• Johnson & Johnson’s road towards business resilience began long before the Covid-19 crisis. Here’s a look at how the prepared for the worst 

• J&J’s digital backbone enabled them to rapidly re-prioritize resources and operations as the crisis unfolded.

• Data science and intelligent automation were key to maximizing supply chain resilience. However, the secret ingredient to J&J’s success is its commitment to long-term sustainable growth vs. short term profits.

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With over $56.1 billion in revenue and over 132,000 employees, Johnson & Johnson (J&J) is now the largest drug company in the world. Despite its size and storied, 135-year legacy, even this industry titan was blindsided by the 2020 Coronavirus pandemic. 

As a manufacturer of everything from consumer health products (i.e. band aids, Nuetragena products, mouthwash, etc.) to life-saving medical devices and prescription drugs (i.e. Stelara, Acuvue contact lenses, an Ebola vaccine, etc.), J&J could not let this worldwide health crisis slow down or disrupt its operations. On the contrary, as one of the eight companies tasked with developing a Covid-19 vaccine, J&J had to ramp things up.

Thankfully, J&J had long invested in digitally-enabled resilience.

J&J Digital Transformation Origin Story

Though technology has always been central to J&J’s mission, until about 10 years ago, it was still considered a “cost-center.” However, that all changed when the leadership team brought on a new CIO in 2012, Stuart McGuigan.

With the intention of optimizing agility, performance and data-driven innovation, McGuigan and his team established a vision for enterprise digital transformation starting with J&J’s core IT organization. 

As he explained in a 2017 interview, “True digital transformation touches every part of the organization—from core IT all the way back into the supply chain. So, in our view, it has to be an integrated effort rather than a separate one. You’re going to run into trouble at some point, for instance, if you’re implementing user-centered development and design thinking on the front end, but you haven’t digitized your business processes on the back end. We brought everyone together and said we’re going to take an end-to-end view of digitization—from the way we consume electricity in the data center to the way we interact with customers. And we invited everyone in the company to look at what we were doing—at any point—to see what sort of progress we were making.”

Over the course of the next 8 years, digital technology became an accelerator of business outcomes and growth. However, as the pandemic hit, J&J’s approach to technology would have to evolve again as priorities shifted towards vaccine development followed by employee safety and supply chain resilience

Intelligent Automation in Action

As one of the early adopters of intelligent automation as well as RPA, artificial intelligence (AI) and data science, by April 2020, J&J had already successfully automated 60 global processes. The main benefit of this in times of crisis was that it allowed J&J employees to focus on high priority tasks instead of routine busy work. 

As Joaquin Duato, vice chairman of the executive committee, Johnson & Johnson wrote in an essay for Deloitte’s Wall Street Journal page, “Intelligent automation reduces repetitive and routine work while generating insights that employees can use to improve decisions, compliance, quality, and speed. For example, our finance collections team automates routine tasks, giving members more time to engage with customers to address their concerns. This has led to improved cash flow, increased productivity, greater efficiency, higher customer satisfaction, and enhanced job satisfaction. In addition, intelligent automation has helped us support the well-being of our employees and their ability to work remotely during the COVID-19 crisis, and to virtually execute critical business processes like payroll, sourcing, and financial close.”

Building a Pandemic Proof Supply Chain

The pharmaceutical supply chain is enormously complex and, as the Covid-19 crisis showed, fragile. In the wake of massive supply chain disruptions, raw material shortages and fluctuations in demand, many drug and medical supply manufacturers experienced significant production delays. This resulted in many high profile drug and medical supply shortages.

Comparatively speaking, J&J faired better than many of their competitors and Gartner even awarded the company the #3 spot on its 2020 Supply Chain Top 25 list. 

For the years leading up to the pandemic, J&J invested heavily in developing its business continuity strategy and the cutting-edge digital technologies required to enable it. Amongst other things, this allowed J&J manufacturers to successfully scale production up or down depending on demand.

For example, early in the pandemic demand for Tylenol doubled which required J&J to rapidly re-prioritize its manufacturing schedule. Using advanced analytics they were able to ramp up Tylenol production by reducing production of other more complex but less in-demand formulations as well as identifying, developing new ways to get medicines to patients and managing cases of stockpiling.

As J&J supply chain team wrote on the company’s blog, “Another way the company works to circumvent unnecessary stockpiling: leveraging data science and utilizing complex algorithms to monitor typical order patterns and flag major deviations. Johnson & Johnson has technology that automatically monitors hundreds of thousands of orders placed by big customers, such as medical centers and governments. So when an algorithm detects an unusual pattern, it alerts supply chain professionals to investigate it.”

J&J’s digitally-enabled infrastructure also facilitated remote supply chain monitoring as many employees transitioned to a work-from-home environment. Using tools such as Google Glasses, engineers and pharmaceutical scientists can view manufacturing equipment in real time. This allows them to see what workers on the floor see and assist them in repairing or adjusting the equipment. These tools also allow select workers to pull equipment performance data and change its settings.

In Summary…..

As one of the largest and richest companies in the world, J&J clearly has the resources necessary to make large technology purchases. However, that’s not what makes its digital strategy so successful.

What separates J&J from the pack is its rigorous approach to business resilience. Unlike many established companies who found themselves essentially winging it as the Coronavirus took hold, J&J was able to rapidly adapt its existing digital technologies and infrastructure to a new normal. 

In addition, instead of simply going into survival mode, J&J approached the pandemic as a transformational opportunity. As Jim Swanson, J&J’s CIO, told The Enterprise Project, “This pandemic has challenged CIOs and IT leaders in ways we couldn’t have forecasted. I wasn’t expecting to jump into crisis leadership mode three months into my new role. A silver lining is that all of this rapid change is building muscle memory in our organizations around working together, learning continuously, and adapting in an agile way to deal with all that may come our way.”

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