The past few decades has witnessed a complete revolution on the way business is conducted and the approach through which organizations relate to one another. This has been facilitated by globalization, advancements in information technology, outsourcing, and a networked economy. Organizations are increasingly finding it necessary to rely on other organizations to effectively compete for scarce resources and ever-dwindling clients.We will write a custom essay specifically for you for only $16.05 $11/page 308 certified writers online Learn More
Smart companies are now relying heavily on effective supply chains to compete successfully in the global economy. They have realized that they must move away from their traditional business boundaries and cocoons and collaborate with other businesses to maximize on their profits. One of the areas they collaborate is on the supply networks, whereby each dedicated business associate focuses on only a few vital planned activities. This supply networks between organizations can be viewed as a new form of organization exhibiting complex connections between the players. This has given rise to the concept of supply chain management (Supply Chain Management 2008).
By definition, supply chain management is the integrated procedure involved in scheduling, controlling, and implementing the operations of the supply chain as proficiently as possible between organizations. It is a process that integrates major activities, from how the raw materials are sourced and stored, the work-in-process inventory, to how the finished products are distributed from the company to the consumers. It must also include collaboration and coordination with supply network partners, in most cases the suppliers of raw materials, third-party service providers, customers, and intermediaries (Supply Chain Management 2008).
Many modern companies are actively managing their supply chain activities in an attempt to achieve a sustainable competitive edge as well as maximize the value of their customers. Managers have realized that efficient and effective supply chains are vital tools for success (Supply Chain Management 2007). One such company is Johnson & Johnson, incorporated in the US, and has branches, networks, and subsidiaries all over the world. Below I attempt to describe the company, its products, and the supply chain in which it operates.
Johnson & Johnson Company
Johnson & Johnson, incorporated in the US, is a company that deals with a wide range of products, especially baby products. It has continued to grow steadily and to sustain itself in the ever competitive economy due to sound management policies. The company has enjoyed over a hundred years of continued growth and service to its most loyal customers. The company deals primarily with health and well-being products. Their wide range of products is used by at least a billion people worldwide everyday (Our management Approach 2008).
Johnson & Johnson credits their endurance and strength to their consistent business approach process and to the character of their customers. They have a guiding philosophy that put the needs and well-being of customers first. The management also takes responsibility towards their employees, the community, and the world in general (Our Management Approach 2008). The company has a wide range of baby products ranging from powders to medicated soaps.
Their baby powders helps to keep the skin soft, dry, and comfortable, while reducing friction that can be uncomfortable to the baby. Here, the company has developed Johnson’s baby powder, Johnson’s baby powder comforting Vanilla & Jasmine, and Johnson’s baby powder calming Lavender & Chamomile. To help treat baby skin irritation and diaper rash, the company has developed Johnson baby powder medicated with aloe & Vitamin E. For extra moisture absorption, the company has come up with Johnson baby powder pure Cornstarch with Aloe Vera & Vitamin E (Johnson’s – Baby Powders 2008).Get your 100% original paper on any topic done in as little as 3 hours Learn More
Johnson & Johnson has been at the forefront in developing children skin care products. They have the Johnson’s baby lotion which helps to keep the skin smooth and soft. Johnson’s soothing naturals nourishing lotion gives moisture to the skin for 24 hours and give relief to dry skin. Johnson’s bedtime lotion and Johnson’s bedtime bath are products designed to calm the baby before going to sleep (Johnson’s – Baby Skin care 2008). The company also designs specialty baby products such as Johnson’s baby cologne.
Meeting the needs of around one billion consumers every day is no easy task. That is why Johnson & Johnson have invested heavily in supply chain management. Johnson & Johnson has over 250 operating companies worldwide. The company management approach is decentralized, but has strong links in supply chain management to save on costs and be able to serve the huge number of consumers of its products efficiently (Our Management Approach 2008).
The company partners with many other individuals and companies to make its work easier and also make sure that they concentrate on the key areas of its business, leaving the rest to its partners. It collaborates with raw materials providers, research scientists, pharmaceutical companies, and business professionals attracted in searching inventive commercialization solutions for its products. It collaborates with independent scientists and pharmaceutical companies mainly in the product development phase (Partners – Johnson & Johnson 2008).
The company has put a lot of emphasis in building strong operational partnerships, especially with its supply chain networks to ensure that its core objectives of advancing the excellence of healthcare around the world, being profitable, respecting the environment, and supporting the local communities are attained. Johnson & Johnson also works with accredited transport companies and courier companies to ensure that its products are distributed efficiently across the globe (Partners, Johnson & Johnson 2008).
Johnson & Johnson has established an efficient, collaborative, and strong relationship with its suppliers. It sorely relies on the suppliers for the provision of raw materials, goods, and services needed to develop products. The company has continued to identify small and diverse suppliers who continue to add value and assist it to achieve its long-term expansion objectives (Suppliers – Johnson & Johnson 2008).
Importance of Supply chain management to Johnson & Johnson
First, embracing supply chain management has helped Johnson & Johnson to reduce its costs of doing business through narrowing in on certainty and speed of response to the market while maximizing on added value. The tool has helped it compete efficiently on the local arena as well as on the global scene. Johnson & Johnson continue to rely on business professionals abroad to market its baby products at very competitive prices (Sovereign 2008).
The business environment experienced today is more competitive than ever. Companies, including Johnson & Johnson must function at a lower cost to be competitive. Companies must also build their basic strong points to differentiate themselves from their competitors. This is what Johnson & Johnson has done. Supply chain management has enabled it to divert its resources and focus on developing baby products – a field it has performed optimally, while it continue to outsource tasks and processes that are less important to the objectives of the company. This has enabled Johnson & Johnson to survive while other companies are falling on the way (sovereign 2008).We will write a custom essays specifically for you! Get your first paper with 15% OFF Learn More
Supply chain management has also enabled Johnson & Johnson to choose the right partners, manpower, and resources. The company now boasts of very strong and stable selling agents from the US to China. This has enabled it to stay ahead of the pack. The company has also been able to specialize in core areas and create a strong market niche for its products, thanks to the efficient supply chain management. No company holds a larger market share in baby products than Johnson & Johnson (Sovereign 2008).
Supply chain management has also helped Johnson & Johnson to add value to its products. Value addition has given its products a competitive advantage over other generalized products. This has also enabled more innovations to be added on the company’s products to meet specific needs of different children. The company has developed a wide range of skin products to meet individual interests (Sovereign 2008).
Through operational flexibility, supply chain management has also enabled Johnson & Johnson to attain faster growth rate. Through contract manufacturing and outsourcing, Johnson & Johnson has been able to maintain its over one billion customers who use its products every day (Strategic Importance 2008).Overall, supply chain management has enabled Johnson & Johnson to comprehensively manage the transition of raw materials to finished goods. The procedure has made it possible for the company to offer high quality products to its customers (Supply Chain Management functions 2008).
Features that reflect common practice in Supply Chain Management
There are many features of the company operations that reflect common practice in supply chain management. According to Supply Chain Management (2008), some of the salient features exhibited by Johnson & Johnson include:
Development of a comprehensive strategic network optimization. Johnson & Johnson is tied to some 245 companies around the world and numerous distribution centres and facilities.
It has developed strategic partnerships with its distributors, suppliers, and customers. It has effective communication conduits that are used to pass vital information and improve on its operations.
It uses product design coordination to make sure that latest and existing products are always incorporated optimally into the supply string.
Johnson & Johnson has invested heavily in information and communication technology to maintain supply chain operations.
The company is involved in sourcing contracts, scheduling, and planning processes that make sure that it deals only in its key competencies of developing beauty and health products while leaving the rest to its partners and suppliers.
It has developed an efficient transport strategy which has taken care of the frequency of transporting its products, contracting, and the routes.
It plans on its daily production and distribution of its products, as well as taking care of all nodes in the supply string.
Interactions with supply chain partners to improve customer outcomes
Johnson & Johnson has a healthy symbiotic relationship with its suppliers, who supply it with raw materials, goods, and services. It carries its suppliers importantly for without them, the company cannot progress forward. Knowledge and expertise is applied to these raw materials brought by suppliers to create the value added products that Johnson & Johnson boasts of. These products are later sold to customers, after undergoing a lot of processes ((Partners, Johnson & Johnson 2008).
As already mentioned elsewhere, Johnson & Johnson has developed an efficient, strong, and mutual relationship with its suppliers. The company relies on them to provide raw materials, goods and services that are needed to develop products and service its customers at home and abroad. The company has continued to maintain a strong supply chain because they realize that the suppliers are the backbone of the company (Suppliers – Johnson & Johnson 2008). They are as important as the customers. Below I attempt to illustrate how the interaction works.
Successes and failures of Supply Chain Management
Though Johnson & Johnson experienced some difficulties in implementing supply chain management in its operations, the successes of the tool far outweigh the failures. First, the company has been able to reduce on costs by making sure that it involves itself only on its key competencies. The tool has enabled Johnson & Johnson to come up with innovative products that continue to change the lives of consumers worldwide. Supply chain management has also helped Johnson & Johnson to remain competitive and remain ahead of its competitors through the production of value added products (Bhattacharya et al. 1996, pp.39-48).
There were some teething problems that were experienced in configuring the distribution networks. The management was unsure of the number and locations of companies they wanted to network with. This has since been dealt with. Distribution strategy also presented some problems, with issues raised about whether to follow centralized, decentralized or shared operating control system. The company settled for the decentralized management system and it has worked wonders.Need a 100% original paper written from scratch by professional specifically for you?308 certified writers onlineLearn More
Sharing of crucial company information with other companies also proved to be a draw back. Supply chain demand that valuable information must be shared in the course of collaboration. Some companies used the information to hold the Johnson & Johnson hostage. This has since been resolved and unfaithful companies have been shown the door. The company also experienced cash-flow troubles as it attempted to arrange the payment methods and conditions across different entities within the supply string (Supply Chain Management 2008).
All in all, it has helped Johnson & Johnson to revolutionalize its market share and offer products that continue to attract millions of consumers worldwide.
Bhattacharya, KA, Julian, LC, Gordon, B & Paul JK 1995, “The Structure Conundrum in Supply Chain Management”, The International Journal of logistics Management, vol 7, no. 1, pp. 39-48. Web.
Johnson’s – Baby Powders 2008, Johnson’s.Web.
Johnson’s – Baby Skin Care: A skin Care Routine as Easy as A, B, C 2008, Johnson’s.Web.
Our Management Approach 2008, Johnson & Johnson.Web.
Partners- Johnson & Johnson 2008, Johnson’s.Web.
Suppliers – Johnson & Johnson 2008, Johnson’s.Web.
Supply Chain Management 2007, Supply Chain Resource Cooperative.Web.
Supply Chain Management Functions 2008, Exforsys Inc. Web.
Strategic Importance of Supply Chain Increased 2008, Metso.Web.
Sovereign, R 2008, Importance of Supply Chain Management in Modern Business, Ezinearticles. Web.
Supply chain management is the practice of coordinating the various activities necessary to produce and deliver goods and services to a business's customers. Examples of supply chain activities can include designing, farming, manufacturing, packaging, or transporting.What is supply chain management explain your answer? ›
At the most fundamental level, supply chain management (SCM) is management of the flow of goods, data, and finances related to a product or service, from the procurement of raw materials to the delivery of the product at its final destination.Why supply chain management is more important give answers with the help of examples? ›
Reduce Operating Costs
Decreases Purchasing Cost – Retailers depend on supply chains to quickly deliver expensive products to avoid holding costly inventories in stores any longer than necessary. For example, electronics stores require fast delivery of 60” flat-panel plasma HDTV's to avoid high inventory costs.
The Top-level of this model has five different processes which are also known as components of Supply Chain Management – Plan, Source, Make, Deliver and Return.How do supply chain management work provide a clear example? ›
By using data like their reorder frequency, amount of stocked ordered, and number of orders received, they can prevent the loss of potential sales. Supply chain management also makes sure that customers are provided with the right number of products at the right locations during the right time.What are examples of supply chain strategies? ›
- Cut inventory costs. Be it a brick and mortar store or an online business, inventory is always present and it costs money. ...
- Integrate business processes with technology. ...
- Use an inventory management software. ...
- Manage inventory risk. ...
- Take green initiatives.
The basic objective of supply chain management is to ensure minimum cost and maximum efficiency in every aspect of handling of raw material, component parts and finished goods as they move from production centre to the final consumer.What are the most important activities of supply chain management? ›
Supply management is made up of five areas: supply planning, production planning, inventory planning, capacity planning, and distribution planning. Supply planning determines how best to fulfill the requirements created from the demand plan.What is the importance of supply chain management? ›
Why is supply chain management important? A well-managed supply chain can significantly reduce a company's operating expenses, driving profits. This efficiency can be reflected in every aspect of the chain, from idea creation to the final product marketing.What is supply chain in simple words? ›
A supply chain is the network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product. A supply chain encompasses everything from the delivery of source materials from the supplier to the manufacturer through to its eventual delivery to the end user.
- Better collaboration with suppliers.
- Better quality control.
- Shipping optimisation.
- Reduced inventory and overhead costs.
- Improved risk mitigation.
- Stronger cash flow.
- A more agile business.
- Better visibility and data analytics.
Efficient SCM gives you better negotiating power to get the best rates and products in the shortest time possible. In turn, this reduces inventory costs and improves the overall planning and efficiency of your operations.What are the 7 R's of supply chain management? ›
In this step, we look at the 7 Rs of logistics. So, what are the 7 Rs? The Chartered Institute of Logistics & Transport UK (2019) defines them as: Getting the Right product, in the Right quantity, in the Right condition, at the Right place, at the Right time, to the Right customer, at the Right price.What are the four 4 stages of supply chains? ›
- INTEGRATION. Integration starts at your strategic planning phase and is critical throughout your communications and information sharing and data analysis and storage. ...
- OPERATIONS. ...
- PURCHASING. ...
Integration, operations, purchasing and distribution are the four elements of the supply chain that work together to establish a path to competition that is both cost-effective and competitive.What is supply chain management and how is it important in today's time? ›
Supply chain management deals with how businesses turn raw materials into finished products, and then transport and distribute those products to consumers. Supply chains are systems that link organizations to their suppliers, allowing them to produce and distribute goods and products.What is an example of a simple supply chain? ›
Examples of supply chain activities include farming, refining, design, manufacturing, packaging, and transportation.What is effective supply chain strategy? ›
A successful supply chain strategy should outline how your organisation manages the entire journey of your product, from pre-production to the moment it lands in your customer's hands. It should also highlight activities such as production, supplier management, inventory management and transportation.What is a good supply chain? ›
The characteristics of a good supply chain are visibility, optimization, having the lowest cost possible, timeliness, and consistency.What are the three things all successful supply chain management needs? ›
Generally the key aspects of Supply Chain management are Purchasing (sourcing), Planning (scheduling) and Logistics (delivery). Sometimes logistics is separate, and procurement may be included with Purchasing, depending upon how location specific the procurement activities are.
Production is one among the most important aspects of this system. It is only possible when all the other components of the supply chain are in tandem with each other. For the process of production to start it is essential that proper planning and supply of goods, as well as the inventory, are well maintained.How do you prepare for a supply chain interview? ›
Research the Company
- What services or products does our company offer?
- Why do our customers choose our company?
- How many locations does our company have?
- What is the mission of our company?
Being upfront about what the challenges are and what you are doing about them can answer a lot of questions before they are asked. Let customers know if there is a delay or shortage with the product they want and when they can expect it before their order is placed, for instance.What are the basic concepts of supply chain management? ›
Supply chain management acknowledges all of traditional logistics and also includes activities such as marketing, new product development, finance, and customer service. In the wider view of supply chain thinking, these additional activities are now seen as part of the work needed to fulfill customer requests.How supply chain management helps to your business growth? ›
An optimised supply chain allows a business to implement end-to-end quality management, from procurement of raw materials to customer delivery. This level of control enables a business to reduce waste and manage KPIs for better business outcomes.What are six key supply chains? ›
These drivers are; Facilities, Inventory, Transportation, Information, Sourcing and pricing.What are the 5 P's of logistics? ›
The major cause of conflict for logistics and marketing interface is related to 5Ps (product, price, place, promotion and packaging) of marketing.What are the six 6 functional elements of supply chain management? ›
- Flexibility. ...
- Data. ...
- Focus On Your End Customer. ...
- Full Integration. ...
- Innovation. ...
- Performance Measurement.
While supply chain is a very broad career field, it has 7 primary functional areas: Purchasing, Manufacturing, Inventory Management, Demand Planning, Warehousing, Transportation, and Customer Service.What is supply chain life cycle? ›
Four major steps of manufacturing are: Protect raw materials, components, and finished goods during storage, handling, and transportation by using appropriate packaging. Assemble raw materials and components into a final product. Test and improve the final product. Remove disposable components and waste.
The 3 Levels of Supply Chain Management: Strategic, tactical and operational. The three levels of supply chain management are strategic, tactical and operational.What is the most important element in a supply chain? ›
“Integration is at the heart of the supply chain and is considered as the brains and heart of the supply chain process.” says Rachael. “As with any project, planning is essential to long-term success. Integration is the process of technology which closely coordinates with supply chain functions and elements.Why is it called supply chain? ›
The physical analogy of a long, interconnected set of supplier operations that eventually lead to the shipping of a finished product was first popularized by Keith Oliver at Booz Allen Hamilton.› digital-supply-chain › wh... ›
What is supply chain? A definitive guide. | Supply Chain Magazine
What is a Supply Chain? - Definition, Models and Best Practices ...
Supply Chain | 9 Important Ways to Improve Supply Chain ...
Amazon has an incredible supply chain which ships over 10 million different products, as well as operating a Marketplace system too. Their supply chain methods utilise the lowest levels of inventory possible yet with delivering with incredible speed.What are some examples of supply? ›
The noun means an amount or stock of something that is available for use. That stock has been supplied. A mother, for example, may take a large supply of diapers (UK: nappies) with her when she goes on vacation with her baby. This means a large amount that is available for use.What is supply chain network example? ›
Supply Chain Network Example: For Apple Juice Organisation
A supply chain network shows the links between organisations and how information and materials flow between these links. The more detailed the supply chain network the more complex and web like the network becomes.
A supply chain transforms raw materials and components into a finished product that's delivered to a customer. It is made up of a complex network of organizations and activities, such as raw materials suppliers, manufacturers, distributors, retailers and the customer.How does J&J supply chain work? ›
Johnson & Johnson is tied to some 245 companies around the world and numerous distribution centres and facilities. It has developed strategic partnerships with its distributors, suppliers, and customers. It has effective communication conduits that are used to pass vital information and improve on its operations.What is supply chain management in one sentence? ›
Supply chain management is the handling of the entire production flow of a good or service — starting from the raw components all the way to delivering the final product to the consumer.
Noun adequate supplies of fresh water He bought a month's supply of cigarettes. They took a month's worth of supplies on the camping trip. The town is in need of basic medical supplies. a store that sells art supplies The state is trying to disrupt the supply of illegal drugs.What are the 4 types of supply? ›
There are five types of supply—market supply, short-term supply, long-term supply, joint supply, and composite supply.Why supply is important in your daily life? ›
Supply and Demand Determine the Price of Goods and Quantities Produced and Consumed. Consumers may exhaust the available supply of a good by purchasing a given good or service at a high volume. This leads to an increase in demand. As demand increases, the available supply also decreases.What are the 3 basic supply chain? ›
There are three main flows of supply chain management: the product flow, the information flow, and the finances flow. The Product Flow – The product flow involves the movement of goods from a supplier to a customer. This supply chain management flow also concerns customer returns and service needs.What are the key benefits of supply chain management? ›
- Better collaboration with suppliers.
- Better quality control.
- Shipping optimisation.
- Reduced inventory and overhead costs.
- Improved risk mitigation.
- Stronger cash flow.
- A more agile business.
- Better visibility and data analytics.
While supply chain is a very broad career field, it has 7 primary functional areas: Purchasing, Manufacturing, Inventory Management, Demand Planning, Warehousing, Transportation, and Customer Service.What is the main function of supply chain? ›
The functions of a supply chain include product development, marketing, operations, distribution, finance, and customer service. Today, many supply chains are global in scale. Effective supply chain management results in lower costs and a faster production cycle.What is another name for supply chain? ›
Are Supply Chain Management, Supply Network Management, Supply Management, Purchasing, Procurement, Logistics, Operations, Sourcing, Contract Manufacturing, Physical Distribution, etc.Why is it called supply chain? ›
The physical analogy of a long, interconnected set of supplier operations that eventually lead to the shipping of a finished product was first popularized by Keith Oliver at Booz Allen Hamilton.