J&J’s European Distribution Network, Laurence Coudroy, EMEA Supply Chain Integration Director, Johnson & Johnson
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J&J’s European Distribution Network, Laurence Coudroy, EMEA Supply Chain Integration Director, Johnson & Johnson

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Presentations from eyefortransport’s 8th 3PL Summit & Chief Supply Chain Officer Forum in Brussels, November 2010. Visit www.3PLsummit.com/eu for further resources.

Presentations from eyefortransport’s 8th 3PL Summit & Chief Supply Chain Officer Forum in Brussels, November 2010. Visit www.3PLsummit.com/eu for further resources.

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J&J’s European Distribution Network, Laurence Coudroy, EMEA Supply Chain Integration Director, Johnson & Johnson Presentation Transcript

  • 1. J&J’s European Distribution NetworkLaurence CoudroySupply Chain Integration DirectorEMEA, MD&D
  • 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 FactoryBy 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
  • 5. 2008 Net Trade Sales : 63,7 bn USD 5
  • 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 presenceSource: 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 ItalyMD&D historical configuration in EMEA Nederland Belgium Switzerland Austria Portugal Warehouse Spain Systems UK Germany France
  • 13. Historical situation of distribution in EuropeMD&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
  • 14. Distribution Optimization Journey2005 2006 2007 2008 2009 2010 2011 EMEA Orga change SC Orga changes 14
  • 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 improvementJan/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
  • 16. Current implementation status FR DE UK GR IT BNL AT SI Iberia Scandi HU PL CZ IE CH16 16
  • 17. Planned 2011/2012 status FR DE UK GR IT BNL AT SI Iberia Scandi HU PL CZ IE CH17 17
  • 18. Distribution optimization cycle 18
  • 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 visibilityNetwork design (warehouses /lanes /..) •Segmentation •SS calculation: •All level viewsDefinition 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 managementInventory optimization •Opportunistic approach •EducationRobust Network •Assess the organization readiness •Consider the implementation timeline constraintsRationalization 23