Perhaps the most important and challenging aspect of SCM is the choice ofchoosing and developing working relationships with suppliers of parts and materials needed to produce a final product. Organizations must carefully choose and manage its their suppliers to avoid any number of risks associated with failure to deliver by a supplier. One way to mitigate these risks is for an organization to engage and incentivize supply chain partners through Supplier Relationship Management (SRM) practices. SRM guides the expectations and relationships among the parties and provides benefits for both sides.
Today’s complex, global business environment requires more than just agreements with suppliers. The sources of parts and materials are no longer always procured locally. Supplier sourcing is more likely to be conducted globally, with the potential to impact people, communities, and cultures in ways that must be considered and addressed responsibly, legally, and ethically.
Scenario
Johnson & Johnson (J&J) is a large, multi-national company with over more than 125,000 employees worldwide. In its Credo, J&J professes responsible and ethical treatment of all its stakeholders. To that end, J&J commits to the following: forming strong relationships with suppliers; including suppliers as stakeholders in innovation; supporting diversity among suppliers; and providing suppliers the opportunity to make a fair profit. In exchange, suppliers must comply with J&J’s Code of Conduct and Responsibility Standards for Suppliers.
You serve as Chief Procurement Manager for the Medical Devices Products at J&J, a position that pays $189,000 annually. You have been with the company for 11 years, and your team works closely with several functions in the organization, including Finance, Marketing, IT, and R&D. One key aspect of your job is to identify reputable supply chain partners that can move product to healthcare providers around the world. In your leadership role, you find it important to follow the J&J Credo, especially the part stating the following: “Customers’ orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit.”
Allied Distributors, Inc. (AD) has approached your office about becoming a worldwide distributor for medical devices. These products are delivered to healthcare professionals in fields like orthopedics, neurology, cardiology, minimally invasive surgery, wound management, and women’s health. The timing of this proposal is right because the J&J leadership team has implemented a strategic plan to improve patient outcomes and expand market share by introducing innovative products. Your job is to engage the procurement process to introduce a new supplier for medical devices.
Introducing a new supplier into the supply chain at J&J requires a good understanding of its supply chain practices and approach to SRM. The resources below provide more detail information in these areas.
J&J Homepage
J&J Product Information – Medical Devices
https://www.jnj.com/healthcare-products/medical-devices
J&J Credo
https://www.jnj.com/about-jnj/jnj-credo
J&J Code of Conduct
https://jnj.brightspotcdn.com/33/7c/6d77ff4b4adb8644d10f298d819e/code-of-conduct.pdf
J&J Responsibility Standards for Suppliers
https://www.jnj.com/about-jnj/company-statements/responsibility-standards-for-suppliers
J&J 2015 Citizenship & Sustainability Report
