Johnson & Johnson is a top multinational corporations based in United States, having its headquarters at New Brunswick, New Jersey. The company was founded in 1886 and deals with medicals devices, consumer packed goods, and different pharmaceuticals. As the years go by, the company has registered great results due to its more comprehensive range of the services and products they offer to it broader consumer base.
Organization's Business Model
The Johnson & Johnson products are known for their high quality compared to other competing products. J&J operates as a manufacturing business model where they came up with innovative products, including consumer products such as pharmaceuticals, medical devices, skin, and hair care alongside beauty products (Huq, Pawar, & Rogers, 2016). J&J also have franchises as well as several therapeutic brands reflected in mergers and acquisition strategies the business has undertaken. In this M&A approach, the companies acquired in the process remain fully independent and fully decentralized to operate as a separate entity of J&J. The reason behind this is to enable J&J run efficiently, to deliver value for money, and ensure the best experience of its wider base customers.
Johnson & Johnson Supply Chain Strategy
J&J employed different strategies to ensure an effective strategy for the supply chain. The pull-push strategy employs the structural adjustments to ensure the supply chain takes place efficiently, which undertakes the products through research and development to boost the marketing, and it manufactures enough product to meet the market demands. For the products to be supplied on time, the company has employed the backward integration method. J&J Company has invested a lot in innovations of new features for its products to ensure they continue producing high-quality products in the market. With the lean strategy, the J&J wants to ensure a transactional approach where it oversees cost reductions in various way, not exclusively limited to the manufacturing model.
Improve Efficiency in the Supply Chain
To improve efficiency, J&J has a good quality design that will make the product to be most preferred in the market. The company also has partnered with other organizations to research what the clients want for them to consider during manufacturing. On the other hand, different stores are opened globally to take the products closer to the client who needs to access the products.
Global Challenges Faced By Johnson & Johnson in their Supply Chain
One of the difficulties that J&J might face in their supply chain is supply constraints. J&J usually makes brand new products, which means that they heavily rely on outsourcing their materials or even parts (Kwon, Kim, & Martin, 2016). Another challenge that J&J faces is the less trained employees. The production and packaging of J&J products always requires them to be done by a workforce that is adequately prepared for this. However, since most of the suppliers of J&J products and not centrally located in one place, they might be unable to ensure that their suppliers are well experienced and trained (Huq, Pawar, & Rogers, 2016).
Importance of Aggregate Planning to Johnson & Johnson's Supply Chain and Their Partners
Aggregate planning has played a significant role in ensuring that J&J can achieve its set financial goals through the overall management of its variable costs. J&J can take charge of the variable values that are involved in their day to day activities in their supply chain. This has ensured that the company can minimize its overall costs in its supply chain system. Likewise, aggregate helped the company to be able to ensure that there is maximum utilization of all their available production and assembly facilities (Huq, Pawar, & Rogers, 2016). Aggregate planning has helped J&J and their various partners in their supply chain to be able to utilize their resources to the maximum to ensure that they can achieve the set company's production with no interruptions. Other roles in which the aggregate planning has ensured in the organization include; helping the organization to be able to meet the goals and objectives.
Role of Demand Forecasting Johnson & Johnson's Supply Chain Strategy
Demand forecasting enables J&J to be able to manage their demand more easily and efficiently. J&J is structured that for a new product that they have, they do not have to get the actual demand forecast in the correct figures. What Johnson & Johnson does is estimating the demand which they expect for their new products, which they consider or speculate that they are going to sell in very high numbers (Kwon, Kim, & Martin, 2016). Thus, J&J have a huge task of demand forecasting so that they may not do an under or over-estimation.
Use of Pricing Promotions to Change Demand
Objective in their pricing is usually to be able to get to the market and their customers great products that can offer the customers a great experience. The pricing strategies through which J&J has been able to implement and seems successful include offering a small number of its products. J&J mainly focuses on the high-end market, meaning that the pricing of their products is not usually for low-income earners (Porter & Kramer, 2019).
The effective supply chain strategy that J&J used has led to its great success. There are several setbacks that the company faces as they try the carry on the supply chain. Such challenges are dealt with accordingly by the organization. The organization's well-organized supply chain has led to massive sales over the years. Also, demand forecasting can be complex sometimes as predicting the exact customer demand is next to impossible. Given that the business can overestimate or underestimate production value, in this scenario, the business can incur warehousing cost; goods can depreciate or tied up inventory.
Huq, F., Pawar, K. S., & Rogers, H. (2016). Supply Chain Configuration Conundrum: How Does the Pharmaceutical Industry Mitigate Disturbance Factors? Production Planning & Control, 27(14), 1206-1220.
Kwon, I. W. G., Kim, S. H., & Martin, D. G. (2016). Healthcare Supply Chain Management; Strategic Areas for Quality and Financial Improvement. Technological Forecasting and Social Change, 113, 422-428.
Porter, M. E., & Kramer, M. R. (2019). Creating Shared Value. In Managing Sustainable Business (pp. 323-346). Springer, Dordrecht.
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