As with many pharmaceutical products manufacturers, the extent of supply chain and quality performance has a direct effect on distribution, profitability and services performance as well (Stevenson, 2012).
Beginning with supply chain management, J&J has an intensively level of supplier audits they expect each supplier to pass and also randomly be able to manage as they provide materials, components and subassemblies to the company (Wechsler, 2011). Supplier audits form the interlinking process to Quality Management, another strategic operations management initiative in the comp[any as well. J&J also uses these supplier audits to ensure alignment to the Collaborative, Planning, Forecasting & Replenishment (CPFR) processes which are critical to their success in anticipating global demand for products by business unit (Weill, Ross, 2005). Supply chain management is the unifying operations management strategy that keeping the entire value chain and quality levels of J&J aligned to corporate objectives and standards (Weill, Ross, 2005) (J&J Investor Relations, 2012).
A second major area of focus for J&J is their focus on enterprise compliance and quality management (ECQM) or as it is often called in operations management studies and texts. Quality Management (Stevenson, 2012). For J&J the Quality Management systems form the foundation of their production processes as each step in the development, mixing and production of many of their products must meet Federal Drug Administration (FDA) requirements (Wechsler, 2011). Quality Management is also managed as a strategic initiative within the company with auditors reporting directly to the Office of the CEO (J&J Investor Relations, 2012) What also is critical for Quality Management for a process perspective is the need for reporting back to other business units and at times to foreign governments what the yields are on new pharmaceutical products (Weill, Ross, 2005). J&J has over decades become a company that has worked very hard to quantify the performance of their quality management process and provide lot traceability...
Figure 2 provides an overview of the Quality Management process of traceability analysis, showing how tightly coupled supply chain management and quality management are within the company.
Figure 2: Quality Management Swim Lane Analysis of J&J
Sources: (Connolly, 2007) (Hook, 2010) (SAP Practice on Life Sciences Supply Chains) (J&J Investor Relations, 2012)
Conclusion
J&J has a strong focus on operations management strategies, techniques and frameworks as the company is heavily reliant on them to continually meet federal and international compliance requirements for their products (Wechsler, 2011). The focus on supply chain integration to quality management is critical for any business' supply chain to execute the many processes and transactions necessary to grow a business (Stevenson, 2012). For J&J the highly regulated nature of the product quality levels for their products make the integration of these two areas essential for their continued profitability and growth.
Appendix
Christine Connolly. (2007). Sensor trends in processing and packaging of foods and pharmaceuticals. Sensor Review, 27(2), 103.
Hook, B. (2010, March). Traceability and Scalability: A New Era in Healthcare Logistics Supply Chain Europe, 19(2), 18-19.
Johnson & Johnson Investor Relations (2012). Investor Relations. Retrieved January 14, 2012 from J&J Investor Relations and Filings with the SEC Web site:
http://www.investor.jnj.com/sales-earnings.cfm
O'Rourke, M. (2010). Tylenols headache. Risk Management, 57(5), 8-9.
Stevenson, W.J. (2012). Operations management. (11th ed.) New York, NY: Irwin McGraw-Hill.
Wechsler, J. (2011). Changes at FDA and challenges on capitol hill. Applied Clinical Trials, 20(2), 20-23.
Weill, P., & Ross, J. (2005). A matrixed approach to designing IT governance. MIT Sloan Management Review, 46(2), 26-26.
