QUESTION: P repare a company profile for J&J and evaluate its philosophy on supp
ID: 369967 • Letter: Q
Question
QUESTION: Prepare a company profile for J&J and evaluate its philosophy on supply chain management. Info and scenario is below.
Supply Chain Management Scenario
Background
Efficient and effective Supply Chain Management (SCM) is integral to business success. SCM encompasses the end-to-end business processes necessary for a company to produce goods for delivery to the end consumer. Integration between the processes and collaboration among the entities involved in the processes is critical. Although there is no single solution to implementing SCM, most companies have a strategy or approach for managing the various components of SCM.
Perhaps the most important and challenging aspect of SCM is choosing and developing working relationships with suppliers of parts and materials needed to produce a final product. Organizations must carefully choose and manage their suppliers to avoid any number of risks associated with failure to deliver by a supplier. One way to mitigate these risks is for an organization to engage and incentivize supply chain partners through Supplier Relationship Management (SRM) practices. SRM guides the expectations and relationships among the parties and provides benefits for both sides.
Today’s complex, global business environment requires more than just agreements with suppliers. The sources of parts and materials are no longer always procured locally. Supplier sourcing is more likely to be conducted globally, with the potential to impact people, communities, and cultures in ways that must be considered and addressed responsibly, legally, and ethically.
Scenario
Johnson & Johnson (J&J) is a large, multi-national company with more than 125,000 employees worldwide. In its Credo, J&J professes responsible and ethical treatment of all its stakeholders. To that end, J&J commits to the following: forming strong relationships with suppliers; including suppliers as stakeholders in innovation; supporting diversity among suppliers; and providing suppliers the opportunity to make a fair profit. In exchange, suppliers must comply with J&J’s Code of Conduct and Responsibility Standards for Suppliers.
You serve as Chief Procurement Manager for the Medical Devices Products at J&J, a position that pays $189,000 annually. You have been with the company for 11 years, and your team works closely with several functions in the organization, including Finance, Marketing, IT, and R&D. One key aspect of your job is to identify reputable supply chain partners that can move product to healthcare providers around the world. In your leadership role, you find it important to follow the J&J Credo, especially the part stating the following: “Customers’ orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit.”
Allied Distributors, Inc. (AD) has approached your office about becoming a worldwide distributor for medical devices. These products are delivered to healthcare professionals in fields like orthopedics, neurology, cardiology, minimally invasive surgery, wound management, and women’s health. The timing of this proposal is right because the J&J leadership team has implemented a strategic plan to improve patient outcomes and expand market share by introducing innovative products. Your job is to engage the procurement process to introduce a new supplier for medical devices.
Introducing a new supplier into the supply chain at J&J requires a good understanding of its supply chain practices and approach to SRM. The resources below provide more detail information in these areas.
J&J Homepage
https://www.jnj.com/
J&J Product Information – Medical Devices
https://www.jnj.com/healthcare-products/medical-devices
J&J Credo
https://www.jnj.com/about-jnj/jnj-credo
J&J Code of Conduct
https://jnj.brightspotcdn.com/33/7c/6d77ff4b4adb8644d10f298d819e/code-of-conduct.pdf
J&J Responsibility Standards for Suppliers
https://www.jnj.com/about-jnj/company-statements/responsibility-standards-for-suppliers
J&J 2015 Citizenship & Sustainability Report
https://jnj.brightspotcdn.com/25/f7/b3172c104796b553e9ea35bac1d0/2015-jnj-citizenship-sustainability-report.pdf
Explanation / Answer
Johnson & Johnson (J&J) is a US-based multinational company (with headquarters in New Brunswick, New Jersey) operating in three areas, viz., Consumer Healthcare, Pharmaceuticals and Medical Devices. Its products are sold in more than 250 countries. It was founded in 1886 by three brothers Robert Wood Johnson I, James Wood Johnson and Edward Mead Johnson. It first started with manufacture of ready-to-use surgical dressings and then diversified into other products over the years. Some of the popular products of the company include bandages, Tylenol medicine, baby products and others.
The Medical Devices division has a wide variety of products in areas such as aesthetics, bariatric surgery, orthopedics, cardiovascular diseases and others. It had global sales of $ 25.1 billion in 2015.
J&J is very much concerned about its relationship with suppliers and distributors as the company wants them to have a ‘fair profit’ as reflected in its renowned Credo. It has even come out with a 16-page document titled “Responsibility Standards for Suppliers - 2017”, which is available as a ‘.pdf file’ in its website.
The company has more than 80,000 suppliers worldwide with a yearly spending in excess of $ 30 billion in procurement. J&J has also a ‘Sustainability Toolkit’ to help suppliers in adopting sustainable practices in supply chain management. The company has a ‘Procurement Sustainability Initiative (PSI)’ to manage risks of procurement on a global basis. It carries out detailed assessments and audits for supplier selection. It also engages in environment protection activities along with its suppliers.
J&J emphasizes a lot on supplier ethics and integrity. It expects its suppliers to ensure employee health and safety while treating the employees with respect and dignity. It also wants the suppliers adhere to all laws and regulations of a particular country and show deep responsibility toward the environment and embrace sustainable practices. Further, it wants the suppliers to follow transparent business practices and disclose all necessary information to their stakeholders.
The company moreover believes in having a diverse supplier base worldwide so as to achieve innovation in supply chain management. It respects small suppliers too and understands that they also have an important role to play.
J&J lastly wants the suppliers to do business systematically and go for continuous improvement.
All the above are the supply chain management practices of Johnson & Johnson which help it to achieve efficiency in its supply chain.