Supply-Chain+Consultant+Suggestions


 * Supply Chain Consultant Suggestions – Sustainability Commitments**

Currently, Johnson and Johnson utilizes its Credo in conjunction with EHS (environment, health and safety) practices to manage sustainability in the Supply-Chain and manage procurement practices as well. The company has an exceptional framework in place to improve its supply-chain and align it with positive sustainability practices. It has spent years refining its models and has created a framework which is broad-based and thorough. Their Credo and EHS integrate with their Healthy Planet Initiative, which environmentally-specific in nature. As well, Johnson and Johnson has its Procurement Sustainability Initiative (PSI) to align procurement processes towards the parent company’s sustainability standards, as well as the Carbon Disclosure Project’s (CDP) Supply Chain program to encourage participants to energy use and greenhouse emissions. A list of other factors within the Supply Chain Sustainability framework are below (health and safety, labour practices, etc).

The problem lies in both the size of their global supply chain and in how aggressively they administer their guidelines and standards upstream (suppliers) and downstream (distributors).

Although the company is using its purchasing power to drive more sustainable business practices ($30 billion per year) it is unclear how many suppliers are fully participating in this initiative (yearly Sustainability Report does not mention). As well, for external manufacturers (over 700), those that are not one of the Johnson and Johnson family of companies are not within the scope of its guidelines and framework making the dozens of manufacturers unaccountable to Sustainability and better environmental, health and safety, labour and governance. As it stands Johnson and Johnson will terminate contracts and association with any external manufacturer when major violations are found. This does not mean the problem goes away, the corporation simply abandons any hope of working with the violating company to improve its conditions, or at the very least discontinue association, work with the company to improve practices and re-establish association once achieved.

The top reasons for why external manufacturers have not considered adherence include lack of capacity, not a priority and lack of knowledge in how to integrate principles with procurement practices.

As a supply chain consultant my advice is as follows:

1. In expending the time to align supply chain participants with Johnson and Johnson’s Sustainability framework create a Supply Chain sustainability training program to each participant based on the framework and guidelines utilized by Johnson and Johnson.

i. The creation of such a training program would require experienced personnel, trained in the framework within each of Johnsonand Johnson’s core businesses (Consumer Health Care products, Medical Devices and Diagnostics and  Pharmaceuticals).

2. Due to the lack of resources and/or money to implement frameworks and initiatives along the supply chain provide multiple avenues for training.

i. The cost of training personnel in-house could be offset and reduced by allowing one or two key staff members to attend trainingseminars (2-week) at other supply chain locations. Leverage other experienced distributors, suppliers and manufacturers to train those who do not have the proper resources to do so. ii. Once the training is complete the staff members in turn return to train and implement the framework with the support of staff from the location where the training took place (email, teleconferencing, remote access, etc).

3. For those manufacturers, suppliers and distributors who do not feel that supply chain sustainability is practical or not a priority Johnson and Johnson can leverage its parent position to forcefully impose this framework. It may need to be re-clarified with management the reasons for implementation. If non-compliance continues management can be shuffled, those who are to doing the actual implementation are not as great a concern as this is a top-down mentality that spawns the proper frame of mind.

4. Enhance the diversity of training as new implementations within new environments occur. Manufacturing would be the most diverse. Suppliers and Distributor training would be fairly standardized.

5. For external manufacturers outside of the Johnson and Johnson family of companies provide the framework and training program in computer-based format. Offer in-person training programs at a heavily discounted price. The cost of training is offset by the adherence to a sustainable supply chain.

6. If the external manufacturer wishes to implement its own form of sustainability in the supply chain suggest the **UN Global Impact** framework. Its guidelines are well-defined and have been updated since its inception ten years ago. They include, among others, such non-financial performance factors as follows (many in turn impact the company financially):

UN Global Compact Management Model Cycle Supply Chain Sustainability - Principles 1 to 6 Supply Chain Sustainability - Principles 7 to 10

i. Protecting and promoting worker safety, health and well-being ii. Providing materials and services with a reduced or positive environmental impact (sourcing raw materials with social and environmental impacts); iii. Respecting and sharing efforts to preserve communities and cultures connected to the origin, processing, manufacturing, use and disposal of materials and services. iv. Partnering with suppliers to ensure minimum standards in management practices, such as minimum hiring age, contracts with workers, health and safety conditions v. Ensure compliance with laws and regulations and adhere to and support international principles for sustainable business conduct, etc.

7. Provide the benefits of implementation. Reduced environmental footprint, of concern to all companies as consumer concern for the environment increases, avoidance and non-compliance damage the bottom line. Increased positive brand recognition, increased efficiency within supply chain lowers transportation costs and processing times, etc. As well, Companies use supply chain sustainability to ensure that their suppliers can adapt to anticipated strengthening of environmental regulations, extended product responsibility legislation and to reduce potential future liability.

8. The last resort is for Johnson and Johnson to leverage its purchasing power to have its subsidiaries change supplier, distributors or manufacturers who do not comply with the supply chain sustainability framework in some form or another. Due to the negative publicity that can occur and the association of the subsidiary or external manufacturer to a lesser or greater degree with the parent company, negative publicity can occur for all entities involved. This measure has the potential to be implemented more often than may be thought.