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The supply chain engine that could

Operatives in sterile suits package pharmaceuticals in a production environment.

Tapping into its own network of diverse partners that includes universities, start-ups, and research and development firms, Johnson & Johnson is building collaborations--and crowdsourcing research--to transform its supply chain into an innovation growth engine.

"Fast changes in healthcare and technology are driving the revolution. We've responded by transforming our supply chain," said Meri Stevens, vice president of strategy and deployment at Johnson & Johnson Supply Chain, speaking at the 2017 UPS® Healthcare Forum, held in San Diego. "We didn't want to start by ourselves. We figured we'd never ever go fast enough. So, we're looking for everyone, everywhere to jump into the party."

It's a novel approach. Today's healthcare landscape is changing at a rapid pace, revolutionizing the way companies like Johnson & Johnson do business. New and innovative technologies, patient pressure for price transparency amid rising health care costs, and the increasing move towards personalized medicine are helping motivate companies to think outside the box to create a more responsive supply chain. Johnson & Johnson, for one, is accelerating innovation to keep pace with shifting, and sometimes disruptive, marketplace dynamics.

Stevens told the audience at the UPS healthcare logistics forum, titled "Delivering Innovation Together," that the company is using innovation techniques identified in collaboration with its R & D partners, focusing on understanding what's going to happen next.

Casting a wide net

For Johnson & Johnson, the process starts by seeking the best possible ideas from internal resources and its global partners of start-ups, universities, R & D firms, and incubators. These ideas are then prioritized against specific needs throughout the organization. The most promising ideas are brought into JLABs, the company's science and technology incubator, or into one of its other innovation centers. There, dedicated, cross-functional teams develop prototypes and measure their functionality. The ones that work can be quickly brought to scale. "That's really allowing us to go much faster forward in being able to adopt and react to the needs of the market," Stevens said.

Out of these collaborations emerge innovations that provide value to healthcare companies, patients, and people's daily lives. For example, 3D printing has "been around forever, like 30 years," Stevens said. But the fragile material and the high costs of capital equipment made its use prohibitive. Advances in material science changed that. Now, the technology is available in classrooms and for medical use, such as 3D printing of cells and titanium implants. "So the push in materials encouraged a push in capital -- and the cost of 3D printers is dropping like a stone," she explained.

In turn, new ecosystems emerge. Advances in 3D printing offer companies the ability to develop new and customizable products using more cost-effective manufacturing processes with greater flexibility in where and how products are produced. "This completely upsets the apple cart in how we think about our supply chain because everything we knew to be true is gone," Stevens said. "The barriers to entry are gone."

A culture of innovation

Collaboration between companies isn't new. But Johnson & Johnson is taking innovation out of the lab and pushing it to every area of the company, from consumer products and medical devices to technology. To do that successfully, however, companies need to develop a corporate culture that supports and prioritizes innovation.

"We've all heard the adage that innovation is inspiration plus hard work," said Geoff Light, vice president of healthcare logistics strategy at UPS, in opening remarks. "In reality, though, some experts are saying that innovation is really inspiration plus collaboration."

In the case of Johnson & Johnson, that means pulling aside some of its 65,000 employees to focus on the future, not today's crisis. "It's not a big group," Stevens said. "It's less than 0.01 percent of our population, but what that team is able to do is have the time to innovate, the time to explore." It also means tearing down corporate silos that prevent cross-pollination of ideas and technology. Most importantly, though, it means letting go of the proprietary attitude that everything needs to be done internally. For example, when JLABs was looking for a way to keep products stable at room temperature, the development team crowd sourced the question across the biologic manufacturing online community. They selected seven finalists from hundreds of responses and identified an overall winner.

Unquestionably, rethinking supply chains in an ever-changing market requires that companies embrace open innovation in ways that are both creative and collaborative. Johnson & Johnson is a model example. But equally important, the innovation strategies they presented at the UPS Healthcare Forum can be widely adopted by any industry.

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