Johnson & Johnson
Focused on the manufacturing of medical devices, pharmaceuticals and consumer packaged goods, Johnson & Johnson (J&J) was founded in 1886. Headquartered in New Brunswick, N.J., the company has approximately 250 subsidiaries, operates in nearly 60 countries and sells product in more than 175 countries.
With its wide footprint and diverse product portfolio, supply chain efficiency is one of the company’s chief concerns for many reasons. The company has sought many methods of reducing its environmental impact and working with responsible external manufacturers and suppliers.
Green Dream
J&J has looked for opportunities to improve its supply chain in ways that are both financially responsible and sustainable. In 2008, the company developed its Procurement Sustainability Initiative to link procurement activities with sustainability undertakings.
J&J participates in the Carbon Disclosure Project’s (CDP) Supply Chain Program, which helps the company work with suppliers to measure energy use and greenhouse gas emissions while also developing reduction plans. As part of its work with CDP, J&J has disclosed its energy use and emissions to the project since 2008. It also encourages supply chain partners to participate in the program. In fact, suppliers representing a total of about $2 billion of J&J’s spend have participated. At the end of 2010, more than 85 percent of the suppliers it has encouraged to take part have chosen to participate in the program.
J&J is also a member of the Pharmaceutical Supply Chain Initiative, which works to develop consistent expectations and supply chain improvements. Many major pharmaceutical companies participate in the initiative, which is helping to develop a shared vision of better social, economic and environmental outcomes for suppliers and manufacturers in the pharmaceutical supply chain.
One specific supply chain concern that J&J is focused on is the responsible sourcing of palm oil, which is the most extensively used vegetable oil in the world and a frequent component of personal care products. Palm oil output stands at around 50 million tons per year. J&J uses around 75, 000 tons each year.
The company joined the Roundtable on Sustainable Palm Oil in 2006. In 2010, it announced its Healthy Future 2015 goals, which included the sourcing of 100 percent of its palm oil-related products from certified sustainable sources by the end of 2015. As it pursues that goal, the company is purchasing Greenpalm certificates to demonstrate its focus on sustainable palm oil production.
J&J also works with several partners as part of its palm oil efforts. The company supports a project with the World Wildlife Fund that is mapping the supply chain of palm oil in Riau, Sumatra, Indonesia. In addition, it is working with the World Resource Institute to divert palm oil production to already-degraded lands as part of an effort to minimize deforestation, greenhouse gas emissions, biodiversity loss and social conflict for indigenous peoples. Another partnership is with Solidaridad, and it is focused on production of certified sustainable palm oil from Sarawak, Malaysia, and Ghana, West Africa.
Suppliers Matter
In 2012, the company updated its responsibility standards for suppliers. It also is committed to having a diverse supplier base and working with small businesses.
Around its sourcing standards, the company expects its suppliers to operate in a manner that is consistent with its internal standards. The responsibility standards for suppliers cover everything from compliance with applicable legal requirements and behaving ethically and with integrity, to implementing management systems to maintain business continuity, performance and continuous improvement and disclosing information associated with the supplier’s impact on the environment and social issues.
In fact, the company established standards for responsible external manufacturing in 2006 and has verified that 98 percent of its external manufacturers conform to its standards. When violations occur, the company works with suppliers to improve performance. However, if the situation is unresolvable, J&J may end its association with the supplier in question.
As for supplier diversity, the company established its Johnson & Johnson Supplier Diversity Program in 1998. Ever since, the company has spent more than $1 billion with small businesses and diverse-owned suppliers. In 2010, it sourced goods and services from more than 2,400 Minority- and Women-Owned Business Enterprise suppliers.
J&J also works with supply chain partners in an effort to source and use raw materials in sustainable ways, and to ensure that manufacturing and production are done in a socially and environmentally responsible manner. The company’s procurement sustainability initiative helps J&J find supplier partners who do everything from protect and promote worker health and safety to provide materials and services with a reduced or positive environmental impact.
Going Lean
Another focus for J&J has been to become leaner. The company saw good results with lean manufacturing, so it worked to bring lean principles to supply chain operations.
The company took a look at ways to eliminate supply chain waste in everything from transportation, inventory, motion and talent to waiting, over-production, over-processing and defects. J&J has taken steps to bring lean to the supply chain by defining and analyzing opportunities, and by measuring, improving and controlling performance.
By becoming leaner in the supply chain side of its business, J&J expects to positively contribute to continued growth and see gains in productivity. It will be able to bring new products to market while not adding to infrastructure.
Overall, J&J is focused on ways of making its entire supply chain operation move in a more reliable and speedy fashion. And it is doing this at the same time that it takes sustainability into account. By being proactive in its approach to the supply chain and sticking to the principles of corporate social responsibility, J&J will continue to push its business forward.