2. Table of content
– Johnson & Johnson
– How to get boardroom attention ?
– EMEA distribution strategy
– Conclusion
2
3. Founded 1886
New Brunswick, New Jersey
in a Former Wallpaper Factory
By three brothers with a dream… that Joseph Lister’s theories about
sterilization could save lives
in America’s hospitals
3
4. World’s Largest Health Care Company
119,000 Employees
250 Operating Companies in 57 Countries
Selling Products in More Than 175 Countries
4
6. MD&D in EMEA consists of 7 franchises
Total Revenue (2008)
EMEA: 6+ Billion USD
and 15,217 employees
6
7. EMEA Medical Devices Industry
A key region in the global market
1/3 of the world’s health
care spend today and in
the future
Second largest medical
device market in the
world (28% of global)
Influences and shapes
global policies (e.g. WHO,
OECD)
J&J MDD EMEA presence
Source: IMD World, U.S. Patent bureau, WMM (Global Insight), EIU Part of EMEA geographic region
7
8. Table of content
– Johnson & Johnson
– How to get boardroom attention ?
– EMEA distribution strategy
– Conclusion
8
9. Get to the boardroom
Boardroom
Key message
Make it accessible
Stakeholder management
Change management
Be ahead of the game but not
too much
Elevator Speech
Solid technical foundation
9
10. Supply chain excellence overview
No one fit all solution
Organization and project management skills
Assess and adapt
Soft skills
Strategic skills
Supply Demand Inventory Metrics Master data Customer Technical skills
planning planning management management service
10
11. Table of content
– Johnson & Johnson
– How to get boardroom attention ?
– EMEA distribution strategy
– Conclusion
11
12. 12
Greece
Slovenia
Czechia
Poland
Hungary
Scandinavia
Italy
MD&D historical configuration in EMEA
Nederland
Belgium
Switzerland
Austria
Portugal
Warehouse
Spain
Systems
UK
Germany
France
13. Historical situation of distribution in Europe
MD&D manages a very complex distribution network across Europe.
The potential for operational synergies across the group is strong.
Distribution network of 26 distribution sites
11 different systems
Shipping more than 2.1MM orders/yr.
Livingston Stockholm
152 different inbound routes Viskafors
Gargrave Leeds
Roden
Physical distribution costs above benchmarks Amersfoort Norderstedt
Warsaw
Dilbeek Beerse
3.7+% of sales (excluding order management) Sulzbach Prague
Garonor
Strasbourg
Zurich Vienna
600 FTE across Europe Lyon
Budapest
Lbjuvania
Milan
Multiple transportation service providers Lisbon
Madrid
Rome
– 40 different carriers used for inbound transportation
– 40 different carriers used for outbound (customer)
Athens
shipping
~300 miles
Lowest service level region
Highest inventory level
13
15. EDC plan
Key project drivers :
Buy-in from all countries and all franchises
Cross-country and cross-franchise harmonization
1600 orders/day
6000 lines/day
7500 orders/day
Benelux France 27000 lines/day
All All
EDC Construction Other transfers – Volume increase
Pilot Process
Design Development/set-up Mitek improvement
Jan/05 Jan/06 Jan/07 18000 Jan/08 Jan/09 Jan/10
16000
Conveyor system and automatic packing machine
14000
Advanced shipping notice notifying electronically of what is in transit
12000
10000
Development of a Cognos metrics1 Year
tool 8000
later
Travelling under quarantine - Shipment of non-released products from the
6000
4000
manufacturing site to the EDC 2000
0 févr-08
avr-07
avr-08
nov-08
août-07
nov-07
août-08
janv-08
déc-08
déc-07
sept-08
sept-07
juin-07
juin-08
mai-07
mai-08
juil-07
juil-08
oct-07
oct-08
15
19. Product Characteristics
Model Ploos Van Amstel
€/M³
HIGH
Value Density
Inventory Optimization
5000
Transport/Storage
Handling Optimization Optimization
LOW
HIGH 100 LOW
Pack Density
Unit/M
Note: Study boundaries defined by University of Eindhoven (TUE) in the 90th.
³ Boundaries on value are influenced by the interest rates.
In the 90th rate was 12% => boundary = 3000 €
•Pack Density = 1/gross cubic (m³) Now rate in the 3% => boundary = 5000 €
* Source : « Werken met distributielogistiek », Van Goor, Ploos van Amstel,
•Value Density = Real cost (bx)/gross cubic (m³) Ploos van Amstel, 2005, Wolters-Noordhoff 19
20. Overall MD&D picture
€/M³
HIGH
Value Density
5000
LOW
HIGH 100 LOW
Pack Density
Unit/M
Note: Study boundaries defined by University of Eindhoven (TUE) in the 90th.
³ Boundaries on value are influenced by the interest rates.
In the 90th rate was 12% => boundary = 3000 €
•Pack Density = 1/gross cubic (m³) Now rate in the 3% => boundary = 5000 €
* Source : « Werken met distributielogistiek », Van Goor, Ploos van Amstel,
•Value Density = Real cost (bx)/gross cubic (m³) Ploos van Amstel, 2005, Wolters-Noordhoff 20
21. Inventory Management Scope
Planning
Network design Inventory monitoring
Inventory entitlement &
& Replenishment
Optimization
Inventory positioning
•MTO/ MTS/ DTO •Actual inventory visibility
Network design (warehouses /lanes /..) •Segmentation
•SS calculation: •All level views
Definition per code/market:
•Normal distribution •Exception based analysis
•Direct distribution next day (DD24) •Demand variability
•Direct distribution with 48H (DD48) •Peak of sales
•Non-normal distribution
•Distribution to order (DTO) •Manage product life cycle
•Local distribution with stock (MTS) •Flatten demand peak
•Make to order code for the region •SS calculation:
(MTO) •Other distribution
•Forecast error Legend :
•Aggregated /detailed view
•Based on a set of constraints •Replenishment frequency In original scope
•Minimum order quantity
•Transport costs •Lead-time variability
•Product costs •Service level simulation Interesting Additions
•Fixed and variable
•Daily forecasting for distribution Future
warehouse costs….
21
22. Table of content
– Johnson & Johnson
– How to get boardroom attention ?
– EMEA distribution strategy
– Conclusion
22
23. Conclusion
Optimization Tools •Creating the capabilities
•Change management
Inventory optimization •Opportunistic approach
•Education
Robust Network •Assess the organization readiness
•Consider the implementation timeline constraints
Rationalization
23