Johnson & Johnson is in the early innings of a massive information technology and supply chain standardization effort designed to keep over-the-counter products such as Tylenol on the shelves as well as improve focus and speed.
On Johnson & Johnson's second quarter earnings conference call, the pharmaceutical giant outlined some of its efficiency efforts. The company in recent quarters has had trouble keeping products such as Children's Tylenol on the shelves. The supply chain struggles have crimped sales for some of J&J's flagship brands.
Sandra Peterson, group worldwide chairman at J&J, was brought on in Dec. 2012 to right the supply chain ship and conduct a review of the company's technology infrastructure. J&J is comprised of multiple units making everything from high-end drugs to medical devices to over-the-counter remedies. In addition, the company was built via acquisition. Bottom line: The technology sprawl is immense.
Peterson, who is in charge of supply chain, quality and information technology, laid out the landscape on the call.
Three years ago, we created a global enterprise supply chain. Our goal was to integrate into a network that would employ consistent quality standards and systems, leverage the scale and technological breadth of our portfolio and enable continuous production of cost-effective and high-quality products. This is a multi-year effort to integrate and leverage over 120 manufacturing sites, over 500 external manufacturers, 450 distribution centers and over 60 ERP systems that support about 275 operating companies, but the opportunity to leverage our scale and breadth to better meet our customers evolving needs and maintain the highest quality in regulatory standards is significant. We've implemented a new quality and compliance operating model to insure consistent standards and capabilities across all products, businesses and geographies while strengthening independent oversight processes. For instance, we've adopted and are now deploying 34 common quality standards for all companies around the world.
Today, Peterson said that J&J, a big SAP customer, is starting to "harmonize our ERP landscape." The ERP effort is a four-year project that revolves around improving the cost of goods sold efficiently to offset pricing pressure from generics and competition, she said.