The Best Supply Chain in The World
Johnson & Johnson has committed to become the best supply chain in the world. Will digitalization and IoT help them achieve this challenging objective?
The Commitment
In 2014, with almost half of its employees (more than 50,000) working in supply chain, more than 15,000 customer orders per day and around 350,000 customers globally, Johnson & Johnson committed to build the best end-to-end supply chain in the world [1]. Combining internet of things (IoT) sensors, cloud computing and advanced analytics, J&J has connected the entire supply chain to achieve this challenging goal. “With IoT, we have the opportunity to bring all that data together in one place and then apply some very sophisticated analytics like machine learning and predictive modeling to better understand what is likely to happen to you as a patient”, explains Stuart McGuigan, J&J’s CIO [2]. Regulatory matters have also influenced J&J’s supply chain digitalization efforts. In 2013, Congress passed the Drug Supply Chain Security Act (DSCSA), which requires pharmaceutical companies to implement end-to-end traceability of prescription drugs distributed in the United States by 2023 [3], fueling the implementation of traceability projects.
Source: [1]
Kathryn Wengel, worldwide vice-president of J&J Supply Chain (JJSC), highlights three main areas where digitalization and, specifically, IoT technologies have had an impact on JJSC: End-to-end supply chain customer type technology (traceability, on-shelf availability and real-time data); Core Product Technologies; Operational Technologies (use of IoT in manufacturing plants to make better real-time decisions) [4].
End-to-end supply chain technologies
JJSC has been on the forefront of developing new technologies to ensure end-to-end product traceability. In October 2014, less than a year after the DSCSA was passed, J&J piloted a project to fully serialize their products and dive into the changes in systems that would be necessary to fully comply with the act [5]. “It is still rare to be able to fully trace every element of a product from origin through to individual patient outcomes via digital health records and real-world evidence” says Wengel, “The rapid advancements in computing, Big Data and technology are enabling rapid innovation […] We’re not just making products anymore. We also make a product’s digital twin. This twin is the basis for how we collaborate across the healthcare supply chain” [6]. IoT has enabled J&J to trace products from their raw material stages all the way to the end-customer. Real-time data provided by IoT sensors and monitors embedded in vaccines, for example, can assure they remain frozen when shipped to sub-Saharan Africa [7].
Core Product Technologies
J&J is also investing in core product IoT technologies to allow real-time diagnosis and treatments. Research and development of new self-correcting contact lenses and other platforms that provide real-time data on the health of a patient’s eye is one of the areas where J&J is applying IoT to improve patients’ treatments [7].
Operational Technologies
Internet of Things has also enabled J&J to change its manufacturing processes. IoT in-line sensor technology changed the way they manufactured Prezista, an HIV medication, and made J&J the first pharmaceutical company to win FDA approval to shift a product from batch to continuous manufacturing. Before the technology was introduced, the drug was produced in batches and production had to be stopped at various steps when samples were sent to a laboratory to be tested. IoT in-line sensors embedded in the equipment have eliminated these steps by performing tests online in real-time. “Our use of IoT-enabled continuous manufacturing opens up a much greater world of flexibility, a dramatic reduction in cycle time, and allows us to use our people resources more efficiently” explains Wengel [7].
Current Performance and Future Obstacles
On May 2017, Gartner released its annual Top 25 Supply Chain Index, ranking Johnson & Johnson as the 13th best supply chain worldwide, climbing up 8 spots from its 2016 ranking and establishing J&J as the only healthcare supply chain on the list [8] [9]. However, to become the best supply chain in the world in future years, J&J will have to outperform other giants such as Unilever (1st) and Inditex (3rd). One of the main obstacles to achieve such goal revolves around cybersecurity.
Can J&J outperform other customer goods and textile supply chains and become the best supply chain in the world? What about security concerns? Can they overcome this obstacle in the healthcare landscape and provide safe, versatile and connected medical devices?
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[1] Johnson & Johnson, “J&J 2014 Year in Review: Building The World’s Best Supply Chain” [Video], You Tube, March 23, 2015, https://youtu.be/wokCJhGyuLM , accessed November 2017.
[2] TechRepublic, “IoT World 2017: Johnson & Johnson on how smart technology is making people healthier” [Video Interview], May 24, 2017, https://www.techrepublic.com/videos/iot-world-2017-johnson-johnson-on-how-smart-technology-is-making-people-healthier/ , accessed November 2017.
[3] FDA, “Drug and Supply Chain Security Act”, October 13, 2017, https://www.fda.gov/Drugs/DrugSafety/DrugIntegrityandSupplyChainSecurity/DrugSupplyChainSecurityAct/default.htm , accessed November 2017.
[4] Dave Blanchard, “Mentoring and Technology Offer a Healthy Outlook for J&J”, Industry Week, January 02, 2017, http://www.industryweek.com/manufacturing-leader-week/mentoring-and-technology-offer-healthy-outlook-jj , accessed November 2017.
[5] SupplyChainBrain, “How Drug Maker Secures Integrity of Its Pharma Supply Chain”, Supply Chain Brain, December 22, 2016, http://www.supplychainbrain.com/single-article-page/article/how-drug-maker-secures-integrity-of-its-pharma-supply-chain/ , accessed November 2017.
[6] Kathryn Wengel, “J&J: Embrace change to transform healthcare supply chains”, Supply Chain Dive, June 15, 2017, https://www.supplychaindive.com/news/JNJ-healthcare-supply-chain-innovation-change-culture/445106/ , accessed November 2017.
[7] Dave Blanchard, “The Healing Power of The IoT”, Industry Week, September 20, 2016, http://www.industryweek.com/supply-chain/healing-power-iot , accessed November 2017.
[8] Johnson & Johnson, “Johnson & Johnson Moves Up Eight Spots on The Gartner To 25 Supply Chain Index”, Company Website, May 25, 2017, https://www.jnj.com/latest-news/johnson-and-johnson-moves-up-eight-spots-on-gartner-top-25-supply-chain-index-2017 , accessed November 2017.
[9] Aronow, S., Nilles, K. and Romano, J., “The Gartner Supply Chain Top 25 for 2017”, Gartner Inc., May 24, 2017.
[10] Mark Hung, “IoT’s Challenges and Opportunities in 2017: A Gartner Trend Insight Report”, Gartner Inc., April 5, 2017.
[11] Mishra, DD, Perkins, E. and Stoudt-Hansen, S., “Address Cybersecurity Challenges Proactively to Ensure Success With Outsourced IoT Initiatives”, Gartner Inc., February 17, 2017.
[12] Jim Finkle, “J&J warns diabetic patient: Insulin pump vulnerable to hacking”, Reuters, October 04, 2016, http://www.reuters.com/article/us-johnson-johnson-cyber-insulin-pumps-e/jj-warns-diabetic-patients-insulin-pump-vulnerable-to-hacking-idUSKCN12411L , accessed November 2017.
[13] Tod Bearsley, “R7-2016-07: Multiple Vulnerabilities in Animas One Touch Ping Insulin Pump”, Rapid7, Company Blog, October 04, 2016, https://blog.rapid7.com/2016/10/04/r7-2016-07-multiple-vulnerabilities-in-animas-onetouch-ping-insulin-pump/ , accessed November 2017.
Victor – this was a fascinating look at how Johnson & Johnson has transformed its own supply chain to incorporate IoT. Twenty years ago, some of these processes would have seemed like science-fiction, yet the future is getting ever-closer as technology and innovation continue to dominate the fields of medicine, logistics, and supply chain management.
Regarding the Gartner ranking, what criteria do they use to evaluate specific firms? What is it that allows Unilever and the other top 12 supply chain providers to maintain their top positions? The steps that J&J are taking seem to be fueling their rapid rise, but without some background, I’ll be curious if they can ever vault their way into the top position.
In your last paragraph, you highlight some of the risks with IoT, specifically, cyber security. Have there been any documented instances of hacking with J&J devices? What are some of the other possible outcomes if the system was penetrated? What are firms like J&J doing to prevent these attacks from occurring? I can see the entire system getting shut-down if, as you point out, a hacker can kill a patient.
Lastly, once J&J figures out a way for me to track my keys, glasses, and watch, then they’ll really be on to something.
J&J ambitious plans to have the best supply chain in the world pose in my opinion significant risks in the privacy area. Having multiple elements interconnected, with automatic triggers and different information being stored together could lead to data being compromised. As a result, J&J should, in my view, invest not only in fully digitizing the supply chain, but also having the best data protection system in the world. However, data being protected from hackers is only one step. Another aspect is that the legal systems around the world put additional requirements on companies regarding how, when and to what extend they can use certain data. Being in line with multiple regulation system could be a challenge, as potentially they could sometimes contradict one another.
I believe that in the retail space having a digitized supply chain should be easier from the data privacy standpoint than in healthcare. In healthcare there are additional security concerns as patients’ data are sensitive. In my view, J&J should move only as fast as the privacy concerns could be addressed.
Victor,
Thank you for what I felt was a great post.
I do believe that J&J can become the best supply chain in the world. The regulatory pressure requiring them to ensure their drugs are entirely traceable soon increases their focus on their supply chain and this shows through what they are implementing.
J&J has already made huge strides on this front. As you highlighted, not only do they rank #13 on the Gartner annual Top 25 Supply Chain Index [1] but they are also the only healthcare company to make the top 25 list. The fact that J&J is the only healthcare company on the list is crucial because I believe that relative to other industries, healthcare companies will need to be particularly effective as it relates to their supply chain given increased regulation and heightened attention on healthcare issues around the world. The industry will continue to have a spotlight on it and creating a top-notch supply chain will need o be the norm. J&J already has a huge start through many of the best practices which you alluded to such as sophisticated analytics like machine learning and predictive modeling.
Although I understand the point that Monika raises in her comment around the risks raised in the privacy area, I believe that as it relates to healthcare, the focus on privacy is not going to create as much of a concern as it does in some areas where more personal social and financial information is in the hands of technology company. I believe that people will need to become desensitized to the idea of overly protecting their healthcare data to create the kind of healthcare systems which has reasonable costs and broad support.
Once again, I felt this was a very thought-provoking piece and I hope that we have a chance to discuss it further.
[1] Johnson & Johnson, “Johnson & Johnson Moves Up Eight Spots on The Gartner To 25 Supply Chain Index”, Company Website, May 25, 2017, https://www.jnj.com/latest-news/johnson-and-johnson-moves-up-eight-spots-on-gartner-top-25-supply-chain-index-2017 , accessed November 2017.
Best,
Triston