and impossible goal.
• Its commitment to connect the supply chain has enabled them to bring all data
together in one place enabling traceability, real time data and on-shelf availability.
d. Cognitive Automation
• In his book, The importance of Supply Chain Management to Modern
Business, Sovereign states that at the core of Johnson & Johnson’s
goal for a more intelligent supply chain is data (Sovereign , 2008).
• He continues to explain that ,the data is used to estimate the average
time it takes a certain product to complete its supply chain cycle and
then use that information to reliably inform customers on the
estimated period it will take for their order to reach them.
• In cases of interruptions within the supply chain, the data is used to
inform the supply teams of the points that are not meeting
expectations.
e. Smart Manufacturing
• J&J in the recent past has been enabling their mission from a supply
chain perspective which is shifting a lot of their manufacturing
capability from the old push supply chain to pull supply which
entails getting products to people when they really need it.
• The smart manufacturing offers them immediate access to data
which makes it easy for them to produce things in a more
intentional manner- they don’t start manufacturing products until
consumption data signals that it’s time to start manufacturing.
• Smart manufacturing has led to less repetitive steps and less errors
since the manual process has been automated.
f. Cloud Technology
• Supply chain disruptions are very common- these hiccups can leave
shelves empty and customers without necessities.
• TechRepublic in their analysis of J&J stated that, cloud computing has
made the company to be agile and ready to mitigate supply chain
disruptions and be able to deliver products on time (TechRepublic ,2017).
• For instance, if J&J has 20 vendors supplying them with raw materials
and data from the cloud is informing J&J that 3 of the vendors are having
some kind of supply chain disruption and they will not be on time
delivering the materials, artificial intelligence is aware of who the other
vendors are and can easily select and order without a person needing to
come up with a report and make that decision.
Critical Analysis of Johnson&
Johnson’s Supply Chain
• Johnson & Johnson hit an impressive performance in
2018 and it has been flying high since then.
• This is all due to J&J’s continued restructuring of its
supply chain to focus more on resources to develop
newer technologies and capabilities.
• The company keeps restructuring so that the resources
of the company are kept away from the older
companies’ portfolio and to put all the focus on new
technologies.
The question is, what has the company really
a. End-to-End User Connectivity
• The most important factor in Johnson & Johnson’s supply chain
success is its ability to manage end-to-end customer connectivity.
• Blanchard(2017), explains the reason for J&J’s supply chain success as
its ability to integrate technologies to its manufacturing processes
which in turn have contributed to greater efficacies and connectivity
across the entire supply chain while sustaining the required quality,
enhancing sustainability benefits, and improving cycle time.
• J&J uses different algorithms such as image-based and artificial
intelligence to predict the likelihood of a product range being on
demand at a particular time.
b. Improved Dynamic Virtual Call Center
• The global market has changed and people nowadays expect
a personalized experience and quick response from
companies than in the past, whether they are calling in for
inquiries or they want to purchase something.
• J&J has excelled in this. They have a dynamic virtual center
that depends on cutting-edge technology such as the
intelligence-based call routing and auto answer.
• This has resulted in continuous flow in the supply chain and
the customer experience has greatly improved.
c. Anticipated Orders
• Another exceptional system that has kept J&J’s supply
chain operational is the new system that guarantees
that repeat customers never see a “sold-out” message
when they log on to make the same order.
• This new system anticipates when a customer will re-
order and reserves the products for them.
d. Siloed Technologies From J&J’s Employees
• J&J’s employees came up with a strategy to improve
siloed technologies, by leveraging digital analytics to
increase productivity , prediction of customer demand
and make the supply chain more agile.
• This has made sure that real-time interaction and
accurate manufacturing processes are in existence.
J & J’s Common Practice in
Supply Chain
According to Supply Chain Management (2008), some of the noticeable features
displayed by Johnson & Johnson include:
a) Development of an inclusive strategic network optimization. Johnson & Johnson
is in collaboration with some 245 companies around the globe and uncountable
distribution points.
b) It has build strategic partnerships with its distributors, suppliers, and
customers through effective communication in order to keep operations
running smooth.
c) To ensure that the existing products are fused into the supply chain, they use
product design and coordination.
d) To maintain supply chain operations, Johnson & Johnson has invested heavily in
information and communication technology.
e) To ensure transport logistics are not interrupted, J&J
has come up with well-organized transport strategy
which takes care of the frequency of transporting its
products, contracting, and the routes.
f) It strategizes on its daily production and distribution
of its products, in addition to taking care of all stages
in the supply chain.
J&J’s Supply Chain
Relationships Management
a. Technology
• Supplier relationships are high up the plan for Johnson & Johnson.
• Johnson & Johnson has invested in new technology – a suite of cloud-based
procurement tools.
• J&J’s 2017 report explained that it has segmented its 80,000 suppliers to focus its
strategic management efforts with those who share the firm’s vision for growth,
citizenship and sustainability (Johnson& Johnson,2017).
• This is to make sure that each stakeholder is affiliated to J&J commercially and
emotionally around a mutual purpose and mission.
• This gives everyone a chance to be involved in J&J’s chance for investment and
innovation.
• J&J believes in bring in diverse ideas about how to resolve customer problems in
the most prompt way possible.
b. Management of Risk and governance
• J&J’s integrated the business engagement leaders into Johnson & Johnson’s
business units.
• The objective was to safeguard the speed of innovation in line with business
needs while guaranteeing strong governance and risk management.
• The roles were also intended to guard suppliers and stakeholders from the
particulars of procurement for an enormous, varied organization.
• J&J believes that if you are not totally in the business relationship, in real-
time , then you can’t get the most value.
• The role also gives suppliers in that relationship express contact that takes
out the intricacy of dealing with a global firm like Johnson & Johnson.
c. Measure the value it gains from supplier relationships
• Johnson & Johnson would not be able to make such a significant investment in
supplier relationship management were it not able to measure the value it gains
from supplier relationships.
• The company upholds a balanced scorecard for supplier performance, which
measures risk, innovation, fiscal responsibility and sustainability.
• Procurement measures supplier innovation that directly results in marketable
products and shares value with vendors.
• Procurement facilitates the relationship between the supplier and the internal
Johnson & Johnson business. Where that could translate into added value, through
new ideas and new solutions, which they then figure out how to put it into practice.
• With the help of suppliers, it has relaunched its entire line of baby products a
signature set of brands which attract very strong recognition.
d. Focus on sustainability to meet consumer demands
• Johnson& Johnson has not side-lined the final consumer when it comes to
building supply chain relationship.
• In the marketplace now, consumers demand all that information. Because of
changes in digital communication, how a company responds to those
expectations has become very important. This is an example of how J&J relies
heavily on the suppliers.
• Johnson & Johnson practices a risk-sharing collaboration aimed at the service
patients and doctors receive, not just the devices or drugs the company sells.
• They work together with suppliers towards positive outcomes, thinking not
just about the product, but how it is packaged, and how equipment can be
used to conduct surgery more efficiently and effectively.
Impact of supply chain
relationship on J&J’s Overall
Performance
There are positive connections between supply chain relationship oriented companies
to the companies’ overall performance:
• J&J’s positive operational outcomes are linked to the companies’ quality of supply
chain relationships i.e. they have a quicker operating cycle, improved delivery
performance and the elasticity to react to shifting market conditions.
• It has led to all stakeholders’ ability to develop and maintain a mutual relationship
based on improved value co-creation .
• J&J’s reputation of creating a good work atmosphere has led to smooth flow of
information and improved communication between different stakeholders in dealing
while dealing with potential hindrances within the supply chain process.
• The standard of high quality relationship that J&J has tried to uphold with its
stakeholders has invigorated the different parties to steer away from decisions
damaging the other parties business and reputation, considering the good terms and
commitments they have towards each other.
References
1. Blanchard, D. (2017). Mentoring and Technology Offer a Healthy Outlook for J&J,
Industry Week, January 02.
2. Johnson & Johnson.(2014). Building The World’s Best Supply Chain, J&J 2014 Year
in Review.
3. Johnson & Johnson,(2017). Johnson & Johnson Moves Up Eight Spots on The
Gartner To 25 Supply Chain Index”, Company Website, May 25, 2017.
4. Our Management Approach, (2008). Johnson & Johnson. Web.
5. Sovereign, R. (2008). Importance of Supply Chain Management in Modern
Business, Ezine articles. Web.
6. Supply Chain Management, (2007). Supply Chain Resource Cooperative. Web.
7. Supply Chain Management Functions, (2008). Exforsys Inc. Web.
8. TechRepublic, “IoT World, (2017). Johnson & Johnson on how smart technology is
making people healthier.