johnson and johnson supply chain case study

Case Study: Johnson & Johnson’s Award-Winning Supply Chain Smart Factory

Johnson & Johnson successfully pilots a scalable smart factory strategy to modernize operations and transform how digital capabilities are incorporated  

Company Fact File –

Company : Johnson & Johnson Sector : Health Care Products HQ location: New Brunswick, NJ Revenues : $10 billion+ annually Employees: 5,000+ Web url: www.jnj.com

Health care is a vital part of humanity, and Johnson & Johnson is committed to changing its trajectory by addressing patient, consumer, and customer needs. To accomplish this ambitious goal requires a high degree of visibility, flexibility and resiliency in the manufacturing operation.

Because the external environment has a dynamic impact on production, J&J developed a smart factory strategy that modernizes site operations by building digitally enabled capabilities to solve information, process, product, and human pain points. The smart factory is built upon a cohesive plan and foundation using data along with capabilities such as edge/high performance computing (HPC), process data mining/analytics, asset optimization, AR and VR mobility platforms, and modular systems that are threaded across the value chain – all designed to help optimize flow, improve reliability, resiliency and agility, while ensuring quality and safety.

The Journey to Smart

Many digitalization elements of J&J processes, digital stack, and standard data architecture and design supporting the smart factory began in 2017. Foundational programs like the development of a common data layer architecture, cloud environments, cybersecurity, ERP design, and a next generation manufacturing system platform are needed to ensure access to required data that will enable digital capabilities and solutions that will support processes, people and technologies.

“You can’t look at the individual technologies level,” says Bart Talloen, J&J’s Senior Vice President Supply Chain Strategy, Innovation and Deployment. “It’s all about the ultimate integrated capability for the business that you enable. The interoperability – system thinking – is fundamental because all the elements are interconnected.”

In the first quarter of 2021, the J&J Consumer business segment sites in Lititz, Penn. (USA) and Bangkok, Thailand began the internal diagnostic and review processes for key product value streams and how smart factory initiatives could improve business processes to support the customer. The smart factory process required engagement from all levels of the site’s organization to establish and link short- and long-term business objectives, vision and metrics.

The process included six phases: 1.     Visioning 2.     Diagnostics 3.     Current to future state digital capability 4.     Prioritization 5.     Roadmap 6.     Business planning

The smart factory requires good planning in how investments are made, sequencing, and people skill analysis to ensure optimal performance, agility, and resiliency objectives are met.

Since its inception, the smart factory rollout was extended to two additional J&J consumer sites in the third quarter of 2021 and then deployed across the entire global manufacturing network in the first two quarters of 2022.

“One of the smart factory objectives is for information to flow easily and in an interconnected way that provides insights for faster and more productive decision-making.”

“The right deployment strategy is critical. It’s always important to start small, nimble – what we call test and learn experiments to test something out,” says Talloen. “Then you take the learnings from those test and learns, and that informs you about deployments strategies.”

The Smart Factory Impact

The J&J Smart Factory transformed how the company identifies, tests, and incorporates digital capabilities to solve process constraints including lead times, equipment and labor efficiency, logistics , and planning processes. The first effort was to build a methodology, or playbook, that ensured a common language, definitions, and approach to understanding the transactional flow within a site, across sites and relationships with other supply chain systems areas (planning, procurement, delivery, customer, and product development).

“Systems can work perfectly, everything can be automated, but at the end it’s still people that are core in the execution. It’s critical to deveop these new technology standards that are clearly articulated for not only operators, but mechanics, engineers, quality people, and planning people to really prescribe in a detailed way those standard operating principles,” Talloen says.

Each smart factory capability was taken into consideration so both data and solutions interacted via a digital thread with interconnection to each system. Traditional problem identification and solving by means of process excellence or lean methodologies identified individual pain points and connections. The smart factory strategy allowed teams to understand and visualize the entire transactional process flow and interconnection of people, equipment, processes, and technology.

From there, the J&J Smart Factory strategy drove how the J&J Operating System (JJOS) – the company’s process excellence system – and teams understood the end-to-end information flows on a deeper level, which illuminated not just the sheer number of transactions within the end-to-end information flow, but the high incidence of duplication brought on by disparate systems. The JJOS includes process excellence methodologies, tools, metrics, and performance management principles. In addition, teams were able to identify additional flow breakers that would have not been visible without the need to understand the current digital landscape. The exercise was a critical input to building a smart factory roadmap because one of the smart factory objectives is for information to flow easily and in an interconnected way that provides insights for faster and more productive decision-making, so that operators, supervisor and managers can focus on making products.

“The smart factory strategy enabled J&J to identify common issues that impact business segments, operations, and needs globally.”

Ultimately, identification of common information flow breakers will populate an expanding digital solutions use-case library. Meanwhile, the capability and skilling process of J&J’s people will enable scaling and accelerate lead time reduction and agility around the globe.

Transforming the Way J&J Addresses Challenges

Beginning with the first Consumer pilot sites in Lititz, Penn., and Bangkok, Thailand, the smart factory program helped the locations address business challenges in new ways. In 2021, supply chain disruptions drove new business challenges throughout Lititz’s warehousing and logistics business units. These challenges led the team to use the JJOS tools to diagnose flow disruptions and leveraged the smart factory framework to identify and implement digital solutions.

• Implementation of J&J’s inbound yard management system, YardView, created detailed trailer visibility and yard jockey movement history. The warehouse team built capabilities for enhanced metric reporting and dashboards driving down detention and service costs.
• A digital twin of the production lines and material movements was created to model flow and material handling between the warehouse and manufacturing lines. The event models identified new product flows and 95% of the site’s total volume was converted to a direct-to-truck loading strategy, decreasing on-hand finished goods inventory by more than 50%. This change in shipping pattern, directly from palletizer to truck, removed 14 days of lead time (LT) from the site to distribution center network.
• Outbound container utilization load building, LoadMax, was implemented for the site, increasing container utilization by 4%, reducing costs by 15%, and lowering carbon footprint by 500,000 kg of CO2 emissions. Through the smart factory program, both Consumer sites can now address flow, productivity, and sustainability challenges in day-to-day business and during the pandemic.
• Scheduling tools were developed to replace manual scheduling and create the digital thread linkage between production’s real time output with logistic arrangement.
• Deliver Lighthouse provided goods-in-transit visibility to downstream markets, and best control on order, inventory, and customer services.
• The next gen manufacturing systems platform development and implementation unlocked the value of information about flow breaks in the manufacturing area to accelerate product release and prevent human error.
• Digital citizen development is aiming to help employees resolve real pain points by utilizing no-code/low code solutions (Power Apps, Alteryx, Azure Machine Learning).
• Workforce digital capability building is a systemic approach to all site employees, teaching how the future digital capability looks through a competency assessment and skills-based learning. The competency gap will be mitigated by multi-method, online learning, hands-on coaching, and project assignments.

As a result, J&J Thailand delivered 25% lead time reduction, 15% productivity improvement, and a 20% carbon footprint optimization.

Scaling for Success

The smart factory strategy provides the means to visualize, react, design, and implement digital capabilities and solutions from site, to region, to network at scale. Powered by clear identification of needs and pain points through information and process excellence, IT technology, and value stream mapping, J&J has identified, tested, developed, and scaled multiple technologies across the manufacturing network and sites within the consumer practice by direct development of tools or by leveraging digital capabilities and technologies from other business units.

J&J has continued deployment of the smart factory strategy across the entire J&J consumer network of twenty-one internal manufacturing sites.

“We’re getting into a phase going forward, where we’re integrating end-to-end supply chain and the smart factory-like capabilities all the way from the connection to the supplier to the connection to the customer,” Talloen says.

“The right deployment strategy is critical. It’s always important to start small, nimble – what we call test and learn experiments.”

Further expansion of the smart factory strategy into J&J medical technology and pharmaceutical business segments also began in 2022. The J&J Smart Factory strategy has enabled shared learnings, scalability of technologies, acceleration of the technology decision process and clear global investment strategies across the three business segments.

The smart factory process and strategy has enabled teams across all of J&J to not only identify local or regional issues, but to identify common issues that impact all business segments, operations, and needs globally. It has provided insights and focus to establish standard approaches that can be leveraged at scale to deploy across the regions and sites. Capabilities and technologies can be scaled more readily, people skills advanced more rapidly, and savings and competitiveness increased.

In addition to earning High Achiever status in the Enterprise Integration and Technology category at MLC’s 2022 Manufacturing Leadership Awards program, the J&J Smart Factory strategy and deliverables have been acknowledged in many forums and recognitions:

• World Economic Forum (WEF) Lighthouse Award – J&J Helsingborg Site – Q2 2021
• World Economic Forum (WEF) Lighthouse Award – J&J Thailand Manufacturing Site – Q1 2022
• Association for Supply Chain Management (ASCM) Annual Conference – Q3 2021    M

About the author:

J eff Puma is Content Director for the Manufacturing Leadership Council.

When Johnson & Johnson (J&J) got its start in 1886, there were just over one billion people in the world. Now, 131 years later, J&J serves just over one billion people per day worldwide. The company is responsible for many popular consumer brands, life-saving drugs, key service delivery components – a whole variety of products that are critical to the daily lives and business operations of many people. Maintaining the supply chain that ensures all of these varied products get where they need to go is more complex than ever before.

To meet the needs of J&J's growing customer base, the company transformed its supply chain into an engine that supports innovation throughout the organization. Given the scale and scope of J&J, this is no easy task. With more than 60,000 people and 350 distribution centers globally, J&J fills over 100,000 orders a day sending products and treatments to hospital operating rooms, retailers, pharmacies, and millions of homes around the world.

Managing Disruption

In order to stay in business for more than one hundred years while also making it into nearly every home in the world, an organization has to be consistently relevant and deliver high quality products that customers use for their whole lives. With an evolving marketplace, changing customer preferences, new technologies, and a shift to pay for outcomes models, creating significant disruptions in healthcare, J&J has had to develop effective strategies to evolve. The company has been able to adapt by constantly turning over its portfolio of brands and future-proofing the business. In her presentation, during the 2017 Next Generation Operations Summit: Creating a Customer-Centric Supply Chain, Meri Stevens, Vice President of Strategy and Deployment for Johnson & Johnson, explained that internally J&J changes a significant percent of the company through divestments, mergers, and acquisitions. That keeps the product mix viable but it also means that the supply chain has to constantly adapt to meet new requirements and deliver new products.

"At Johnson & Johnson, it's about who we partner with, who we benchmark, where we go for answers."

Understanding changing customer preferences.

In addition to product turnover, J&J’s supply chain team partners with commercial and R&D teams to understand how customers will buy and use products in the future. "The disruptions are quite large," Stevens says. "Think about Alexa. When you want to order something you just say 'Alexa, order me paper towels.' It doesn't ask you what brand. It doesn't ask you how much. It's dependent on what you bought last. So if it's Bounty, it's always going to be Bounty. The cost to change that pattern and get the consumer to buy something else is going to be enormous." In order to win the future, J&J's supply chain team is working closely with the sales team to ensure that the products customers casually order through Alexa or a Dash Button or something else are always J&J products and that those products are always available.

Outside of the US, J&J’s Supply Chain must also understand and react to the growing middle class in major emerging markets like China or India. The tax structure, product regulation, and purchasing process are different in these countries, making it harder to create a standardized process for order fulfillment throughout the organization. In order to manage so many variables, J&J has to rely on a strong network. "At Johnson & Johnson, it's about who we partner with, who we benchmark, where we go for answers," Stevens explains.

To focus and prioritize our transformation J&J’s Supply Chain team developed three North Stars and seven foundational pillars. The North Stars create the ability to digest trends and disruptions in an organized way and the foundational pillars assure constant improving our performance to meet rising expectations in value creation. Stevens centered her discussion on the North Stars.

Manufacturing for the Future

In addition to working on new products and services, J&J is also experimenting with how to manufacture for the future by incorporating new technologies and capitalizing on real-time data and analytics. Previously, J&J would have information on demand cycles, purchasing preferences and so on, but it was hard to predict potential disruptions or understand why customers were making certain decisions. To prepare for the future, J&J used this emerging capability to react to the recent terrorist attack at the Brussels airport. Belgium is the distribution hub for many products in Europe, data analytics allowed J&J to divert product to meet patients’ needs.

J&J is also using new technology to improve packaging and anticipate customer needs. J&J provides prescription treatments for a variety of conditions. With SmartPak technology, the supply chain team can track delivery of medications but also have the package automatically send a message that the package has been opened, giving suppliers and healthcare providers insights about refill needs or if different treatment options need to be developed because patients routinely forget to take medications.

In collaboration with J&J colleagues throughout the Supply Chain, Stevens and her team are also busy learning from other industries that have mastered rapid release manufacturing. Given J&J's focus on healthcare, it is important for each product to be backed by rigorous quality testing. Historically, that's made for a slow manufacturing process. However, other industries like semiconductor makers that also rely on rigorous quality testing have been able to speed up the pace to market, while providing microchips that have consistently better performance. J&J has made it a strategic imperative to learn from industries like semiconductor manufacturing to understand how to handle the rapid release of complex products.

Shaping the Portfolio

Finding answers to questions of the future can be difficult. In order to stay on top, Stevens and her team are helping the J&J Supply Chain evolve its way of working to innovate rapidly, but breakthrough innovation doesn't happen overnight. Ideas require testing and an understanding of how they will benefit the organization and the customer.

J&J’s supply chain team regularly meets with J&J's partner network to understand pain points, to explore new areas of demand and to solicit ideas. Once those ideas are paired down to a few key threads that align with J&J's business, the supply chain team gets to work. Ideas are studied, then developed and finally tested. Testing happens in agile sprints over a 3-6 month cycle in a target area to see how well a given idea will work out. "We go out and test small and rapidly learn," Stevens says. "For the ones that work, we scale like crazy and the adoption is incredible because everyone is aware of the pilots we're working - the engagement is right there."

One of the small tests currently underway in Jacksonville, Florida involves QR codes. In an effort to streamline maintenance, Stevens’ team partnered with a QR code provider to add the codes to each one of their product lines. Now when a maintenance person goes to update a given line, they scan the code with a smartphone and get all the steps required to make an update. If they run into trouble, they can put on Google Glasses and work with a technician remotely. The process removes any wait time associated with finding the right information or right person to make a change if something is out of the ordinary.

Finding partners that help improve capability is the pathway J&J is taking through the next hundred years. As consumerism and health care become more and more personalized it will be critical for companies like J&J to understand their customer base at an almost individual level. Maintaining a supply chain that is adaptive enough to be able to service billions of individuals each day is the new normal. By sticking to their Strategic North Stars, bringing in new technology partners, and experimenting with new ideas rapidly, J&J’s supply chain team are helping J&J design a new way of working – and innovating - for a digital world.

“You have to dedicate time to be able to go fast. Going fast actually requires you to do research and take a step back, not just plow ahead, and that's tough. You have to spend a lot of time testing and learning.”

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Case study: ecommerce & retail, keeping johnson & johnson’s critical supply chains strong.

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Johnson & Johnson relies on complex global supply chains to ensure its vital pharmaceuticals, consumer products, and medical devices reliably get to the consumers who depend on them. Since the Covid-19 pandemic began, keeping these supply chains strong has been more important – and more challenging – than ever.

The challenge

Timely, actionable data is vital for maintaining a global supply chain network. Johnson & Johnson’s suite of data applications included a number of mission-critical features that allowed supply-chain managers to triage problems across the complex chain’s stages. They were able to combine analytical data from many different first-party and third-party systems, and provide historical analytics and trends against targets, highlighting anomalies that needed to be investigated and addressed.

While they had effective tools that let supply-chain managers proactively remediate critical issues through integrations with internal systems, they decided to modernize their business intelligence (BI) platform to overcome several shortcomings. First, their legacy BI applications did not let managers flexibly develop new analytics through interactive dashboards and reports. Changing applications was also slow and expensive, and data extracts with legacy tools weren’t providing supply-chain managers with real-time data.

The solution

Johnson & Johnson’s data engineering and visualization teams asked DAS42 to help build a new, lightweight, and powerful tool that delivered the flexibility supply-chain managers needed. But they wanted to retain the same look and feel and integration in existing application workflows that supply-chain managers were familiar with.

Building the modern platform Johnson & Johnson needed involved addressing three broad components:

• OTIF  (on-time, in-full) measures if a customer received all of the units in their order across all of their lines in the fulfillment window promised to them. It’s critical for supply chains and customer satisfaction.
• The  Delivery Control Tower  is a connected, personalized dashboard of data, key business metrics, and events across the supply chain that enables organizations to more fully understand, prioritize, and resolve critical issues in real time.
• The  QBR  (quarterly business review) application provides performance management, reliability, and customer experience insights.

As we worked with Johnson & Johnson and came to understand their needs and expectations, it was obvious that Looker, part of the Google Cloud Platform, was the clear choice for the modernization effort. Looker has unique characteristics and advantages for a project like this, and Looker’s extensions framework made it possible to build a customized modern data platform that looked and felt like the legacy system Johnson & Johnson’s supply chain managers were used to.

How did it turn out?

The modernization initiative had a lot of moving parts, but the transition from the legacy system to Looker was relatively fast, smooth, and painless.

We migrated four existing applications and built one new application using the Looker Embed SDK and an extension framework in just a few months. The extension framework let Johnson & Johnson developers quickly leverage standard visualizations and features out of the box with Looker while providing a completely customized user interface look and feel. Their new agile, scalable development framework lets Johnson & Johnson’s team accommodate frequent requests to incorporate new requirements, while the customized interface designed with the same look and feel of the legacy system minimized the need for staff training and change management.

Most important, supply-chain managers have the analytics and capabilities they need to keep Johnson & Johnson’s supply chains strong at a challenging time when many companies’ supply chains have been under strain. That has been a major factor in their success at advancing their mission of keeping their pharmaceutical and other products moving uninterrupted across the world.

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Inside Johnson & Johnson’s Supply Chain Operations

Johnson & Johnson is a long-established leader in the healthcare sector. Founded in 1886 with just 14 employees, it now provides global solutions for pharmaceuticals, medical devices, and consumer goods.

Today, Johnson & Johnson operates over 250 companies that employ more than 152,000 people worldwide, generating an annual revenue in excess of $21.3B . And it owes its monumental success in part to its supply chain.

Because supply chain management (SCM) is so crucial to the quality of the products it produces, Johnson & Johnson has deliberately made SCM a core focus of their business.

The Evolution of Supply Chain Management at Johnson & Johnson

In years past, supply chain management was simpler and more straightforward. Companies favored geographically proximate suppliers for their needs.

More recently, the transition to a truly global marketplace has transformed how companies, including Johnson & Johnson, approach their supply chains. This shift necessitated the adoption of digital technologies to manage the complex logistics of sourcing materials and delivering products internationally.

From barcode scanning and mobile solutions to smart control towers, looking to technology has helped Johnson & Johnson become—and remain—a titan in its market space. As a result, Johnson & Johnson’s supply chain evolution stands as a testament to its foresight and adaptability, emphasizing not just efficiency but also resilience.

The digital transformation taking place within Johnson & Johnson’s supply chain is not because of a drive to keep up with technological trends. Instead, the strategic utilization of technology enabled the company to pre-empt and respond to global challenges of all kinds.

As we’ve seen, the COVID-19 pandemic underscored the importance of such an approach . Johnson & Johnson’s success during the pandemic exemplifies how foresight and investment in supply chain infrastructure can pay dividends in times of crisis.

What Companies Can Learn from the Coca-Cola Supply Chain

Supply chain challenges during the covid-19 pandemic.

Today’s global marketplace is already complex. Interlocking logistics and supply chain operations must operate continuously and smoothly for goods to flow. For large operations like Johnson & Johnson, delivering products and raw materials across multiple stakeholders and countries is no less than a monumental challenge.

When the COVID-19 pandemic struck, it added a new and unpredictable layer of complexity , testing the resilience and adaptability of supply chains worldwide.

Johnson & Johnson’s supply chain proved to be one of the few that demonstrated the nimbleness to adapt and thrive amid uncertainty.

During that time, the company faced an unprecedented demand for healthcare products, from over-the-counter medications to medical devices. Johnson & Johnson’s supply chain was put to the test.

By leveraging advanced planning and digital tools, the company was not only able to meet the surge in demand but also to ensure the continuous supply of essential healthcare products to those in need.

Leveraging High-Tech Tools During the Pandemic

During the COVID-19 pandemic, Johnson & Johnson faced unprecedented challenges in its supply chain. Surges in demand for essential products like Tylenol, which saw demand double early in the pandemic, proved salient.

The company responded by maximizing product availability, running its plants 24/7, and making strategic trade-offs, such as reducing the production of more complex formulations to focus on producing high volumes of the most needed medicines.

This agility was part of a broader strategy to manage or circumvent disruptions, ensuring that hospitals, pharmacies, and people worldwide continued to receive much-needed medications, medical devices, and other healthcare products.

To address pandemic challenges, Johnson & Johnson leveraged cutting-edge supply chain technologies and innovative approaches. Some of these technologies included smart glasses with remote access capabilities and track-and-trace sensors powered by GPS to maintain smooth operations across its manufacturing and shipping facilities globally.

These technologies allowed for real-time monitoring and management of the supply chain, ensuring end-to-end visibility of shipments and enabling the company to respond to the dynamic market patterns caused by the pandemic.

Through these efforts, Johnson & Johnson was able to continue serving patients, consumers, healthcare providers, and customers worldwide, despite the challenges posed by COVID-19.

“A lot can happen between the time a package leaves a manufacturing plant and its arrival at the final destination. Enter track-and-trace sensors that travel with a shipment, allowing for ‘end-to-end visibility.” Kevin Whitehead | Head of Digital Strategy, Supply Chain, Janssen Pharmaceutical Companies of Johnson & Johnson

Strategic Planning and Customer Experience Enhancement

At the heart of Johnson & Johnson’s supply chain strength lies a deep commitment to strategic planning and enhancing the customer experience. Recognizing the changing expectations of both B2B and B2C clients, Johnson & Johnson has embraced digital technology to introduce new efficiencies and a level of personalization previously unseen in the healthcare sector.

Enhancing Customer Service

Pivotal to this transformation was the Johnson & Johnson advanced planning team. Tasked with developing an end-to-end infrastructure, they set out to streamline operations and improve customer satisfaction.

Personalization and automation were their key strategies. Today’s customers demand instant solutions and prefer self-service options over traditional customer service calls.

Johnson & Johnson responded by implementing chatbots and instant messaging services, allowing for quicker and more efficient customer interactions. For more complex queries requiring human intervention, these digital tools help free up staff, ensuring that customers receive the support they need without unnecessary delays.

This shift towards digital customer service solutions represents a broader trend in supply chain management, where technology is used to enhance operational efficiency while creating a more customer-centric experience.

Any supply chain can benefit from leveraging these same basic principles.

Getting Started with Warehouse Automation

Supply chain automation.

As we’ve seen, during the pandemic, Johnson & Johnson’s strategic supply chain planning relied on automation technology to stay afloat. Technology combined with thorough preparedness bolstered business continuity.

For instance, the foresight to integrate and test track-and-trace sensors enabled the company to create end-to-end supply chain visibility. When the pandemic hit, operations knew exactly where in the supply chain all its materials were at any given point.

In addition, the company went to great efforts to prevent unnecessary stockpiling. The company also reassured customers and partners about product availability to mitigate instability in the market. This fostered a sense of reliability and trust among consumers as well.

Guide: Unpacking Supply Chain Traceability

Data and robotics: pioneering supply chain innovation.

Part of Johnson & Johnson’s supply chain innovation revolves around data analytics and robotics. Used to drive efficiency and reliability in manufacturing and logistics, these technologies have proven their effectiveness when strategically applied.

In one case, the company introduced YuMi, a collaborative dual-arm robot—and an example of the company’s willingness to experiment with next-generation manufacturing tools. YuMi’s precision and ability to work alongside humans have revolutionized routine tasks on the factory floor, significantly boosting productivity and ensuring that products reach consumers faster.

Beyond robotics, Johnson & Johnson’s strategic use of data has led to a more predictive and responsive supply chain. By deploying data crawlers to gather and analyze vast amounts of information , the company is able to create a sophisticated analytics layer.

This data-driven approach allows for accurate forecasting, improved decision-making, and the identification of inefficiencies within the supply chain at a granular level.

In harnessing data to inform every aspect of its operations, Johnson & Johnson not only enhances product delivery but also pioneers improvements in healthcare delivery itself.

Collaborations and Future Technologies

To further optimize its supply chain, Johnson & Johnson’s strategy has been to focus on collaboration and investment in future technologies. The ultimate aim is to address operational efficiency and patient care at the same time.

A notable example of such collaboration is their partnership with public hospitals in Italy to implement the ‘Resolution’ system. This system significantly reduces the time clinical staff spend on logistical tasks. In this way, the initiative streamlines hospital operations while allowing healthcare professionals to focus more on patient care.

Looking ahead, Johnson & Johnson is exploring innovative technologies like digitally augmented pill bottles and even more advanced traceability systems . These initiatives are aimed at improving patient outcomes by ensuring medication adherence and verifying the authenticity of drugs, respectively.

With initiatives like these, Johnson & Johnson continues to set new standards for how supply chains can contribute to healthcare advancements.

Lessons Learned from Johnson & Johnson’s Supply Chain Success

Johnson & Johnson’s innovative approach to supply chain management exemplifies how foresight, adaptation, and strategic use of technology can help companies navigate global challenges—and thrive. Careful testing for potential challenges combined with the strategic use of supply chain technology solutions have contributed to astounding success. Today, Johnson & Johnson is a globally recognized brand in healthcare and life sciences. The company remains highly profitable and highly regarded. And it’s all thanks to their emphasis on innovation and continuous improvement.

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Home » Business Analysis » Case Study: Johnson & Johnson Company Analysis

Case Study: Johnson & Johnson Company Analysis

Founded in 1866 as a family business, Johnson & Johnson now has over 130,000 employees in 60 countries worldwide. What started off as a small, three-person business, the company has now expanded across the globe and was named a “2017 Fortune’s Most Admired Company”. One may wonder, how did brothers Robert, James, and Edward Johnson set the foundation for the next 130 years to come? This success can be attributed to Johnson & Johnson’s Strategic Framework, which is at the root of all decision-making. The company’s Strategic Framework is comprised of three main components: The Foundation, Strategic Principles, and Growth Drivers. All three sections of the Strategic Framework include insight into Johnson & Johnson’s Management Approach, which guides the company’s philosophy for continuous success.

Mission and Vision

The mission of Johnson & Johnson is to, “Make diversity & inclusion how we work every day”. The purpose of a mission statement is to outline the foundation of the company’s goals and objectives. This mission is supported by the company’s vision of, “Be yourself, change the world”. Johnson & Johnson’s vision is a broader representation of where the firm plans to go in the future. These two statements validate why the company is listed as #16 of “The Happiest Companies to Work For in 2017”. Johnson & Johnson aspires to bring in natural-born leaders who are comfortable being themselves across a multitude of diverse backgrounds. Being comprised of 130,000 employees, the company wants to advance its unique culture to “spark solutions that create a better, healthier, world”. According to Forbes Patrick Hull, there are 4 essential questions that need to be answered in a mission statement. These four questions include the what, how, whom, and value brought. Johnson & Johnson’s mission is lacking half of these qualities because of how short and simple its statement is. The statement includes the what- diversity, and the value- inclusion; however, the statement does not go into the how or whom it addresses. Yet, one can imply the “how “by working across a range of diverse nations and the “whom” by those included in The Credo (patients, employees, communities, and shareholders). The statement is clear and concise but requires more implications than other traditional missions.

Johnson & Johnson is a company that is constantly pursuing its mission. This can be seen in its “Health for Humanity 2020 Goals”. The company’s “Health for Humanity 2020 Goals” are 15 goals that should be completed in a 5-year term to make “the places we live and work in healthier” across the world. These objectives are already being completed as seen in making and donating more than 160 million doses of medicine to children in underprivileged communities. These actions support the company’s mission by providing medicine to various societies and prioritizing physical well-being. The company’s mission, vision, and goals for 2020 align with The Foundation of the Strategic Framework, by always putting the people first.

Form of Organization

Besides being publicly traded, there are also advantages and disadvantages to being a corporation. The top three advantages of a corporation include limited liability, the ability to raise more money for investment, and size. Johnson & Johnson optimizes its limited liability and size capacity. Having limited liability is crucial for a large corporation like Johnson & Johnson. Since the company is in the consumer, pharmaceutical, and medical devices markets, it is vital for its owners to have limited losses in the company. This extra protection for its owners is extremely necessary right now with the issuance of lawsuit claims against the company for as much as $417 million. If the owners were liable for all the losses exceeding their investment, the owners may be entirely wiped out by now. Not only could this include the owners’ investment in the company, but it could also include their houses, cars, retirement funds, etc. Johnson & Johnson also leverages its size against competitors in its markets. Since the firm is so massive, it can accumulate enough profit and power every year to invest, acquire, and grow assets in the company.

On the other hand, the top three disadvantages of a corporation include extensive paperwork, double taxation, and difficulty of termination. Johnson & Johnson’s most evident disadvantages are double taxation and difficulty of termination. Since the company is a corporation, it is required to pay taxes twice: first, before it can distribute its income as dividends, and second, once the shareholders receive the dividends. Double taxation decreases the original net income that the firm annually earns. However, Johnson & Johnson acquires enough income to steadily grow every year, even with being taxed twice. It is almost impossible for the company to terminate now that it has expanded worldwide. The main downfall of impossible termination is if the company goes into large sums of debt, and ends up abandoning its employees as a result. The closing of the company would devastatingly leave over 130,000 people unemployed. Therefore, the firm needs to ensure profitable growth every year. Luckily, bankruptcy should not be a problem for Johnson & Johnson anytime soon, as it is currently one of the two AAA-rated companies in the United States for exceptional credit. Understanding the advantages and overcoming the disadvantages of being a corporation is why Johnson & Johnson has been so successful the past 130 years. The execution of its organizational form corresponds with the Strategic Principles in the Strategic Framework by managing for the long term.

Organization Size and Scope

Johnson & Johnson accumulated $18.8 billion in sales for Q2 which is up 1.9% versus a year ago. The $18.8 billion sales were broken down by $3.5 billion in consumer, $8.6 billion in pharmaceutical, and $6.7 billion in medical devices. The annual sales revenue of Johnson & Johnson in 2016 was $71.94 billion, and the company is projected to surpass this revenue at $76.1 billion by the end of 2017. The company utilizes its size and scope capacity to extend its services to the rest of the world, which resembles the Connect and Lead of the Growth Drivers in Johnson & Johnson’s Strategic Framework by being a leading provider in the consumer health, pharmaceutical, and medical devices industries.

One crucial element to a successful business is executing proper operational activities. Johnson & Johnson has recently extended its company base to include Supply Chain Management . For example, less than one year ago the Supply Chain Team in Buffalo Grove for major retailer Walgreens Co. started out as a two-person team. Within one year, the team now has over ten members and plans to grow by the year. Supply Chain now makes up 45% of employees working for Johnson & Johnson. Supply Chain has become crucially important to Johnson & Johnson’s Strategic Framework in the Foundation of the Credo. It is essential for the firm to not only allocate its resources efficiently but also environmentally friendly. Given a highly competitive atmosphere, Johnson & Johnson wants to advance its company with eco-friendly sustainability, which provides aid to the community aspect of the Credo.

When the company produces its primary products, it also tries to implement end-to-end supply chain optimization. The end-to-end tool is used to eliminate as many “middle layers” as possible to increase efficiency and costs. The company is partnered with approximately 80,000 suppliers, broken down into 30 categories and grouped into 5 families. Johnson & Johnson has enrolled in the “Sustainable Procurement Program” to focus on supplier efficiency with regulatory system assessments. The hope for the company is to become as efficient, effective, and eco-friendly as possible. In 2016, 58% of packaging, 46% of marketing materials, and 61% of furniture were derived from forest materials.

Johnson & Johnson’s resource process begins with obtaining the raw materials and components needed for product configuration by outsourcing from one of its 80,000 suppliers. Once the materials are received, the product is created by one of its manufacturing plants worldwide. The product is sorted in a case, that is then put with others onto a pallet. The pallet is then shipped by truck, boat, or airplane to one of the major 14 distribution centers. From the distribution center, the product’s case is pulled from the pallet and then shipped to the customer warehouse distribution center. The customer distribution center then receives the products and ships them to the appropriate store locations, which finally sells the product to the end consumer.

Organizational Structure

Since the company has vastly widened geographically to 250 different operating units, it makes sense for Johnson & Johnson to delegate more freedom to its managers and employees in each unit. Johnson & Johnson’s facilities incorporate a decentralized structure with more empowerment for its workers in various levels of management . Implementing a decentralized structure allows each operating unit to adapt to the needs of the people in each differing location. In a decentralized structure, authority is delegated down the organizational chain. Since Johnson & Johnson is so massive with over 130,000 employees, the pyramidal structure is also quite tall. Having a tall organizational structure means that there are various levels of management and reporting relationships. Generally tall, decentralized structures are inefficient because of the lack of communication across multiple segments and levels. However, Johnson & Johnson is one of the few large companies that has used this structure to its advantage by adapting to the local needs in proximity to each operating unit. The company’s diversified organizational structure is affiliated with the Strategic Principles of Johnson & Johnson’s Strategic Framework of a long-term decentralized organizational approach.

The two main advantages of a decentralized structure include higher morale and faster decision-making. Imagine if a low-level manager had to ask its boss’ boss’ boss’ boss for approval on a decision. Increasing empowerment in its various levels of employees improves time management and provides employees with higher levels of satisfaction. The two main disadvantages of a decentralized structure include less top-management control and a weakened corporate image. However, these two disadvantages are in fact advantages for Johnson & Johnson as the company leverages its decentralized structure for a happier working environment which increases its corporate image to the public. It can also be assumed that Alex Gorsky, CEO of Johnson & Johnson, does not want nor has the time capacity to oversee 130,000 employees on his own. Instead, the decentralized structure includes multiple operating units that have different functional and divisional groups within.

Financial Condition

Johnson & Johnson is labeled as one of, “The 10 Most Profitable American Companies in the Fortune 500”. For a company to be profitable, it must sustain substantial cash flow. One of the most relevant indicators of wealth in financial statements is the statement of cash flows . Johnson & Johnson’s statement of cash flows provides crucial insight into the success of the company’s profitability . The statement of cash flows is segmented by operating, investing, and financing activities. Currently for Q2 2017, Johnson & Johnson has $5.77 billion, -$12.25 billion, and -$1.92 billion in operating, investing, and financing activities, respectively. These numbers in Q2 2016, were $4.99 billion, $1.32 billion, and -$1.46 billion in operating, investing, and financing activities, respectively. When comparing the differing activities, the operating and financing segments seem relatively similar to the prior year. However, there is a huge difference between Q2 2017 investing activities (-$12.25 billion) versus prior Q2 2016 investing activities ($1.32 billion). This can be explained by Johnson & Johnson’s quarterly report. In Q2 2017, Johnson & Johnson finalized the acquisition of Actelion Ltd. for $30 billion in cash. The acquisition of a leading biopharmaceutical company such as Actelion Ltd. is substantial compared to the prior-year acquisition of Vogue International LLC for $3.3 billion in cash.

Both purchases appear in the investing activities section under the statement of cash flows. The range of purchases is the main reason behind the difference in investing activities versus the prior year. Nevertheless, this is not a bad sign to be negative in investing activities. In fact, it is a positive sign to see a negative in the investing portion of the statement of cash flows because growing companies spend increased amounts of money on new assets. In this case, Johnson & Johnson bought out Actelion, which is an immense contribution to the company’s assets. For a company to grow substantially, it must acquire more power and ownership in the market. In this case, Johnson & Johnson acquired a much larger company this quarter versus the prior year which will propel growth and profit in the future.

Industry/Competitive Environment

With a highly competitive industry, Johnson & Johnson is focused on the segment that contributes the most to the overall success of the company . Johnson & Johnson’s pharmaceutical industry has reported continued growth for Q2 2017 and amounted to roughly 46% of the company’s total revenue. Pharmaceuticals has continued to account for the largest segment of revenue within the company for the past three years. In the pharmaceutical industry, Johnson & Johnson’s three main competitors include Pfizer, Novartis, and Eli Lilly & Co. Considering the pharmaceutical business includes more than two major competitors owning a significant market share, Johnson & Johnson is considered an oligopoly. An important characteristic of oligopolies is the strategic interdependence between competitors. This statement means that any change in one influences the other- especially when it comes to products or prices. Johnson & Johnson, Pfizer, Novartis, and Eli Lilly & Co create similar medicines designed to cure and treat specific diseases. Therefore, price reliance is not as much of a focus as the differentiation of advantages and benefits associated with its products. Each company heavily relies on innovation within its own laboratories to outdo rival firms. Introducing new products to the pharmaceutical market can heavily impact competitor profits. One way these four oligopolies expand their market share in the industry is by using their size capacity to facilitate large research and development budgets to create new drugs and medicines.

Over the course of the past ten years, Johnson & Johnson has increased its research and development budget, giving them a competitive advantage over the other three firms. This supports Johnson & Johnson’s Credo to support its doctors and patients in the Foundation section of its Strategic Framework. According to Endpoints News, Johnson & Johnson is #2 on the list of “The 15 Top R&D Spenders in the Global Biopharma Business” in 2016. The company’s research and development budget has increased significantly over the years, where their budget originally was lacking behind competitors at $6.4 billion in 2005. Ever since Johnson & Johnson has made it a priority to improve innovation by increasing the budget. As of 2016, the company’s budget spend was $9.1 billion, followed by #3 Novartis at $8.4 billion, #4 Pfizer at $7.8 billion, and lastly #9 Eli Lilly at $5.4 billion. Allocating more money on research and development provides Johnson & Johnson with a competitive advantage by enabling the company to create more product differentiation with the entrance of new products.

One promise Johnson & Johnson makes time after time is quality assurance. The company strives to achieve the most efficient yet effective products as displayed in Deliver of the Growth Drivers in the Strategic Framework. One way the company executes this is by segmenting its market. It creates products for all ages, genders, and races. It targets each segment by providing a solution to a particular need. For example, teenagers are prone to have more acne- so Johnson & Johnson create products specifically designed for acne treatment and launches “solvemyacne” on its Neutrogena website. “Solvemyacne” includes a personalized questionnaire for a teenager to fill out that ultimately recommends a suitable regimen. This segmentation can be seen across multiple markets, but one market the company is continuously trying to capture and deliver to is its mothers.

Johnson & Johnson assumes that mothers are willing to go the extra mile to provide the best care for their children as stated in their Johnson’s® Baby mission: “We’re helping moms and dads like you safely care for your babies. We know you don’t want to take any risks”. Therefore, Johnson & Johnson, owner of Johnson’s® Baby, creates products of premium quality for those mothers that want the best for their child. The company manufactures all the necessary products a mother may want to be created with the gentlest ingredients. This is supported by “Johnson’s® 5-Step Safety Assurance Process” which constantly tests and evaluates its formula ingredients. The company’s product line contains baby shampoos, oils, body washes, wipes, powders, lotions, etc. Johnson & Johnson knows mothers will pay for the premium product, and therefore designs its products to include the purest, eco-friendly, non-chemical ingredients, that are proven to be the safest and least harmful to children.

Johnson & Johnson guarantees product placement with its Johnson’s® Baby products to further incentivize mothers to purchase its items. First, the company confirms its products are readily available in the baby section of every large major retail store. These stores include nationwide locations of Walgreens, CVS, Rite-Aid, Kroger, Target, and Walmart. The company ensures its products are an option for the mother. To begin with, the company pushes for product purchasing by implementing on-shelf availability. The company negotiates thousands of dollars to place its baby care products at eye level and within reach on the shelf, for both the mother and the child. This product placement is essential to its marketing technique. By placing the product at eye level for the mother, it is the first baby brand the mother looks at when debating a purchase. Secondly, by placing the product at eye level for the child, the child is then able to grab the product and ask his/her mom to buy it. Allocating on-shelf availability in an accessible manner motivates the mother to purchase the product, whether that be by the decision herself or the pressure from her child.

Although Johnson & Johnson’s pricing is at a reasonable premium level, it allows for the expense of discounts and bundles. The markup on pricing gives the company wiggle room to promote its products at lower prices. Promotions include BOGOs (buy one get one), coupons, or FSIs (free-standing insert). All three promotions lessen the purchasing prices of the items. If vendors expense a promotional spend, the price can be less than the generic brand. This can be seen with the same Johnson’s® Baby Head-to-Toe Wash Original Formula 15 oz priced at $5.49 that currently has a $2 off coupon. This coupon brings the retail price down to $3.49, which is less than the generic Walgreens Well Beginnings Baby Wash 15 oz priced at $3.99. In this case, Johnson’s® Baby is utilizing a high-low pricing strategy, where it is cheaper to buy the name brand than to buy the generic brand when on promotion. Promoting discounts and deals builds a relationship that returns mothers back to the Johnson’s® Baby brand and stimulates growth in the company.

Summary and Conclusion

Related posts:.

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ProcureCon Supply Chain 2025

Atlanta, GA

Here's How Johnson & Johnson Is Creating an Intelligent Supply Chain

The act of facilitating supply and demand is no mean feat. Things used to be slightly easier back in the day as companies would tend to favor geographically proximate suppliers from which to source goods and services.

Today, however, we live in a global marketplace, and while ordering a product and having it delivered may seem like a simple thing, it is a massive endeavor involving multiple stakeholders and thousands of miles. Each part of the supply chain needs to be carefully managed in such a way so it can produce predictable and measurable outcomes, which is essential for providing a consistent service.

It probably won't surprise you to hear that digital technology is helping big brands such as Johnson & Johnson to create more intelligent and dependable supply chains throughout its business network.

Johnson & Johnson

The responsibility for this transformation falls to the advanced planning team at Johnson & Johnson, which has been tasked with developing the complete end-to-end infrastructure of the supply chain and improve the brand's customer experience by using digital technology to create new efficiencies.

"I work in advanced planning," said Senior Director of Global Supply Chain Advanced Planning at Johnson & Johnson, Neil Ackerman . "It's part of the global supply chain. I focus on delivering an improved customer experience and creating a competitive advantage by levering advanced capabilities within the supply chain. What makes up the J&J supply chain? How do we think about it? We have some big, strategic ideas about supply chain. We want to fast track our innovation. We want to be an agile solution provider for customers. We want to have an end-to-end value, and we want to inspire our employees and people."

How, then, does customer experience fit into this idea of an intelligent supply chain? The expectations of customers have changed a lot when it comes to ordering products - regardless of whether they're B2B or B2C clients. If a company can't meet those expectations, those customers will have little problem seeking out one of its competitors.

Personalization and automation are two such ways Johnson & Johnson is working digital technology into its supply chain operations. Customers these days expect a certain amount of self-service. They don't want to have to sit on hold waiting to speak to someone. Instead, they want to be able to solve queries via chatbots or instant messaging services. Of course, sometimes a query is too complex to deal with via virtual assistants. However, allowing simpler issues to be dealt with this way frees up more human staff to deal with those tougher problems - improving the customer experience no matter the contact method.

"The world of the customer and what their expectations are has changed a lot," said Ackerman. "I remember years ago when you had to wait on a phone call and customer service took a long time. Now, it's not the same. A lot of things are self-service, if you think about what's happened. The customer has greater expectations. Why is that? It's because their whole lives around them have also become more efficient; effective, you could argue. As a result of that, in their whole lives they want that same efficiency."

Cognitive Automation

At the core of Johnson & Johnson's goal for a more intelligent supply chain is data. Thanks to Johnson & Johnson's powerful IT capabilities, it can send data crawlers out into the supply chain to gather and index vast amounts of data based on pre-set parameters.

It's then able to create an analytics layer which can be used to create different types of data tools, which can then be used to create a number - such as a forecast - depending on the insight the advanced planning wants to achieve. For example, the data could be used to calculate the average times it takes a certain product to complete its supply chain journey, and then use that information to reliably inform customers how long they can expect it to take for their order to arrive.

Alternatively, it could inform teams if there are any points in the supply chain which are consistently failing to meet expectations. Once identified, these inefficiencies can be addressed and then continually reassessed to make sure the necessary improvements have been achieved.

"Let's take something simple - well, relatively simple," said Ackerman. "You order something. You want to know or the person listening wants to know when they're going to get it. Very simple, right? Except, actually, really hard. What happens is, they'll say, 'Over the past six months, when someone has ordered widget A, when has widget A arrived?' When we told them it was going to be this date, were we actually accurate with that date? Actually, you'll find that most of the time people are not."

Final Thoughts

Creating an intelligent supply chain using automation and data is a great way to boost both the performance of your brand and the customer experience simultaneously, and it's great to see massive brands such as Johnson & Johnson leading the way in this regard.

You can hear Johnson & Johnson's Senior Director of Supply Chain Customer Solutions, Ruben Taborda , speak at Supply Chain Next 2019 , taking place in November at the Westin Chicago River North, IL.

Download the agenda today for more information and insights.

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Case study: How Johnson & Johnson promotes environmental and social responsibility throughout its supply chain

As the world’s largest and most diversified healthcare company, with 134,000 employees in 60 countries, Johnson & Johnson works with over 70,500 suppliers across its three business segments     Tweet This! : Consumer, Medical Devices and Pharmaceutical. Building a socially and environmentally responsible supply chain is, thus, a key priority.

This case study is based on the 2017 Health for Humanity Report b y Johnson & Johnson published on the Global Reporting Initiative Sustainability Disclosure Database  that can be found at this link . Through all case studies we aim to demonstrate what CSR/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

For Johnson & Johnson, creating a sustainable supply chain reduces sourcing risks, protects brand reputation and, most importantly, has comprehensive positive impacts on both society and the environment. In order to promote environmental and social responsibility throughout its supply chain Johnson & Johnson took action to:

• monitor compliance with the Responsibility Standards for Suppliers
• carry out Environment, Health & Safety (EHS) audits
• conduct social audits

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Please subscribe to the SustainCase Newsletter to keep up to date with the latest sustainability news and gain access to over 2000 case studies. These case studies demonstrate how companies are dealing responsibly with their most important impacts, building trust with their stakeholders (Identify > Measure > Manage > Change).

With this case study you will see:

• Which are the most important impacts (material issues) Johnson & Johnson has identified;
• How Johnson & Johnson proceeded with stakeholder engagement , and
• What actions were taken by Johnson & Johnson to promote environmental and social responsibility throughout its supply chain

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What are the material issues the company has identified?

In its 2017 Health for Humanity Report Johnson & Johnson identified a range of material issues, such as product quality, safety and reliability, ethics and compliance, innovation, global public health, workplace safety. Among these, promoting environmental and social responsibility throughout its supply chain stands out as a key material issue for Johnson & Johnson.

Stakeholder engagement in accordance with the GRI Standards

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The organization should identify its stakeholders, and explain how it has responded to their reasonable expectations.”

Stakeholders must be consulted in the process s of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups Johnson & Johnson engages with:

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics, Johnson & Johnson invited more than 1,500 stakeholders to respond to a survey. Stakeholders were asked to rank topics by importance to them and by their potential for social, environmental and economic impact.

What actions were taken by   Johnson & Johnson to promote environmental and social responsibility throughout its supply chain ?

In its 2017 Health for Humanity Report Johnson & Johnson reports that it took the following actions for promoting environmental and social responsibility throughout its supply chain:

• Monitoring compliance with the Responsibility Standards for Suppliers
• Johnson & Johnson confirms and monitors suppliers’ compliance with its Responsibility Standards for Suppliers by means of a formal assessment and audit program. Assessments are conducted through EcoVadis – a third-party program. EcoVadis assessments involve an initial screening of supplier performance. Subsequently, the results (a score) play an important role in deciding which suppliers may require an on-site audit.
• Carrying out Environment, Health & Safety (EHS) audits
• follow-up technical visits which include expert training and best practice sharing
• business reviews with direct coaching and guidance
• information provided in the Sustainability Toolkit for Suppliers
• supplier relationship management engagement at category level
• participation in supplier capability-building conferences, webinars and other resources that are available through Johnson & Johnson’s membership in the PSCI
• In 2017, Johnson & Johnson carried out 189 EHS audits and technical visits.
• Conducting social audits
• In 2017, to establish an enterprise-wide framework for addressing human rights in its supply chain, Johnson & Johnson expanded the human rights requirements in its updated Responsibility Standards for Suppliers. In addition, a cross-functional Human Rights Working Group met regularly, guiding and informing the development of Johnson & Johnson’s human rights risk assessment approach and audit program. Johnson & Johnson’s supplier social audit program is scheduled to be fully implemented in 2018. Supplier selection and prioritisation criteria will include results for EcoVadis scores regarding Labour and Business Ethics, location in a country considered high risk for violation of human rights and the supplier category.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 308-1 New suppliers that were screened using environmental criteria

2) Disclosure 414-1 New suppliers that were screened using social criteria

Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.

Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:

• Sustainable Development Goal (SDG) 5 : Achieve gender equality and empower all women and girls
• Business theme: Workplace violence and harassment
• Sustainable Development Goal (SDG) 8 : Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
• Business theme: Labor practices in the supply chain
• Sustainable Development Goal (SDG) 16 : Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

78% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism .

FBRH GRI Standards Certified and IEMA approved Sustainability Course | Venue: London LSE

By registering for the next 2-day FBRH GRI-Standards Certified and IEMA approved Course you will be taking the first step in gaining the many benefits of sustainability reporting .

References:

1) This case study is based on published information by Johnson & Johnson, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2)  http://www.fbrh.co.uk/en/global-reporting-initiative-gri-g4-guidelines-download-page

3) https://g4.globalreporting.org/Pages/default.aspx

4) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to Johnson & Johnson: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us .

SAP-Native App Development Platform

Alba creates a central employee portal making hr processes paperless and efficient..

Johnson & Johnson is Creating a Digital Supply Chain Transformation .

Neptune Software's low-code development platform can solve the challenges of an entire digital ecosystem. Watch how Johnson & Johnson is embracing innovation to create complex apps creating a digital supply chain with Neptune Software.

• 90% of Supply Chain operations flowed through SAP
• When project started Fiori apps weren’t available
• When Fiori app became available the time it took to develop them was much too slow to scale at speed
• Neptune DXP simplifies the development and the IT environment
• iPhone 7 devices that met D1B1 compliance
• Easily scalable across users and locations
• Takes 40 percent less time to manage the high-volume supply chain process
• $1.12MM in savings per year across 16 sites by eliminating paper
• Apps that are easy to use with a UX end-users love

Johnson & Johnson created a better, more user-friendly mobile SAP experience while streamlining costs to save over $1.12 million year over year

Challenge: Streamlining SAP, enhancing UX, reducing costs

Managing the supply chain for one of the world’s largest consumer goods companies – more than 134,000 employees across 60 countries – is a monumental effort, to say the least.

That’s why Johnson and Johnson set out to simplify its SAP environment, which included 30 platforms, 550 instances, and 2,000 services. The goal of the company’s “Back to Basics” program was to reconcile its large SAP instances into one platform while ensuring the solutions aligned with business unit requirements.

“Ninety percent of our supply chain operations flow through SAP. It’s the backbone of our business,” said Aravinda Boyapati, Supply Chain Manager at Johnson and Johnson. “We needed to streamline our SAP infrastructure so we could reduce costs within our consumer goods, pharmaceuticals, and medical device divisions.”

Since mobility and a strong user experience (UX) were also important, the team set out to rebuild its SAP portal. Because the effort pre-dated the advent of SAP Fiori, the team began creating mobile apps from scratch; over time, they integrated Fiori-based applications into their platform, to good success. Still, the team needed to accelerate the pace of app delivery across the organization.

“As a UX architect, I’m constantly challenged to build things cheaper and faster. Once we realized we also needed to scale our effort across all of the manufacturing floors and warehouses for our warehouse management and plant maintenance solutions, we knew we needed to speed our process and run at a lower cost,” Boyapati continued.

‍ Solution: Scaling mobility projects to global teams     

Enter Neptune Software, a rapid, low-code SAP-certified app development platform.

“It was clear that Neptune was a good choice for our custom Fiori apps, in part because it doesn’t require any additional hardware or middleware. It truly simplifies the development and the IT environment, while delivering a better UX, which is exactly our Back to Basics program is about,” said Boyapati. “Developer training was included in our contract, making an easy learning curve for ABAP and UX developers alike.”

The company began with a proof of concept (POC) to mobilize inventory management. The effort included switching from existing equipment to iPhone 7 devices to meet facility requirements for electronic shock-sensitive equipment, meeting D1B1 compliance, and employing Siri-based voice commands to enhance the user experience.

Switching from a 4-digit to a 6-digit PIN proved puzzling. “Fortunately, Neptune Software experts were there to provide content and development insight on demand so our project stayed on track,” said Boyapati.

The pilot project was then rolled out to a small group of users within one plant. Business units were engaged and enthusiastic, providing good feedback and working back and forth with the development team to identify the functionality they need to be productive. Once employees were happy with the solution and it passed their rigorous testing process, developers were able to scale it across users and locations.

A chance meeting with European developers for the company led to the expansion of plant maintenance projects using Neptune DXP. "At a business partner conference, I presented a simple POC showing Neptune capabilities, and our European coworkers quickly realized a project they had spent six months on could be created faster and cheaper using our approach,” said Boyapati.

A bar code scanning project for inventory and warehouse management was also much simpler using Neptune DXP. Developers were able to create a single plug-in to meet the company standards for days sales of inventory (DSI), keyback, and code-128, among other requirements.

‍ Results: Forty percent less time for Supply Chain Process, and now users want more

Efforts have paid off as solutions are implemented one plant at a time. It now takes 40 percent less time to manage the high-volume supply chain process, which includes picking, transfers, and shipping and takes more than 2,000 scans per day.

“We’ve also been able to achieve a cost savings of $70,000 (USD) by eliminating the need to print documents,” mentioned Boyapati. “That’s an annual saving of 1.12MM (USD) we expect to realize across each of our 16 sites as we continue to roll out the Neptune solution.”

Users are impressed by how quickly the team can release a working solution. They also appreciate how easy it is to use the new apps and how fast they run. Users are so happy that they’re requesting the same great UX in non-SAP workflow and solutions, too.

The work continues. The team has already completed seven projects and has three more underway. Individual projects can be developed and implemented in just five weeks.

With continued success, these apps and more were implemented across all 16 sites in 2018, giving users the easy, mobile functionality they need to work efficiently while delivering a more streamlined, less costly SAP environment overall. And that’s the way to get “Back to Basics.”

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Johnson & Johnson Creates an Intelligent Supply Chain

Neil Ackerman

Senior Director, Global Supply Chain Advanced Planning

Johnson and Johnson

Michael Krigsman

Find out how Johnson & Johnson is building the future of intelligent supply chain management with cognitive automation.

• #Digital Transformation
• #Business Impact

These days, there's nothing simple about supply and demand. With goods being manufactured all over the world, and customers expecting a very personal experience when they purchase goods and services, the idea of an intelligent, efficient supply chain becomes an increasingly vital part of doing business. Neil Ackerman, Senior Director of Global Supply Chain Enterprise Planning and Innovation at Johnson & Johnson, sees the future of intelligent supply chain management (SCM) as one of the most exciting and innovative paths that can keep Johnson & Johnson ahead of the competition.

Supply chains may seem pretty straightforward to the layperson. You order something, you pay for it, and you get it delivered to you. In reality, it is a far more complex process, with an incredible amount of moving parts that need to be managed and controlled, with predictable, dependable outcomes. That's the challenge and the promise that confront Neil and his team at Johnson & Johnson.

Watch the video to see how the Advanced Planning team at Johnson & Johnson is focusing on the end-to-end infrastructure of the supply chain in order to develop the greatest efficiencies to improve the customer experience. Specifically, learn how it is developing a self-driving automated system that gathers and indexes data and then creates an analytics layer, which in turn develops tools that can produce the most accurate forecast of output for a product. Beyond that, Neil talks about taking supply chain analytics to the next level by exploring cognitive automation, a combination of robotic process automation (RPA) and Artificial Intelligence (AI) that could revolutionize how Johnson & Johnson serves its customers, and give the company a winning edge.

About Supply Chain and Advanced Planning at Johnson and Johnson

Customer experience and supply chain, supply chain creates competitive advantage, supply chain management and cognitive automation, what is the meaning of "self-driving", impact of supply chain transformation on johnson and johnson.

This transcript was lightly edited.

Michael Krigsman: We're at MIT, speaking about supply chain innovation and cognitive automation with Neil Ackerman from Johnson & Johnson. Hey, Neil. How are you doing?

Neil Ackerman: Terrific. Thanks for having me today. I'm real excited to be here. This is my favorite topic. I believe that supply chain is the most important part of a business and to be able to talk to my peers and friends about it is a great opportunity, especially here at the MIT Engine.

Michael Krigsman: Neil, tell us about Johnson & Johnson and tell us about your role.

Neil Ackerman: I work in advanced planning. It's part of the global supply chain. I focus on delivering an improved customer experience and creating a competitive advantage by levering advanced capabilities within the supply chain. That's globally.

To really take a step back for a second, J&J started in 1886. The company obviously has been around a long time, unlike some of the more, I would say, other types of companies like the FANG stocks that have been there, the Facebook, Amazon, Netflix, Google. Let's talk a little bit about really how big it is because people don't realize.

First of all, J&J is a market cap, the ninth largest in the world, of $372 billion. It operates in 175 countries. It has 250 subsidiaries. That's why the supply chain is so important within the company.

I think another important factoid would be that, of the thousands and tens of thousands of employees, over half are in supply chain, so over 60,000 employees just in supply chain alone globally at J&J. I'm responsible for this advanced planning function within supply chain, that innovation aspect of it, in all of our divisions.

Michael Krigsman: Well, let's talk about advanced planning. For people who are not supply chain experts, what does that mean?

Neil Ackerman: What makes up the J&J supply chain? How do we think about it? Well, we have some big, strategic ideas about supply chain. First of all, we want to fast track our innovation. We want to be an agile solution provider for customers. We want to have an end-to-end value, and we want to inspire our employees and people.

When you're in advanced planning, you're pioneering these aspects of our strategic initiatives in different ways as you try to create this end-to-end value. What do we mean by end-to-end value? What we're talking about is whether you're sourcing something, you're making something, you're delivering that product, that purpose of healthcare, that's part of the end-to-end infrastructure.

A lot of people don't really understand how these pieces and parts get to you. You just think that your doctor gives you a prescription and you go to the store and get it or it's mailed to you. Actually, all of these things are all part of a supply chain and advanced planning is actually looking at this end-to-end and saying, "Where can we have the greatest efficiencies to improve the customer experience, to create a competitive advantage?"

Michael Krigsman: Neil, when you talk about customer experience in this context of supply chain and advanced planning, please elaborate on that for us.

Neil Ackerman: The world of the customer and what their expectations are has changed a lot. I remember not too long ago when my only option was to go to the store and get something. Now, things are delivered.

I remember years ago when you had to wait on a phone call and customer service took a long time. Now, it's not the same. A lot of things are self-service, if you think about what's happened.

The customer has greater expectations. Patients have greater expectations. Doctors have them. Why is that? It's because their whole lives around them around have also become more efficient; effective, you could argue. As a result of that, in their whole lives they want that same efficiency.

We're responsible for the creation of the personalization. We're responsible for the shipping and delivery. We're responsible for the procurement and getting those items from all over the globe where people want to get it. Now that the world has become flat, and you can get anything you want from anywhere, we have those responsibilities.

Supply chain now has come from this, "Oh, we're kind of here, like we don't really know," to, "We're the sexy thing now," right? We are it.

What happens is, people don't realize that marketing, everyone could be like a marketeer, right? Is it purple? Is it pink? Is it orange? We don't like that color. What should it be? Actually, they all can't be marketeers, but they think they can.

In supply chain, not many people can be just supply chain expertise. You need a lot of knowledge about how things work from processes, cost structure, variable, fixed, trans cost, to fully understand how you can meet customer expectations, give them a great price, broad selection, and make sure that they get it in the most convenient and effective way.

Neil Ackerman: That is a challenge that I love and I know my peers who work on it love.

Michael Krigsman: Okay.

Neil Ackerman: All that, though, is not done by one person. The one thing that's fun about supply chain is it has to be a collaboration.

Michael Krigsman: Supply chain is a core operation at J&J. In fact, a very significant number of your employees are involved in supply chain, so why is that?

Neil Ackerman: Supply chain is really a competitive advantage when you can really knock it out of the park and so, luckily, J&J has had great success with supply chain; always ranked in the top tier of companies.

Michael Krigsman: What does it mean to knock it out of the park when it comes to supply chain?

Neil Ackerman: It means that not only are you exceeding your customer expectations, but you're at the leading edge of technology, cost structure, efficiency. There's a series of metrics in supply chain, that maybe don't matter for today, related to what they call forecast bias or mean absolute percent error, pieces that are different types of metrics. What really matters is, are all your stakeholders getting what they want when they want it delivered, so on time, in full, delivered? Are you minimizing your out-of-stock rates and maximizing utilization?

Now, every company has different problems at different times over the years. Fine. Over the long term, we've been able to be a winner and our return on assets have demonstrated such matters.

Really, what I think matters here is what's made us so good lately. We've been able to move towards a self-driving supply chain. We've been able to understand that the ideas of silos and these one-off decisions that used to be made or were made in the past now are becoming more autonomous.

They're more automated. They're more end-to-end within the infrastructure. You have procurement still talking to folks in deliver. You have make understanding what's happening with source and they know where to ship it afterward with deliver.

These different pieces that come together, they're one team. This is the collaboration that I'm really trying to talk about, this idea that no one has the exclusivity on supply chain and genius. That does not exist.

My own team, I work for them. I work for that team.

Michael Krigsman: I want to explore this notion of the cognitive automation but, before we do that, historically, how have the supply chain teams worked so that it sets the stage for the differences that cognitive automation can make?

Neil Ackerman: In the past, you had a human. The human would create this idea of what was the historical forecast. Let's come up with the demand equation.

The spectrum of the folks listening to this talk today could be from, "I'm going to use just an Excel spreadsheet," to, "I'm going to have a sophisticated piece of software." At the end of the day, they were creating a demand and supply plan, right?

The thing is that this actually can be automated and actually really accurate. Why? Because it could take different pieces of data, not just your forecast, the historical forecast, but it can also take what are some of the expectations in the external world that are going to happen, what's happening in your forecast for the future, where you're going to get source from, what's that going to look like, and you could put together, actually, a really wonderful, self-driving, automated system.

Now, does that mean that it's perfect all the time? No. Does it mean that the human was perfect all the time? No. It does mean that, over the long-term, you're going to get better and better and better. Therefore, by doing that, you're going to improve your bias, so you're not going to have a big range of what you think it was; what it could be. You're going to have a really low, mean, absolute percent error, so your error rate will be lower, and you're going to improve your on time, in full, and delivered to the customer.

Now, what are some of the things that need to happen? Well, first of all, even if you get all the data, you have to be able to understand that data is not linear in this world. It's an analytics layer of linear mixed integers and tools that are coming together to actually create that demand plan.

Now, a demand plan alone is nice. You also have to make sure that you can source the material, that you can make it so your manufacturing is ready to go, and that you have enough trucks to deliver it. This is a self-driving plan I'm really trying to talk about. That's where I find the most excitement to be.

Is it hard? Yeah. Yeah, it's really hard, but it's really fun, and it's worth doing because, when you do it right, you lower your fixed cost, your variable cost, your trans cost. You improve efficiency and customers are happier.

Michael Krigsman: When you talk about self-driving, explore that for us. Explain for us, what is that? What does that mean? What's involved with that? Maybe give us a couple of examples.

Neil Ackerman: There is a machine and the machine uses a series of data crawlers. These data crawlers go across and they collect data and they index all this data. That's step one.

Step two: the machine then says, "Let's create an analytics layer." The analytics layer is the piece that is going to then create those different types of tools, whether it be a linear or, basically, a series of integers that will come together to create a number or a forecast, so the output of whatever you're looking for.

What drives outputs? Inputs. And so, the self-driving machine is saying, "Give me all the inputs from end-to-end of the supply chain, and then I'm going to give you the most accurate output that I can give you."

Michael Krigsman: Give us some examples of these inputs.

Neil Ackerman: Let's take something simple -- well, relatively simple. You order something. You want to know or the person listening wants to know when they're going to get it. Very simple, right? Except, actually, really hard.

What happens is, they'll say, "Over the past six months, when someone has ordered widget A, when has widget A arrived?" When we told them it was going to be this date, were we actually accurate with that date? Actually, you'll find that most of the time people are not.

Minus, of course, the other, I would say, e-commerce companies that we can talk about, even them are not accurate all the time. Even when they're at a 5% to 8% error rate, that's kind of a lot for all their packages, right?

Think about other companies, too. You want to know what they call "available to promise." When is it going to be available so it can be promised with a date?

The self-driving machine would say, "We now know when this has all happened in the past. We now know what we're sourcing from around the world. We know with our manufacturing what are the machines making and we know when that's going to be ready. Then we know, based on historical context, when it's delivered and when it's going to be in a distribution center."

With all that data--this is multi-integers that are all coming together--they spin it. They come through and they say, with accuracy, let's say 90% accuracy, "This is going to be your ATP date," available to promise date.

What's fascinating about it is, that's not good enough. In the self-driving supply chain, you also need a capable to promise date. You didn't make it yet, right?

Imagine this. It was not made, but the customer still wants the date of when it's going to be there. Now, that is also very difficult, especially in a global world when you're making things all over the world. People don't realize this stuff goes on boats and planes, and it goes through customers, and it goes through regulations. There are a million things that could go wrong--just watch the news--a million things.

When that happens, we also want to create an accurate CTP date, the capable to promise date. We have found, as a large supply chain in a healthcare company, that we've been able to really, really improve our ATP and our CTP date with different partners.

One of those partners happens to be Aera. With Aera, they have helped us self-drive this machine in one of our divisions. Our accuracy was good, but it wasn't great before.

Now, we can define it as, hey, it's great in this particular division. Why is it so great? It's because we worked with them to create a cognitive platform, a self-driving machine that takes a bunch of important data pieces that are not necessarily structured, structured and unstructured, that come together to create an index. We then put on top of it our own algorithms that we developed to give us this forecast, with their help, of course. Then, together, we create an accurate ATP and CTP date.

Now, what does that look like? It looks like this. "Hi. I'm a customer service agent and I'm picking up the phone." Maybe I have thousands of customer service agents, which I do, a change agent.

You're a customer, and you want to know when widget A is going to arrive. You pick it up and you say, "When is widget A going to arrive?"

The customer [service agent] in the past might have said, "I have to look into it." It could take me 15 minutes. I have to find out where it is, what we're making. I've got to make a couple of phone calls. This is not just a typical item. This could be anything. There are medical devices. We have hundreds of thousands of SKUs, right? What is it?

Now, here's a new world. You call up the agent and the agent says, "Oh, I'm going to look." They look right on the portal. There's the date, and it tells the customer where it's coming from.

Now, what would be really cool is if it says, "There's a date. This is where it's coming from," but, actually, maybe there's a backorder, or maybe they don't have it. What's another path to get that done? Now you start focusing on the future of supply chain, the idea that this cognitive machine is going to literally tell you, in the future, and say, "Actually, we know there's a back order, but you can tell the customer that it's going to come from these three different locations, it's going to be made on these dates, and it's going to deliver here."

How does it know it? Because this machine has created, from the structured and unstructured data, the cognitive thinking to make that happen. Yeah? And so, how I define cognitive automation is robotic process automation, RPA, plus AI, artificial intelligence, equals cognitive automation.

Now, what's RPA and why is it so important? What matters for this discussion is, RPA is essentially saying, "Give me all this data. Let me do tools and actions for you, so the human doesn't have to do it." Imagine putting in data, the same thing every time in the same field. This does it for you, plus artificial intelligence, which says, "Give me all your AI, your unstructured and structured data. Let's pull it together and then create an output using all this information." When they come together, RPA and AI, you have a cognitive automation. You're doing human skills with the use of a computer.

Obviously, this is the beginning of that. Supply chain is definitely at the forefront of it but it's going to change a lot over the next three to five years. There are things like quantum computing and serious science, that doesn't matter for this call or for this talk, that's going to influence that change.

Michael Krigsman: This investment in technology, investment in data, investment in new processes sounds like supply chain is so important to J&J that it makes it worth, obviously, this investment in processes, investment in data, investment in technology that you're making.

Neil Ackerman: I would say that this is about transformation and disruption. Let's be really clear. Not just J&J is it important to. It's literally important to every person on this earth. It's important to space.

We're talking about the idea. It's not just a movement of goods anymore. It's not just a truck. It's the use of the production, sourcing it, producing it, making it, shipping it, delivering it, all in this unbelievable background, the backdrop that you didn't even know how it got there. Because it's so important, it's always ripe for disruption. There's always a new way to transform it or to win to make it even better.

I would say that I would push the audience here and say, actually, supply chain is a new revenue generating machine. It used to be that sales and marketing generated revenue and supply chain was a cost center. I want to be really clear that supply chain is no longer a cost center. Supply chain, for those companies that know how to work it, can become your revenue generating machine.

Michael Krigsman: How? How is that possible?

Neil Ackerman: Because when you exceed customer expectations and you deliver something that they want faster than everybody else, you innovate within the supply chain via 3D printing, let's say, or sensors on a device to give you information using Internet of Technology, Internet of Things, IoT, this is all part of the supply chain. You don't have to look any further than the major e-commerce companies to know that supply chain actually is a winner. It's an advantage.

You need traditional tools, but you also need to understand that you can't win without it. Wars are won and lost on supply chain. Soldiers have to be fed.

The whole global economic structure really depends on trade and the ability to create these magic, what I call, supply chain magic. I literally call it that because it's no longer a village trading with one in each other. It's a global world and we're creating magic.

There are Merlins all over the place, not just one. These Merlins that are everywhere are a team and they're trying to get it to you faster, cheaper, better, more efficient, make something different.

Let's just do one example. Let's say you need a medical device for a knee or anything artificial. In the past, you'd have to get it. They measure it. It'd have to come to you.

What if you could 3D print it right on the spot? That's what we're talking about. We're talking about the world is going to change so fast.

What's 3D printing? 3D printing is a form of supply chain. It's creating something. It's getting the plastics, the ceramics, the metals, whatever you need where it needs to be. Boom.

In the past, hospitals were these big, big buildings and they were sort of not everywhere. Now you have ambulatory centers everywhere.

How do you control the inventory? How do you know who is going to be sick where next? You need models, prediction, transformation, disruption because you have to predict the future. If not, you're always going to be behind.

We also have a responsibility to teach the world that supply chain is core to what is happening here, and so that's why we're so excited to talk about it.

Michael Krigsman: Neil Ackerman, a very passionate look at supply chain. Thank you so much for talking with us today.

Neil Ackerman: Well, thanks for having me. I really appreciate it. Let's keep moving.

Published Date: May 16, 2019

Author: Michael Krigsman

Episode ID: 597

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A convergence of two trends led Johnson & Johnson to work with WWF to analyze risk within the company’s supply chain—the emergence of palm oil as a growing environmental risk and increased interest from consumers in naturals and naturally derived ingredients.

At the same time, the company was also cognizant that a lot of assumptions are wrapped up with naturals—people assume that they are better from a personal health stand point and environmental one—if it’s good for them, it must be good for the planet. Given the risks identified with palm oil, the company knew that this implicit belief from consumers needed to be managed responsibly.

With a strong sense of responsibility and deep commitment to sustainability, Johnson & Johnson embarked on a journey to better understand what some of those risks might be around other naturally derived materials that the company sources.

The analysis uncovered that Johnson & Johnson could be more focused and targeted on the issues they engaged their suppliers on to get the answers they needed more quickly. Instead of asking suppliers a generic, and often lengthy, set of questions, the risks and hotspots identified enables the Johnson & Johnson’s buyers to ask a specific supplier of a specific ingredient in a certain geography as few as three questions that would result in information that can inform purchasing decisions.

“It’s not necessarily about getting a lot of information; it’s about getting the right information,” says Paulette. “From our suppliers’ point of view – it’s question fatigue. They are getting asked so many questions. And we have a responsibility to ask the right questions to get just the right information so that we can be as smart as possible in our decision making.”

Johnson & Johnson is now distilling the findings into a set of tools and resources to equip their procurement organization. Together, WWF and Johnson & Johnson will host a training in the summer of 2014 to arm the company’s buyers with the knowledge and insights needed to effectively manage potential risks or issues for a given commodity and geography.

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Case study: Johnson & Johnson - supplier development and collaboration

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As a business founded with the belief that a healthier planet offers benefits to human health, Johnson & Johnson has been setting environmental goals for nearly 30 years, and broader Citizenship & Sustainability goals since 2010. These include specific ambitions to tackle impacts outside their direct control. And with more than 78,000 suppliers around the world, Johnson & Johnson recognizes that the business can drive enormous positive impact through their supply chain sustainability initiatives.

A key practice highlighted in Johnson & Johnson’s five-year Citizenship & Sustainability 2020 goals is collaboration with suppliers to accelerate environmental and social improvements across the value chain – accomplished through their Sustainable Procurement Program. The Program has evolved over time, building on progress and insights gained as the Company worked towards their prior Healthy Future 2015 goals. Johnson & Johnson has raised their expectations as they look towards 2020, with an aspiration for world-class supplier sustainability efforts.

To achieve that goal, they are expanding the reach of the Sustainable Procurement Program to include suppliers covering 80% of their total spend. The program maintains a flexible approach, focusing on issues that are relevant and important to both Johnson & Johnson and their individual suppliers.

Working with each supplier on initiatives that can drive the greatest value and impact in that supplier’s industry has led to collaborative problem-solving across the full product lifecycle. Importantly, the elements of the Sustainable Procurement Program are embedded in the supplier management process, from supplier selection through score-carding and awards and recognition. In fact, this year Johnson & Johnson incorporated CDP disclosure scores into its Supplier Sustainability Awards, recognizing two suppliers in the category of CDP Improvement.

Partnerships in the Real World: Great Supply Chain Partners 2024 Case Studies

Photo: iStock.com/Wasan Tita

Our annual 100 Great Supply Chain Partners issue is dedicated to showing what supply chain excellence looks like in the real world — through partnership. Technology is critical, of course, but it requires expert help to use it to make supply chains hum.

The best way to illustrate the importance of excellent supply chain partnership is through real-world case studies, and this August’s issue is chock full of them.

See the Full List of 100 Great Supply Chain Partners 2024 Here.

You’ll read how almond producer Blue Diamond developed a strategy to acquire all of the software it needed to run a digitized global supply chain with end-to-end control, one piece at a time.

You’ll learn how BD Biosciences worked with a technology vendor to reduce delivery lead times at a global scale.

We’ll also tell you optimized storage capacity allowed security hardware firm Levata ’s new warehouse to efficiently manage a wide range of SKUs, maximizing storage utilization, and giving the company room to grow.

Read SupplyChainBrain’s latest 100 Great Supply Chain Partners issue now! 

View the Digital Flip Book here.

Then, we’ll dig into how freight brokerage and transportation management company TI & NTG found a way to streamline multiple legacy systems for interacting with customers and carriers. 

Next, you’ll discover how a golf equipment manufacturer, TaylorMade , took advantage of the fact that leases were expiring on its customization and distribution facilities to find a smart way to rejig its distribution network.

Another great partnership success story comes from kitchen cabinet manufacturer, American Woodmark , which deployed voice technology to help workers assembling cabinets perform better, and new employees get up to speed much faster than before.    

Love Twinkies? Find out how snack giant Hostess  significantly increased the accuracy and speed of data available regarding movement of goods in its warehouse.

Another intriguing case study comes from 3PL Langham Logistics , which deployed drones for inventory counts, meaning employees no longer spend long, tedious hours doing manual inventory with forklifts, and there is now less likelihood of misplacing product.

A well-designed supply chain should function like a precision Swiss watch. And timepiece brand Breitling  saw sales increase by 20% in the U.S. the month after it introduced an omnichannel inventory management technology, with online sales revenue increasing by 15% to 30%.

Keeping workers happy is important. International shipping and mailing company Pitney Bowe s found a huge opportunity to improve operational efficiency, as well as employee retention, with a lively, ongoing feedback loop between workers and management.

Finally, we plunge into the world of swimming pools, with pool liner and cover vendor Tara Manufacturing , which reduced its downtime by 75%, saving the company $100,000 in the first year, after implementing computerized maintenance management system.

Running through these case studies is the need for new tools that automate manual processes and supplant legacy systems that were designed for a simpler and less volatile time. Artificial intelligence, in particular, comes to the fore as a means of overseeing just about every aspect of the supply chain, with its ability to make sense of more data than humans could ever manage. 

But humans remain firmly in the loop, and here again we’re reminded of the value of partnership.

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I cover the global economy.

For decades, major companies have behaved as if geographic distance were almost irrelevant. A factory in China was the same as a factory in Michigan. The internet, container shipping and international trading arrangements had supposedly shrunk the globe.

No longer. The pandemic and geopolitical upheavals have exposed the risks of depending on faraway industry to make critical things like computer chips, protective gear and medicines.

I recently wrote a book on this topic, “How the World Ran Out of Everything.” I’ll use today’s newsletter to help you understand why commerce has changed — and how companies and governments are reacting.

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The emergence of Covid in China ended the previous version of globalization. Quarantines shut Chinese factories at the same time that Western consumers, stuck in lockdown, ordered more manufactured goods like exercise equipment and electronic gadgets.

This combination of reduced supply and surging demand made other countries realize that they had become heavily dependent on a single nation — China — for many items, including medical supplies. Covid eventually faded from the headlines, but policymakers and business executives in the United States and Europe faced pressure to diminish their reliance on China.

A central reason for concern was the rise of geopolitical tensions. China wasn’t merely the world’s factory; it is also an autocracy that, under President Xi Jinping, has become more aggressive in asserting global influence. Xi, for instance, has been vocal about bringing Taiwan under China’s control, using force if necessary. Taiwan is the dominant manufacturer of the most advanced varieties of computer chips.

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