A Strategy for Growth at Johnson & Johnson

An Insight from the 2018 Next Generation Operations Summit

Part of a Series

This Insight is taken from the 2018 Next Generation Operations Summit.

To see the complete report, click here.

In a post-Amazon world, there has been a dramatic shift in customer expectations. Consumers want more personalization, on-demand products and services, and immediate access. How can the supply chain and operations leaders of tomorrow meet these new demands while addressing a growing set of disruptors? At Johnson & Johnson (J&J), customer intimacy is a critical part of the equation. The company engages with people through some of the most challenging experiences of their life – when they have new babies, when they are diagnosed with a disease, or when they get hurt. Now as the company looks toward future growth, J&J’s Supply Chain is playing a critical role in finding new ways to bring even more personalization to its products and solutions.

J&J’s products fit broadly into three buckets - consumer goods, pharmaceuticals, and medical devices. Each of these three areas drive growth for the company by targeting different parts of the healthcare market. Over its more than 100-year history, J&J has helped create many of the markets they serve today. The company has been at the leading edge of healthcare, but in order to stay relevant, the company has to continuously rethink its products and solutions and how it delivers.

“Think about personalizing supply chains in a very, very different way than what we've been doing before, and how it is a must, a requirement, to use the latest technologies, capabilities like track and trace, in order to be able to make good on the promise.”
Meri Stevens
Vice President of Strategy and Deployment, Johnson & Johnson

Putting People First

Meri Stevens, Vice President of Strategy and Deployment for Johnson & Johnson Supply Chain, is an experienced supply chain leader. When she began her career, tracking products through the supply chain involved moving magnets around on a board and holding on to paper delivery receipts. Now, supply chain involves a global technology infrastructure to pilot, test, track, and deliver thousands of customized products and solutions on a tight schedule.

For J&J, segmenting the supply chain for personalization drives growth by getting individuals and healthcare providers the supplies and medication they need with the customization they demand. At an individual consumer level that may mean giving someone prescription contacts by mail that allow them to change their eye color to match their outfits. At a more macro level, it means working in emerging clinical care locations like ambulatory surgery centers to deliver customized surgical replacements of knees and hips for each procedure, on time, and without violating patient privacy.

Stevens describes this as the journey of reliability. Reliability represents not only product performance; it is also tracking and tracing products to ensure they make it to consumers. In order to make the journey of reliability work, Stevens set up a strategic plan. The key components of the plan are:

Each of these components come together to support product delivery while also helping the supply chain team identify new growth areas. For Stevens, each part of the plan also ensures that J&J remains credible and transparent on product delivery internally and externally. That transparency keeps employees and business partners engaged and invested in a quality process.

In putting the strategic plan into action, the Johnson & Johnson Supply Chain is working to build ‘personalized supply chains.’ Personalized supply chains put the customer at the heart of product delivery by tailoring solutions to individuals’ needs and tracking related outcomes. For example, that could entail delivering customized beauty kits for everyday use to a customer’s home, delivering targeted medications in specific doses and developing strategies to track if those medications were taken in line with instructions, or personalizing replacement hips, knees, and other joints ahead of a surgery.

The supply chain team is leading personalization within J&J by focusing on all five principles of the strategic plan and ensuring the production of high-quality products, reliable service, and speed to market. Value is created by putting customers at the center of that process. At a practical level, this change has also prepared J&J for the broader shift within the healthcare industry to a pay for outcomes model that focuses on prevention.

Driving Growth through Innovation

As a company, J&J is no stranger to innovation. The company often invents its own market segments and routinely works on new areas of healthcare to find new cures and new ways to improve services. Within the supply chain, Stevens seeds innovation by looking to other industries for ideas and inspiration. Her team has drawn extensively from the work semiconductor companies do to make microchips quickly while maintaining quality. Microchips require clean rooms, precision processes, and speed to market. Many parts of the healthcare landscape work the same way. Stevens calls it integrated quality - a process that has precision all the way through to delivery.

Stevens and her team are also looking for new ways to digitize as much of the supply chain as possible in order to remove the guesswork from tracking and tracing. One recent innovation includes the creation of a kind of “vending machine” for medical parts. Medical practitioners get parts from the machines on an as needed basis and inventory is tracked and replaced accordingly. The machines help hospitals cut down on inventory storage while also making product supply cycles more predictable for J&J. Innovations like this also make it easier for hospitals and other providers to do business with J&J, which creates value and builds good customer relationships.

Stevens views supply chain innovation in the aggregate. Her team is focused on how to improve the network as a whole and intentionally includes all parts of the distribution network in driving innovation. In practice, this means piloting a potential innovation, refining it, and then rolling it out to the global supply chain.

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Conclusion

At the core of everything the J&J Supply Chain does is a focus on patients and customers. The culture at J&J is defined by a Credo that implores organizational leaders to think first about how people are impacted by the products they use and the services that are delivered. For the supply chain team that means leading a growth agenda focused on creating a personalized supply chain that meets the unique needs of every J&J customer.

Delivering personalization requires a reliance on technology and analysis that supports the supply chain team as it delivers products and services. Borrowing from other industries that have already created high-quality, technology-driven processes allows the team to scale up quickly. Testing new innovations in small pilot projects before rolling them out globally ensures that the supply chain isn't disrupted while it evolves and improves.

“There's a recognition that the speed of change is going to disrupt supply chain more than anything else. As we think about that at Johnson & Johnson, we think about supply chain as how do we really change the trajectory of health?”
Meri Stevens
Vice President of Strategy and Deployment, Johnson & Johnson

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