The European Supply Chain Excellence Awards 2007, Healtcare Winner: Johnson & Johnson

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The Healthcare category produced four shortlisted finalists, although for reasons that are obscure, one fancied entry didn”t continue through the assessment procedure.

Another, Teva Hungary, is a manufacturer and distributor of pharmaceuticals in that and neighbouring countries. The assessors recognised that great strides are being made there, not least through a new centralised distribution centre, which have had direct and very positive impacts on Teva”s competitiveness. But at the same time, as Teva themselves would surely acknowledge, they have started from a low base, and have some way to work up the ”supply chain maturity” ramp.

The Healthcare Purchasing Consortium was arguably too honest for its own good – ”The NHS could not generally be described as currently having an award-winning supply chain” – their words, not ours, and as many readers will be aware, the whole NHS logistics chain was seriously reconstructed last year with the outsourcing to DHL-Exel. So the Consortium is in the early months of a set of pilot schemes aimed at ”developing and improving a variety of supply chain practices in a complex mixture of NHS Trusts”, starting with Pharmacy and Operating Theatre supplies, and extending out to equipment, transport, community services and elsewhere as the Trusts begin to recognise their needs and problems. Creating ”intelligent buyers” in the NHS is going to be critical if the logistics side is going to work effectively, and the assessors said ”While this is basic stuff at the moment, there is bags of enthusiasm, and we would really like to see them again next year to find out what they”ve achieved”.

Which leaves this year”s healthcare sector winner, Johnson & Johnson Medical Devices & Diagnostics. Headquartered in Belgium, this organisation has undergone a fundamental transformation across several dimensions of the supply chain. This has included the creation of a common platform across EMEA, rather than having individual country ”franchises”; Reorganisation and centralisation of finished goods distribution around a new Greenfield DC in Belgium, and coupled with implementation of a JD Edwards distribution system as the cornerstone for a new approach to the ”order to cash” cycle. This is also laying foundations for a whole new fiscal framework for the division – emphasising the strategic role of the supply chain in the business.

As with many of this year’s entries, this major set of projects is still in progress. The former system involved 26 distribution sites, shipping over 2.1 million orders a year, and themselves served by 152 different inbound routes from European and overseas plants.

The assessors noted several quite innovative aspects of the work, and particularly appreciated the clear improvement in the process of bringing new product to market partly through holding markedly less obsolescent inventory that would need to be sold out of the system first. A clear (2-3 percentage points) improvement in service levels was also claimed and verified. The way in which critical assets, such as the DC building, are retained in ownership despite the staffing and immediate management being outsourced, was also interesting.

Patrick Rainforth, executive director at the MD&D division, says ”We are creating a lean, coordinated and integrated supply chain across the MD&D sector in Europe and we believe with these changes we are striving towards excellence in supply chain. This Award is significant because it is a recognition by the outside world of the importance and complexity of our transformation”.

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