Importance of Effective Supply Chain Management

Sociocultural

• Wide range of products to cater for variety in age, race and other diversity are readily available
• Social change affecting the diversity in various healthcare demand and needs from issues in obesity, cancer, and diabetes
• High investment opportunity in the aging population with needs for surgery and medicines aimed at prevention
• Misleading cultural beliefs in some areas on the use of drugs leading to poor reception on Johnson and Johnson products.
• Health needs cannot be foregone making it a necessity and thus no adverse effects on the company products
• Health awareness programs and efforts by WHO and other international organizations on use of medicine
• Drug abuse and drug trafficking issues making it transport and shipment to take a long time
• Education on the use of medicine and importance of treatment(Johnson & Johnson, 2009)

Political/ Legal

• Political environment and wars can make severe damages to the company in terms of profit generated.
• High discussion in healthcare provision in some countries like the Czech Republic
• Environmental regulations on the prevention of the environment by local governments. New laws are being set to govern and protect the environment.
• High taxation causes products to increase in price reducing the purchasing power of customers.
• Effects of Affordable Care Act (ACA)
• Liability laws concerning public properties
• FDA regulations affect operation of most pharmaceuticals
• Different work formulas in number of days worked in the various countries limiting number of days worked
• High wage rates in some countries leading to high spending in paying for services
• Packaging and safety requirements globally for medicines and other products in the industry making packaging expensive(Johnson & Johnson, 2011)

Technological

• Increased spending on research over the years with $77 billion investment in research in 2011 alone which has increased over the years. The study helps in creation of new medicine and solving emerging issues
• Innovation has helped create new products and provide better services. The company has increased investment in a research team that is innovative and highly skilled in the medicine field
• The high technology used helps create high quality and reliable products and offer exceptional services. Johnson and Johnson is a leading manufacturer of a broad range of medicines
• New products generated within a span of five years generated more than a quarter of sales in 2012. The company introduces new products with new discoveries made in the research centers (Johnson & Johnson, 2011)

Economic

• Fluctuating international foreign exchange rates, especially in developing countries, reduce the profits
• Use of financial instruments in hedging of risk of the exchange rates making changes in LIBOR to affect net income
• High-interest rates affect production and ability to get more funds for other research and investment
• Changes in stock market valuations reducing profitability and investor valuation of the company
• High inflation rates in some countries making supply and other subsidiary services expensive
• High unemployment rates that reduce disposable income and spending abilities of customers (Johnson and Johnson, 2011).
• Changes in economic growth rate affect the profitability of the company especially during recession. (Johnson and Johnson, 2011).

Global

• Increasing global market to areas such as China and India which cover more market than the United States
• Most of the growth comes from areas out of the United States accounting for more than 55% sales
• Global market focus aimed at exploring other areas in the world to provide better healthcare services and products
• Online purchases making products be easily purchased catering for a wide increase in sales. (Johnson and Johnson, 2011).

Balanced Scorecard

Strategy Map Measure Targets Initiatives

Financial

1. Increase in sales revenue
2. Expenses reduction
3. Increase sales by 20%
4. Reduction costs to increase profitability
5. Increase number of outlets and advertising.
6. Reduce marketing costs and cost of production

Customer

1. Market share and expansion
2. Retention and satisfaction of customers
3. 40% increase in market share
4. Reduce chances of customer moving to competitors and attain 90% customer retention
5. Increase marketing in most of the countries outside America
6. Offer high-quality products and services at affordable prices

Internal

1. Procurement of new materials
2. Increase employee satisfaction
3. Purchase of latest materials in the market.
4. Ensure employee loyalty and conducive working environment
5. Increase allocation of new material procured in budget allocation.
6. Increase in salaries of employees and motivation programs

Learning and Growth

1. Increase amount spends on research and innovation
2. Improved quality of products and service delivery
3. Increase the quality of products and formation of new products
4. Be the best company in service delivery in the industry.
5. new international stores
6. Increase allocation of research by 15% every year and employ more workers in research centers.
7. Use of high technology machines to test products for quality and train employees on customer relations.

Johnson and Johnson sales revenue has a potential to increase. Increased investment in innovation and research will help ensure that more products are produced at a cheaper price. The number of outlets all over the world can be increased to ensure that it faces of competitors like Novartis. Advertisement in the media and especially in developing countries on new brands and products also need to be intensified to increase sales. The pharmaceutical industry has room for expansion and is still promising for more investment (Miletsky & Callander, 2009).

The company also needs to reduce its cost to ensure increased profitability. The growing cost of production as a result of scarce raw materials has led to increased manufacturing costs. Acquiring of cheaper but quality materials are essential for cost reduction. Partnership and acquisitions help in reducing production costs (Miletsky & Callander, 2009). The marketing costs need to be reduced with more focus on the new markets as a way of increasing sales.

Intensified marketing in new areas is necessary to help raise more revenue and increase the ROE. Most African countries have a promising economy and growth in pharmaceuticals. Marketing methods used include prints and mostly the media. The industry has received increased competition in the sector over the years with expansion in countries like India and China making advertisements important in ensuring high profits.

Customer satisfaction and retention have always been the company’s mission through quality service and products. Johnson & Johnson has a potential to increase its market share given its 125 years of experience. It successfully came back to business after the Tylenol crisis led to the death of seven people in Chicago. Increased high-quality services through innovation and research will ensure profitability is improved. Its growth is dependent on research and better research policies help enhance the productivity of the company enabling it to scale the heights of the pharmaceutical industry. Budgetary allocation for technology and research should be increased, and more specialized and experienced employees employed to meet the growing demand for better services and product (Miletsky & Callander, 2009).

Delivery of finished goods to customers and resources must meet demand. An effective supply chain management of the company is necessary for ensuring that all regions get ample supply of the products (Dwivedi & Butcher, 2009). Resources are important in effecting a fast manufacturing process. Increased online purchases must have an adequate supply. Shipment to far countries and locations can be made easier through regional plants that are crucial in ensuring continuous and efficient supply (Miletsky & Callander, 2009). Communication is important in supply management, and an effective supply chain is necessary to have the best in the provision of finished products to customers.

Increased production and quality also depend on the equipment. The medical field is constantly updating its resources and equipment and an improvement in the equipment will ensure that the better products are produced. Investment in machines increases customer satisfaction through better products and services. The company has a wider market to serve in the very competitive field, and quality service delivery is essential to any production process. The increase in budgetary allocation for new machinery will help reduce production costs through faster production.

Employee satisfaction will ensure continued loyalty for the company. The employees need motivation and increased wages to ensure loyalty. Demand for more experts in the sector is growing over the years, and competition for a skilled workforce is high. The company, therefore, needs to increase continuously its salaries to employees yearly and provide a better-working environment for its workforce. Retention of workers is essential to ensuring protection of company secrets.