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Transcript of J&J’s European Distribution Network, Laurence Coudroy, EMEA Supply Chain Integration Director,...
J&J’s European Distribution Network
Laurence Coudroy
Supply Chain Integration Director
EMEA, MD&D
2
Table of content
– Johnson & Johnson
– How to get boardroom attention ?
– EMEA distribution strategy
– Conclusion
3
Founded 1886 New Brunswick, New Jersey
in a Former Wallpaper Factory
By three brothers with a dream… that Joseph Lister’s theories about sterilization could save lives
in America’s hospitals
4
World’s Largest Health Care Company
119,000 Employees
250 Operating Companies in 57 Countries
Selling Products in More Than 175 Countries
5
2008 Net Trade Sales : 63,7 bn USD
6
MD&D in EMEA consists of 7 franchises
Total Revenue (2008)
EMEA: 6+ Billion USD
and 15,217 employees
7
1/3 of the world’s health
care spend today and in
the future
Second largest medical
device market in the
world (28% of global)
Influences and shapes
global policies (e.g. WHO,
OECD)
EMEA Medical Devices Industry
A key region in the global market
Source: IMD World, U.S. Patent bureau, WMM (Global Insight), EIU Part of EMEA geographic region
J&J MDD EMEA presence
8
Table of content
– Johnson & Johnson
– How to get boardroom attention ?
– EMEA distribution strategy
– Conclusion
9
Get to the boardroom
Boardroom
Key message
Make it accessible
Stakeholder management
Change management
Be ahead of the game but not too much
Elevator Speech
Solid technical foundation
10
Supply chain excellence overview
Supply
planning
Demand
planning Inventory
management Metrics Master data
management
Customer
service Tech
nic
al
skills
Str
ate
gic
skills
So
ft s
kills
Org
an
izati
on
an
d p
roje
ct
man
ag
em
en
t skills
No one fit all solution
Assess and adapt
11
Table of content
– Johnson & Johnson
– How to get boardroom attention ?
– EMEA distribution strategy
– Conclusion
12
MD&D historical configuration in EMEA
Warehouse
Systems Fra
nc
e
Ge
rma
ny
UK
Sp
ain
Po
rtug
al
Au
stria
Sw
itzerla
nd
Be
lgiu
m
Ne
de
rlan
d
Italy
Sc
an
din
av
ia
Hu
ng
ary
Po
lan
d
Cze
ch
ia
Slo
ve
nia
Gre
ec
e
13 13
MD&D manages a very complex distribution network across Europe.
The potential for operational synergies across the group is strong.
Athens
Rome
Milan
Madrid Lisbon
Garonor
Lyon
Strasbourg
Leeds Gargrave
Livingston
Dilbeek Beerse
Amersfoort
Roden
Norderstedt
Warsaw
Prague
Budapest
Vienna
Lbjuvania
Viskafors
Stockholm
Sulzbach
~300 miles
Zurich
Historical situation of distribution in Europe
Distribution network of 26 distribution sites
11 different systems
Shipping more than 2.1MM orders/yr.
152 different inbound routes
Physical distribution costs above benchmarks
3.7+% of sales (excluding order management)
600 FTE across Europe
Multiple transportation service providers
– 40 different carriers used for inbound transportation
– 40 different carriers used for outbound (customer)
shipping
Lowest service level region
Highest inventory level
14
Distribution Optimization Journey
2005 2006 2007 2008 2009 2010 2011
EMEA Orga change SC Orga changes
15
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
avr-
07
m
ai-
07
ju
in-0
7
juil-0
7
ao
ût-
07
se
pt-
07
o
ct-
07
n
ov-0
7
dé
c-0
7
jan
v-0
8
févr-
08
avr-
08
m
ai-
08
ju
in-0
8
juil-0
8
ao
ût-
08
se
pt-
08
o
ct-
08
n
ov-0
8
dé
c-0
8
1 Year
later
EDC plan
Key project drivers :
Buy-in from all countries and all franchises
Cross-country and cross-franchise harmonization
Jan/05 Jan/06 Jan/07 Jan/08 Jan/09 Jan/10
EDC Construction
Design Development/set-up Pilot
Mitek
Benelux All
France All
Process
improvement
1600 orders/day
6000 lines/day 7500 orders/day
27000 lines/day
Conveyor system and automatic packing machine
Advanced shipping notice notifying electronically of what is in transit
Development of a Cognos metrics tool
Travelling under quarantine - Shipment of non-released products from the
manufacturing site to the EDC
Other transfers – Volume increase
16 16
Current implementation status
FR DE
UK
GR
IT BNL
AT SI
Iberia HU
PL
CZ
IE
CH
Scandi
17 17
Planned 2011/2012 status
FR DE
UK
GR
IT BNL
AT SI
Iberia HU
PL
CZ
IE
CH
Scandi
18
Distribution optimization cycle
19
Product Characteristics
Pack Density
Valu
e D
en
sity
LOW HIGH
HIGH
LOW
€/M³
Unit/M
³
Inventory Optimization
Handling Optimization Transport/Storage
Optimization
•Pack Density = 1/gross cubic (m³)
•Value Density = Real cost (bx)/gross cubic (m³)
Model Ploos Van Amstel
100
5000
Note: Study boundaries defined by University of Eindhoven (TUE) in the 90th.
Boundaries on value are influenced by the interest rates.
In the 90th rate was 12% => boundary = 3000 €
Now rate in the 3% => boundary = 5000 €
* Source : « Werken met distributielogistiek », Van Goor, Ploos van Amstel,
Ploos van Amstel, 2005, Wolters-Noordhoff
20
Overall MD&D picture
Pack Density
Valu
e D
en
sity
LOW HIGH
HIGH
LOW
€/M³
Unit/M
³
•Pack Density = 1/gross cubic (m³)
•Value Density = Real cost (bx)/gross cubic (m³)
100
5000
Note: Study boundaries defined by University of Eindhoven (TUE) in the 90th.
Boundaries on value are influenced by the interest rates.
In the 90th rate was 12% => boundary = 3000 €
Now rate in the 3% => boundary = 5000 €
* Source : « Werken met distributielogistiek », Van Goor, Ploos van Amstel,
Ploos van Amstel, 2005, Wolters-Noordhoff
21
Inventory Management Scope
Inventory monitoring
Planning
&
Replenishment
Inventory entitlement
Network design &
Optimization Inventory positioning
Network design (warehouses /lanes /..)
Definition per code/market:
•Direct distribution next day (DD24)
•Direct distribution with 48H (DD48)
•Distribution to order (DTO)
•Local distribution with stock (MTS)
•Make to order code for the region
(MTO)
•Based on a set of constraints
•Transport costs
•Product costs
•Fixed and variable
warehouse costs….
•MTO/ MTS/ DTO
•Segmentation
•SS calculation:
•Normal distribution
•Demand variability
•Peak of sales
•Non-normal distribution
•Manage product life cycle
•Flatten demand peak
•Daily forecasting for distribution
•SS calculation:
•Other distribution
•Forecast error
•Aggregated /detailed view
•Replenishment frequency
•Minimum order quantity
•Lead-time variability
•Service level simulation
•Actual inventory visibility
•All level views
•Exception based analysis
In original scope
Interesting Additions
Future
Legend :
22
Table of content
– Johnson & Johnson
– How to get boardroom attention ?
– EMEA distribution strategy
– Conclusion
23
Conclusion
Rationalization
Robust Network
Inventory optimization
Optimization Tools •Creating the capabilities
•Change management
•Opportunistic approach
•Education
•Assess the organization readiness
•Consider the implementation timeline constraints