Johnson & Johnson
Issue Issue 1 2008
Johnson & Johnson’s healthy operation
Johnson & Johnson (J&J) is the world’s largest and most broadly based health care organisation.
The business is comprised of franchises and operating companies all over the world. The three main business segments within J&J are Consumer, Medicines as well as Nutritionals and Comprehensive Care & Surgical Care, formerly known as Medical Devices & Diagnostics (MD&D).
J&J employs more than 120,500 employees and sells products in more than 175 countries. Its product ranges include baby care, first aid, hospital products, medical devices, prescription pharmaceuticals, diagnostics, products relating to family planning, and dermatology.
The Comprehensive Care & Surgical Care business segment offers an extensive range of sutures and wound management products, infection prevention products, surgical equipment, interventional and diagnostic cardiology products, endovascular products, contact lenses, orthopaedic and spinal products, diabetes care, sterilisation products, diagnostic equipment and supplies, and joint replacements. Its aim is to provide scientifically sound, high quality products and services to help heal, cure disease and improve patients’ quality of life.
Within the organisation, the Comprehensive Care & Surgical Care segment accounted for 38 per cent of net trade sales in 2006, while the pharmaceutical and consumer sectors make up 44 and 18 per cent respectively. Supply chain manager for MD&D, Laurence Coudroy explains further: “Our main priority is ensuring that our customers receive high quality products and services from us continuously. We remain committed to growing our reach throughout EMEA on behalf of the many patients who benefit from our medical technology.”
J&J develops, markets and sells more medical devices than any other company in the world. Seven companies or franchises operate within the division; Cordis, LifeScan, Ethicon, Ethicon Endo Surgery, DePuy, Vision Care, and Ortho-Clinical Diagnostics. The segment includes a broad range of products used predominantly in the professional field by physicians, nurses, therapists, hospitals, diagnostic laboratories and clinics. Sterile surgical dressings and sterile structures are among the company’s first products, marking the first practical application of the theory of antiseptic wound treatment.
At the heart of J&J’s operation is its Credo, written in 1943 by Robert Wood Johnson, who served as the company’s chairman during that period of time. The Credo outlines the company’s responsibilities to customers, employees, the community and shareholders. “One of J&J’s key strengths is our Credo and sense of customer service,” asserts Laurence. “We always place our customers and the patients first in everything we do as a business.”
J&J recently made a significant development in Europe with a 33 million euro investment in the construction of a European Distribution Centre, which acts as a European supply hub. “Our new European Distribution Centre opened in 2006 with the aim to enhance our overall distribution system for our device and diagnostics business,” states Laurence. “The first aim of this project was to improve customer service because in our business that is paramount. It is through simplification that we can better manage our supply chain and although it’s tough to implement change, afterwards the business is much easier to manage. J&J is a broadly based health care company that has mostly grown through acquisitions and we’ve been keen to keep the brands of the companies we acquire. Since the business segment is comprised of several different franchises, each with their own speciality, there has been some complexity and we’ve been keen to retain the independence of all these companies. Each has its own management, structure and distribution network, which tended to complicate matters, so our European Distribution Centre project has helped to harmonise the companies within the segment.”
This new development has seen the division undergo a major transformation across several dimensions of the supply chain and include the creation of a common platform. Laurence says the project has been a massive undertaking as streamlining its warehouses, whilst maintaining good relationships, has proved challenging: “My role has been demanding as I’m in charge of the supply chain, all the inbound and outbound processes, the relationships with franchises and further affiliates,” says Laurence. “Operating our supply chain covers the management of all of the processes including the franchises, this new centre, redistribution to the end customer and the relationship with the local countries. Relationships are key and the most challenging aspect of this project was deciding how best to work with seven companies across 26 countries and harmonise as much as possible. That’s the crux of the project – to achieve sychronisation throughout all of the processes and the distribution network within that complex environment.”
The Centre has been so successful that its construction led to the division winning in the healthcare category for Best Supply Chain Operator at the European Supply Chain Excellence Awards. “We won an award for our European Distribution Centre’s optimisation project and the fact that we’re now the main European hub,” reveals Laurence. “We managed to smoothly handle diversity within that project and it was important for us to win the award for the team who worked very hard for the past two years, focusing on the details and solving issues continuously. Having an external body recognise that hard work and what we achieved has been very positive in building the team spirit.”
Besides winning recognition for its ongoing efforts and impressive achievements, maintaining efficiency is particularly important to Comprehensive Care & Surgical Care considering the importance of the sector in which it operates. “The healthcare sector is highly customer-focused as we never forget that there are patients on the table,” comments Laurence. “The culture of ontime delivery is from a customer point of view rather than a cost point of view. We’re very focused on the regulatory aspect as well because everything in the healthcare sector is very critical and regulated. Packing and tracing, for example, is a critical part of the job. As our business progresses, it will concentrate on continuing to maintain its complex supply chain as well as its franchises, whilst retaining a firm identity as a leading company.
“Further developments revolve around increasing volumes and concentrating on our orthopaedics franchise,” concludes Laurence. “In 2008, we will bring much more of our orthopaedics business into our warehouses with a reverse logistics process whereby we send out a full kit for the surgeons to choose the pieces they want, then they send it back so we can identify what pieces were used before replenishing it. As I have already discussed, the key challenge in moving forward is harmonising our entire operation so we don’t act as individual companies – we want to act as a whole.”
Johnson & Johnson
Industry: Medical equipment