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Pharmaceuticals: Innovation in Real Time

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Pharmaceutical giant Johnson & Johnson is best known for its consumer brands, from Benadryl to Listerine to Motrin to its eponymous baby powder. But given the company's aggressive spend every year on research and development (over $11 billion in 2019), it's fair to say the company's supply chain is as dependent on technology as it is on logistics—or more accurately, the two go hand-in-hand.

“We see ourselves as not only a healthcare company but also as a technology company because technology is dramatically changing the landscape of what's possible for us,” says Kathy Wengel, executive vice president and chief global supply chain officer for Johnson & Johnson. And one of the biggest change agents for J&J is the Internet of Things (IoT), a technology that lets connected devices communicate with each other, using sensors, radio frequency identification (RFID), performance data, and of course the Internet itself.23

Wengel oversees a global supply chain that has 300,000 SKUs, services 250,000 customers, places 100,000 orders per day, and involves nearly 100 manufacturing facilities and more than 300 distribution centers. Under Wengel, J&J's supply chain group works with the company's R&D department on strategies to innovate, make, test, and deliver every product the company develops. As she explains, the supply chain group's efforts aren't just based on where to locate factories or how to optimize the company's logistics networks, but include strategizing on how technology will help change J&J's innovation capabilities.

For instance, the company's vision care business is using IoT technology to manufacture contact lenses using one-third the production space, and at twice the rate as previously. J&J is also using IoT to enhance its tracking and tracing capabilities throughout the supply chain by gathering data at any stage of a product's lifecycle, from its raw material origins through the manufacturing process, into a package, onto a truck, delivered to a hospital, and scanned into an inventory system.

“IoT gives us the ability to make decisions on real-time data in an industry that has often used separate testing that happens over days or weeks,” Wengel says. IoT provides J&J the reassurance that each node of the supply chain is where it should be and is arriving when it needs to be there.

One of the selling points of IoT technology is its ability to have machines “talk” to each other, and to that end the company is able to use data collected by machinery in one of its facilities to produce an HIV medication by using an integrated quality process. “This process,” Wengel explains, “collects and aggregates data in real time and then processes it using online multivariate analysis and machine learning. This enables us to make process corrections in real time so that we produce only acceptable product, enhance its quality, and improve speed and efficiency.”24

As one of the world's Top 25 supply chains (at least, according to analyst group Gartner), J&J's supply chain efforts are focused on three areas: fast-track product innovation; supporting omni-channel distribution, regional shifts, and delivery to final destination; and developing well-segmented end-to-end supply chains.25

“Technology is dramatically changing the landscape of what's possible for us—in how we can approach problems of global health through Big Data and analytics and being able to look at patient populations in different ways, all the way through to how we design smart products that use technology on an ongoing basis to improve the patient or the customer outcome,” Wengel explains.26

Supply Chain Management Best Practices

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