A Study On Suuply Chain Management at Johnsons

Johnsons & johnsons Pvt Ltd
A STUDY OF SUPPLY CHAIN MANAGEMENT AT

JOHNSONS & JOHNSONS, MULUND
Project submitted to
S.A.V ACHARYA INSTITUTE OF MANAGEMENT
STUDIES
In partial fulfillment of the requirements for

Master of management studies
By
Shailesh M. Nikumbha
Roll no:
Marketing
Batch: 2015-2017
Under the guidance of

Prof .Prashant Mishra
SAV Acharya Institute of Management studies, Shelu
A STUDY ON SUPPLY CHAIN MANAGEMENT AT JOHNSONS &

JOHNSONS, MULUND
Project submitted to
S.A.V ACHARYA INSTITUTE OF MANAGEMENT STUDIES
partial fulfillment of the requirements for
Master in Management Studies
By
SHAILESH NIKUMBHA
Roll No:
Specialization
MARKETING
By
Batch: 2015-2017
Under the guidance of
Prof Prashant Mishra
S.A.V ACHARYA INSTITUTE OF MANAGEMENT

STUDIES
SHELU
JULY 2016
Students Declaration
I hereby declare that this report submitted in partial fulfillment of the
requirement of MMS Degree of University of Mumbai to S.A.V
ACHARYA INSTITUTE OF MANAGEMENTSTUDIES. This is my
original work and is not submitted for award of any degree or diploma or
for similar titles or prizes.
Name
: NIKUMBHA SHAILESH MUKUND
Class
Roll No. :
Place
: SHELU
Date
Students
Signature:
Certificate
This is to certify that the dissertation submitted In partial fulfillment for
the award of MMS degree of university of Mumbai to S.A.VACHARYA
INSTITUDE OF MANAGEMENT STUDIES is a result of the
confide research work carried out by Mr. SHAILESH MUKUND
NIKUMBHA under my supervision and guidance .no part of this report
has been submitted for award of any other degree, diploma or other
similar titles or prizes, The work has also not been published in any
journal / Magazines
Date : / /2016
Place: SHELU
Project Guide
Director
(Dr .C. SATYANRAYANA)
ACKNOWLEDGEMENT
I have great pleasure in expressing my sincere Thanks to those who have
spared their valuable time in helping me to archive the success in my project .
I would specially like to thanks and express my gratitude to my project guide,
Mr. Narayan Iyengar sir& Shaji sir, Gadgil sir
I would also like to Johnson &Johnson staff member who have encouraged me
and help me in my completion of this project
Finally, I would also take opportunity to thanx my parents and all my friends
and colleagues for their undying support during the preparation of this project
TABLE OF CONTENTS:
Chapter
No.
Particulars
Executive Summary
Introduction
Introduction to the subject/ topic
Introduction to the industry/sector
Introduction to the company
Literature Review (Secondary Data)
Research Methodology
Problem Definition
Objectives
Sources of data
Coverage of area
Research design
Sampling method
Sampling size
Tools of analysis
Limitations
Scope of the report
Analysis and Findings
Suggestions/Recommendations
Page No.
Conclusions
Bibliography and References
10
Annexure
List of symbols
Questionnaire
EXECUTIVE SUMMAREY
INTRODUCTION
INTRODUCTION TO PHARMA INDUSTERY
1) CIPLA
Cipla
Limited is
an
Indian
multinational pharmaceutical and
biotechnology company, headquartered in Mumbai, India, Belgium, Surrey in

the European and Miami, Florida, in the United States; with manufacturing
facilities
in Goa(eight), Bengaluru (one), Baddi(one), Indore (one), Kurkumbh(one), Pata
lganga (one), and Sikkim (one), along with field stations in Delhi, Pune, and
Hyderabad .Cipla primarily develops medicines to treat cardiovascular, arthritis,
diabetes, weight control and depression; other medical conditions.
Fig 1.1 Cipla Mfg plant,Mumbai
Product and service

Cipla sells active pharmaceutical ingredients to other manufacturers as well as
pharmaceutical and personal care products, including Escitalopram (antidepressant), Lamivudine and Fluticasone propionate. They are the world's largest
manufacturer of antiretroviral
Operation
Cipla has 34 manufacturing units in 8 locations across India and has presence in
170 countries. Exports accounted for 48% 49.48 billion (US$740 million) of its
revenue for FY 2013-14. Cipla spent INR 517 cr. (5.4% of revenue) in FY 2013-14
on R&D activities. The primary focus areas for R&D were development of new
formulations, drug-delivery systems and APIs (active pharmaceutical ingredients).
Cipla also cooperates with other enterprises in areas such as consulting,
commissioning, engineering, project appraisal, quality control, know-how transfer,
support, and plant supply.
As on 31 March 2013, the company had 22,036 employees (out of which 2,455
were women (7.30%) and 23 were employees with disabilities (0.1%)).During the
FY 2013-14, the company incurred 12.85 billion (US$190 million) on employee
benefit expenses
2) Glaxo smith Kline consumer health care:
Fig
1.2
Glaxo Smith Kline
Glaxo was founded in the 1850s as a general trading company in Bunnythorpe,

New Zealand, by a Londoner, Joseph Edward Nathan. In 1904 it began producing
dried-milk baby food, first known as Defiance, then as Glaxo (from lacto), under
the slogan "Glaxo builds bonny babies."The Glaxo Laboratories sign is still
visible (right) on what is now a car repair shop on the main street of Bunnythorpe.
The company's first pharmaceutical product, produced in 1920, was vitamin d
Glaxo Laboratories opened new units in London in 1935. The company bought two
companies, Joseph Nathan and Allen & Hanburys in 1947 and 1958 respectively.
The Scottish pharmacologist David Jack was working for Allen & Hanbury's when
Glaxo took it over; he went on lead the company's R&D until 1987. After the
company bought Meyer Laboratories in 1978, it began to play an important role in
the US market. In 1983 the American arm, Glaxo Inc., moved to Research Triangle
Park (US headquarters/research) and Zebulon (US manufacturing) in North
Carolina.
Burroughs Wellcome & Company was founded in 1880 in London by the
American pharmacists Henry Wellcome and Silas Burroughs. The Wellcome
Tropical Research Laboratories opened in 1902. In the 1920s Burroughs Wellcome

established research and manufacturing facilities in Tuckahoe, New York, which
served as the US headquarters until the company moved to Research Triangle
Park in North Carolina in 1971. The Nobel Prize winning scientists Gertrude B.
Elion and George H. Hitchingsworked there and invented drugs still used many
years later, such as mercaptopurine. In 1959 the Wellcome Company
bought Cooper, McDougall & Robertson Inc to become more active in animal
health. Glaxo and Burroughs Wellcome merged in 1995 to form Glaxo
Wellcome.Glaxo restructured its R&D operation that year, cutting 10,000 jobs
worldwide, closing its R&D facility in Beckenham, Kent, and opening a Medicines
Research Centre in Stevenage, Hertfordshire. Also that year, Glaxo Wellcome
acquired the California-based Affymax, a leader in the field of combinatorial
chemistry
SmithKline Beecham
In 1843 Thomas Beecham launched his Beecam's Pills laxative in
England, giving birth to the Beecham Group. In 1859 Beecham
opened its first factory in St Helens, Lancashire. By the 1960s
Beecham was extensively involved in pharmaceuticals
John k .smith opened its first pharmacy in Philadelphia in 1830. In 1865 Mahlon
Kline joined the business, which 10 years later became Smith, Kline & Co. In 1891
it merged with French, Richard and Company, and in 1929 changed its name
to Smith Kline & French Laboratories as it focused more on research. Years later it
bought Norden Laboratories, a business doing research into animal health,
and Recherche et Industrie Thrapeutiques in Belgium in 1963 to focus on

vaccines. The company began to expand globally, buying seven laboratories in
Canada and the United States in 1969. In 1982 it bought Allergan, a manufacturer
of eye and skincare products.
SmithKline & French merged with Beckman Inc. in 1982 and changed its name to
SmithKline Beckman. In 1988 it bought its biggest competitor, International
Clinical Laboratories, and in 1989 merged with Beecham to form SmithKline
Beecham plc. The headquarters moved from the United States to England. To
expand R&D in the United States, the company bought a new research center in
1995; another opened in 1997 in England at New Frontiers Science Park, Harlow
GlaxoSmithKlinee
Glaxo Wellcome and SmithKline Beecham announced their intention to merge in
January 2000. The merger was completed in December that year, forming
GlaxoSmithKline (GSK)The company's global headquarters are at GSK
House, Brentford, London, officially opened in 2002 by then-Prime Minister Toy
Blair. The building was erected at a cost of 300 million and as of 2002 was
home to 3,000 administrative staff Andrew Wittytook over as CEO in May 2008.
Witty joined Glaxo in 1985 and had been president of GSK's Pharmaceuticals
Europe since 200Chris Gent, former CEO of Vodafone, has been the chair since
January 200 Philip Hampton, chair of the Royal Bank of Scotland, replaced Gent
in September 2015
pharamaceutical
GSK manufactures products for major disease areas such as asthma, cancer,
infections, diabetes and mental health. Its biggest-selling in 2013
were Advair,Avodart, Flovent, Augmentin, Lovaza, and Lamictal; its drugs and
vaccines earned 21.3 billion that year. Other top-selling products include
its asthma/COPDinhalers Advair, Ventolin, and Flovent;
itsdiphtheria/tetanus/pertussis vaccine Infanrix and its hepatitis B vaccine; the
epilepsy drug Lamictal, and the antibacterial Augmentin.
Medicines historically discovered or developed at GSK and its legacy companies
and now sold as generics include amoxicillin and amoxicillinclavulanate,ticarcillin-clavulanate mupirocin, and ceftazidime for bacterial
infections, zidovudine for HIV infection, valacyclovir for herpes virus
infections, albendazolefor parasitiAmong these, albendazole, , amoxicillinclavulanate, allopurinol, mercaptopurine, mupriocin, pyrimethamine, ranitidine,
thioguanine, trimethoprim and zidovudine are listed on the World Health
Organization's list of essential medications.
Consumer healthcare
GSK's consumer healthcare division, which earned 5.2 billion in
2013, sells oral healthcare, including Aquafresh, Maclean's
and Sensodyne toothpastes; and drinks such as Horlicks, Boost, a
chocolate-flavoured malt drink sold in India, and
formerly Lucozade and Ribena, sold in 2013 to Suntory for
1.35bn.Other products include Abreva to treat cold sores; Night
Nurse, a cold remedy; Breathe Right nasal strips;
and Nicoderm and Nicorette nicotine replacement
3) P&G (PROCTER GAMBLE)

Procter & Gamble Co., also known as P&G, is an
American multinational consumer goods company headquartered in downtown
Cincinnati, Ohio, United States, founded by William and James Gamble, both from
the United Kingdom. Its products include cleaning agents, and personal
care products. Prior to the sale of Pringles to the Kellogg Company, its product line
also included foods and beverages.
Procter & Gamble Co., also known as P&G, is an

American multinational consumer goods company headquartered in downtown
Cincinnati, Ohio, United States, founded by William and James Gamble, both from
the United Kingdom. Its products include cleaning agents, and personal
care products. Prior to the sale of Pringles to the Kellogg Company, its product line
also included foods and beverages.
In 2014, P&G recorded $83.1 billion in sales. On August 1, 2014, P&G announced
it was streamlining the company, dropping around 100 brands and concentrating on
the remaining 65 brands, which produced 95 percent of the company's profits. A.G.
Lafley, the company's chairman, president and CEO until October 31, 2015, said
the future P&G would be "a much simpler, much less complex company of leading
brands that's easier to manage and operate".
David Taylor became P&G CEO and President effective November 1, 2015.
Company overview
Fig no: Johnsons & johnsons headquarter US
Johnson & Johnson (JNJ) is one of the leading pharmaceuticals and healthcare
companies in the US.
The worlds largest and
most compressive manufacture of health care
product
Founded in 1886 Headquartered in new Brunswick ,new jersey
Sales of $72.2billion in 2015
265+operating companies in 60+countries 128,500+employess worldwide
Customers in over 200 countries
The worlds sixth largest consumer health company
The worlds eighth largest pharmaceutical company
The world fifth largest biologics company
The companys business is divided into three major segments:

1.
Pharmaceuticals
2.
Medical Devices and Diagnostics
3.
Consumer Products
The group is referred as Johnson and Johnson Family of Companies. It includes

around 275 subsidiary companies. It has operations in 60 countries. Its products are
sold in around 200 countries.
Share price performance

The above graph shows Johnson & Johnsons share price performance compared to
its peers. On an annualized basis, the company delivered returns of 13.4% from
February 2010 to February 2015. In the same timeframe, Merck & Co. (MRK),
Pfizer (PFE), and Bristol-Myers Squibb Co. (BMY) each delivered annual returns
of 14.2%, 18.5%, and 24.9%, respectively.During the same period, the annualized
return for the Health Care Select Sector ETF (XLV) was 20.38%.
Foundation and early history
ROBERT Wood Johnsons

Inspired by a speech by antiseptic advocate Joseph Lister, Robert Wood
Johnson joined his brothers James Wood Johnson and Edward Mead Johnson to
create a line of ready-to-use surgical dressings in 1885. The company produced its
first products in 1886 and incorporated in 1887.
Robert Wood Johnson served as the first president of the company. He worked to
improve sanitation practices in the nineteenth century, and lent his name to
a hospital in New Brunswick, New Jersey. Upon his death in 1910, he was
succeeded in the presidency by his brother James Wood Johnson until 1932, and
then by his son, Robert Wood Johnson II.
Robert Wood Johnson's granddaughter, Mary Lea Johnson Richards, was the first
baby to appear on a Johnson & Johnson baby powder label.
Johnson & Johnson was founded by three brothers in New Brunswick, New Jersey
in 1886. The company started its business operations by introducing a line of
ready-to-use surgical dressings. Surgical dressings are used to cover a wound to
promote healing and prevent further harm.
The company published Modern Methods of Antiseptic Wound Treatment. It was
considered to be one of the standard texts for antiseptic surgery in 1888. In the
same year, the company also introduced its commercial first aid kits to help
railroad workers. Later, it became standard in treating injuries.
The company transformed into a publicly traded company in 1943. It had a listing
on the NYSE in 1944. The companys common stock has also been part of the
Dow Jones Industrial Average since 1997. Its one of the Fortune 500 companies.
As of 2014, the group had ~126,500 employees at over 275 Johnson &
Johnson operating companies. The total revenue from all three business segments
was over $74.3 billion in 2014. It had net earnings of about 22% of the total
revenue.
Chairmen
Robert Wood Johnson I (18871910)
James Wood Johnson (19101932)
Robert Wood Johnson II (19321963)
Philip B. Hofmann (19631973)
Richard B. Sellars (19731976)
James E. Burke (19761989)
Ralph S. Larsen (19892002)
William C. Weldon (20022012)
Alex Gorsky (2012present)
VISION AND MISSIO
The company operates in three broad divisions; Consumer

Healthcare, Medical Devices and Pharmaceuticals.
Johnson & Johnson Family of Companies
Consumer
Medical Devices
Pharmaceuticals
Baby Care
Advanced Sterilization Products
Janssen
Skin & Hair Care
Animas Corporation
Janssen R&D LLC
Wound Care and
Biosense Webster
Janssen Healthcare
Topical
DePuy Synthes Companies of
Innovation
Oral Health Care
Johnson & Johnson
Janssen Pharmaceuticals
Womens Health
Ethicon, Inc.
Inc
McNeil Consumer
Janssen Diagnostics BVBA
Janssen Diagnostics
Healthcare
Johnson & Johnson Vision Care,
Janssen Therapeutics
Over-The-Counter
Inc.
Janssen Scientific
Medicines
LifeScan, Inc.
Affairs
Nutritionals
Mentor
McNeil-PPC, Inc
Healthcare
Analyzing Johnson & Johnsons Three Main Business

Segments
Business segments
Johnson & Johnson (JNJ) introduced its commercial first aid kits and ready-to-use
surgical dressings in the late 1880s. Over a period of 128 years, the company
diversified its business into three major business segments:
1.
Pharmaceuticals
2.
Medical Devices and Diagnostics
3.
Consumer Products
Pharmaceuticals segment
The Pharmaceuticals segment is focused on five therapeutic areas including

immunology, infectious diseases, neuroscience, oncology, and cardiovascular and
metabolic diseases. Over 29 prescription drugs are part of this segment.
The segment distributes its products directly to retailers, wholesalers, hospitals,
and healthcare professionals for prescription use.
Medical Devices and Diagnostics segment
The Medical Devices and Diagnostics segment includes products used in the
orthopedic, surgical care, specialty surgery, cardiovascular care, diagnostics,
diabetes care, and vision care markets. This segment distributes its products to
wholesalers, hospitals, and retailers. The products are mainly used in
the professional fields by physicians, nurses, hospitals, and clinics. The company
completed the divestiture of its Ortho-Clinical Diagnostics business in June 2014.
Consumer Products segment
The Consumer Products segment deals with products for baby care, oral care, skin
care, wound care, womens health fields, nutritionals, and OTC (over-the-counter)
pharmaceutical products. These products are marketed to the general public.
Theyre sold through retail outlets and distributors across the globe.
Johnson & Johnsons structure is based on the principle of decentralized
management. Johnson & Johnsons executive committee is the main management
group thats responsible for the companys strategic operations and resource
allocation. The committee oversees and coordinates the activities of all three of the
companys segments.
Johnson & Johnson competes with various local and global companies in all of its
major products. However, the most significant competition is for the research and
development of new drugs. Other companies include Teva Pharmaceuticals
(TEVA), Pfizer (PFE), Merck and Co. (MRK), Boston Scientific (BSX), Stryker
(SYK), and Zimmer Holdings (ZMH).
Johnson & Johnson forms about 10.4% of the total assets of the Health Care Select
Sector SPDR ETF (XLV).
MULUND, INDIA
Johnson & Johnson Limited, Consumer Division
Business Facts
The 24-acre manufacturing facility in Mulund West, a suburb of Mumbai in India,
contains 6 buildings, covering 22,096 square meters of floor space.
The facility manufactures adhesive bandages, health and sanitary products.
Operations run 24-hours per day, 6 days per week with approximately 656
Employees.
Fig;
Mulund consumer Plant
Fig: Mulund consumer Plant Product
Community and Social Engagement

Civic Activities:
Active member of Mutual Aid Response Group (MARG), an organization with
industries from Mulund to Kurla.
Annually conduct coloring competition in association with MARG and the
Directorate of Industrial Safety & Health for employees children in the MARG
Group.
Participated in the training program for local police personnel.
Provide and maintain a garden for the local residents around the facility.
Environmental, Health and Safety Performance
Environmental highlights:
Achieved 10% absolute reduction of water use from 2005 to 2010. During this
same period, net trade sales increased.
We are committed to reducing our environmental footprint, and in 2005
implemented a hot melt coating process resulting in reduction of volatile organic
compounds (VOC) emission and generation of hazardous waste.
We have also eliminated the EO Sterilization process for Adhesive Products by
upgrading the manufacturing facility and controlling the Bio burden.
Year Hazardous waste generation (in kilograms)

2004 2,418
2005 6,208
2006 5,585
2007 7,008
2008 3,459
2009 2,006
2010 1,476
2011 1,054
Since 2000, the facility has used Design for Environment tools to redesign our
product packaging and processes, eliminating the use of PVC completely, and
reducing the amount of cardboard used for shipping.
Certified by TV (Technishe Uberwachungs Verein) for establishing and
managing the ISO 14001: 2004 Environmental Management Systems standard
since 2002.
Health and Safety highlights:

EHS training is incorporated into the orientation program for new employees.
Prior to purchasing any new machines or designing a new project we conduct a
comprehensive Aspect/Impact analysis for EHS.
No lost workday injuries since August 1998.
Awards and recognition:
The facility has won 42 National/State and 6 Mutual Aid Awards since 1981.
National/State awards are presented for the lowest accident free rates and lowest
accidents for the corresponding year. The Mutual Aid awards are presented for
EHS Industrial Award Competitions.
Johnson & Johnsons Global Business

Strategy Promotes Growth
Business strategy
Johnson & Johnson (JNJ) operates in nearly 60 countries. It sells
its products in about 200 countries. The following chart shows the
breakup of sales to customers by business segment.
Johnson & Johnsons operations

Nearly 55% of Johnson & Johnsons revenue comes from non-US markets. The
company focuses on the innovation of new products that bring value to people,
healthcare professionals, and health systems around the world.
The company operates 134 manufacturing facilities and eight innovation centers
across the globe. In the US, there are eight manufacturing facilities for the
Consumer Products segment, eight for the Pharmaceuticals segment, and 26 for the
Medical Devices and Diagnostics segment. There are 41 manufacturing facilities in
Europe, 15 in the Western Hemisphereexcept the US, and 36 in Africa and AsiaPacific.
Most of the manufacturing facilities outside the US serve more than one business
segment. Major research facilities are located not only in the US, but also in
Belgium, Brazil, Canada, China, France, Germany, India, Israel, Japan, the
Netherlands, Singapore, Switzerland, and the United Kingdom.
Consumer segment
The company introduced various products including moisturizers, body lotions,
body wash, anti-aging lotions, skin care products for sensitive skin, no-calorie
sweeteners, and pain relieving creams. The new products were mainly focused in
the US, the United Kingdom, Canada, and Australia. This determines the
companys efforts to maintain its market share in the Consumer Products segment
in the US and non-US markets.
The company is focused on developing and improving drugs in order to maintain
the revenue stream from this business segment. The patents for Remicadethe
companys largest selling productwill expire soon. In 2014, Remicade accounted
for 9.2% of the total revenue. Recently, the company launched Edurant, Olysio,
Xarelto, and Zytiga.
The company is mainly focused on orthopaedic products for joint reconstruction
and trauma. Apart from this, the company introduced various products for
oncology, cardiovascular care, surgical care, diabetes care, and vision care.
Johnson & Johnson already went for the divestiture of the Ortho-Clinical
Diagnostics business. Its exiting certain womens health products.
Other big pharma companies including Pfizer (PFE), Merck & Co. (MRK),
GlaxoSmithKline, and Novartis AG (NVS). Theyre constantly working to
increase their product range and market reach. Merck & Co. forms about 6% of the
total assets of the Health Care Select Sector SPDR ETF (XLV).
Exploring Johnson & Johnsons Pharmaceuticals Segment

Johnson & Johnson (JNJ) is the largest pharmaceutical company in the US. Its the
fastest growing company among the top ten companies globally. The
Pharmaceuticals segment contributes over 43% of the companys revenue.
For 2014, the segment generated revenue of about $32.3 billion. This was due to
operational growth of 16.5% in worldwide pharmaceutical sales.
The Pharmaceuticals segment is focused on five therapeutic areas including
immunology, infectious diseases, neuroscience, oncology, and cardiovascular and
metabolic diseases. Over 29 prescription drugs are part of this segment.
The segment distributes its products directly to retailers, wholesalers, hospitals,
and healthcare professionals for prescription use. The company focuses on research
and development in these five therapeutic areas only. It doesnt have any plans to
expand into other areas of the Pharmaceuticals segment.
As a percentage of sales, the pre-tax profits for the Pharmaceuticals segment were
36.2% in 2014. This was achieved due to high margin products strong sales
volume growth.
Products
Remicade is an immunology drug. Its the largest selling drug in this segment. The
drug contributes nearly 9.2% of the companys total revenue. However, the patent
for this drug is going to expire in two sets. The first set will expire in 2015 for
some of the countries in Europe. The other set will expire in 2018 for the US.
Key contributors from this segment include:
immunology products including Remicade, Stelara, and Simponi Aria
infectious disease products including Olysio, Sovraid, and Prezista
oncology products including Zytiga and a new product called Imbruvica
oral anticoagulant Xarelto
neuroscience products including Invega, Sustenna, and Xeplion

Competition
Other big pharma companies include Pfizer (PFE), Merck and Co. (MRK),
Novartis AG (NVS), and GlaxoSmithKline (GSK). Pfizer forms about 7.80% of
the total assets of the Health Care Select Sector SPDR ETF (XLV).
Johnson & Johnsons Medical Devices and Diagnostics Segment

Medical devices segment
The Medical Devices and Diagnostics segment contributes over 37% of Johnson &
Johnsons (JNJ) revenue. For the last three years, the orthopedics franchise has
been a key driver for the companys growth in this segment.
For 2014, the segment generated revenue of about $27.5 billion through the
worldwide sales of medical devices. This was a 3.4% decrease compared to the
year before. The decrease was partially due to the divestiture of the Ortho-Clinical
Diagnostics business to The Carlyle Group in June 2014. It was also due to the
negative impact of currencies.
As a percentage of sales, the pre-tax profit for this segment was 28.9% in 2014.
This was achieved due to a $1.9 billion gain on the divestiture of the OrthoClinical Diagnostics business and lower litigation expenses.
The company is planning to exit certain womens health products.
Products
The segment includes products used in the orthopaedic, surgical care, specialty
surgery, cardiovascular care, diagnostics, diabetes care, and vision care markets.
Key products from this segment are:
Orthopaedic franchise joint reconstruction, trauma, sports medicine, knee,

and hip products.
surgical care franchise sutures and the Endopath stapler
specialty surgery franchise biosurgical products and energy products
vision care franchise Acuvue and Vistakon products
cardiovascular care franchise Biosense Webster products and the

ThermoCool SmartTouch contact force sensing catheter
This segment distributes its products to wholesalers, hospitals, and retailers. The
products are mainly used in the professional fields by physicians, nurses, hospitals,
and clinics.
Brands
A few of the segments devices include:
DePuy Synthes for orthopaedic products
Cordis and Biosense Webster for cardiovascular products
Codman Neuro and DePuy Synthes for neurovascular diseases
Lifescan and Animas corporation for diabetes care
Vistakon and Acuvue for vision care products
Ethicon and Codman Neuro for general surgery products

Ethicon and Mentor for aesthetics products
Acclarent for ear, nose, and throat conditions

Competition
For medical devices, other major companies include Medtronic (MDT), Boston
Scientific (BSX), Stryker (SYK), and Zimmer Holdings (ZMH). Johnson &
Johnson forms about 10.5% of the total assets of the Health Care Select Sector
SPDR ETF (XLV).
A Snapshot of Johnson & Johnsons Consumer Segment
Consumer segment
Johnson & Johnsons Consumer segment is focused on baby care, oral care, skin
care, and other consumer products. It contributes ~1920% of the companys
revenue.
For 2014, this segment generated revenue of about $14.5 billion. It was an
operational increase of 1%. It was offset by the negative currency impact of 2.4%.
The total decrease was 1.4%compared to the year before. The company went for
the divestiture of womens sanitary protection products in the US, Canada, and the
Caribbean. The divestiture was completed by the end of 2013.
As a percentage of sales, the pre-tax profit was 13.4% in 2014. This was
achieved mainly due to the cost containment initiatives.
Products
The Consumer segment includes products for OTC (over-the-counter) sales, skin
care, baby care, oral care, wound care, and womens health. The key products from
this segment are:
OTC franchise analgesics and upper respiratory products
skin care franchise Aveeno, Neutrogena, and Dabao product lines
baby care franchise Johnsons baby products
oral care franchise Listerine products
wound care franchise Band-Aid, Bengay, and Neosporin products

These products are marketed to general public and sold through retail outlets and
distributors across the globe.
Brands
Consumer Products is a segment where the products are sold mainly due to the
brand reputation and the trust for its quality. A company like Johnson & Johnson
has over 100 brands. A major part of the brands is focused on consumer products.
A few of the major brands for this segment include:
Johnsons baby for baby care products
Aveeno, Neutrogena, Johnsons, Clean & Clear, and Dabao for skin care
products
Band-Aid, Bengay, Savlon, and Neosporin for wound care products
Listerine and Rembrandt for oral care products
Splenda and Benecol for nutritionals
Visine and Acuvue for vision care products
Tylenol, Sudafed, Pepcid and Benadryl for OTC medicines

Competition
For the Consumer Products segment, other major companies include Unilever NV
(UN), Nestle S.A. (NSRGY), Kimberly-Clark Corporation (KMB), and Procter &
Gamble (PG). Johnson & Johnson (JNJ) forms about 10.4% of the total assets of
the Health Care Select Sector SPDR ETF (XLV).
Johnson & Johnsons Revenue Stream Increased in 2014
Revenue breakup
Johnson & Johnsons (JNJ) net revenue increased by 4.2% from $71.3 billion in
2013 to $74.3 billion in 2014. There was an operational increase of 6.1%. The
negative impact of currency was 1.9%.
Johnson & Johnson has three segmentsConsumer Products, Pharmaceuticals,

and Medical Devices and Diagnostics.
Consumer segment
The Consumer segments revenue for 2014 was $14.5 billion. It was 1.4% lower
than the revenue for 2013. It consisted of an operational increase of 1%. It had a
negative impact of 2.4% from currency. Sales in the US decreased by 1.3%. Sales
outside the US decreased by 1.4%.
The segments positive contributors were the sales of Tylenol and Motrin
analgesics, Zyrtec allergy OTC (over-the-counter) products, Aveeno and
Neutrogena skin care products, and Listerine oral care products.
The Pharmaceuticals segments revenue for 2014 was $32.3 billion. It was 14.9%
higher than the revenue for 2013. It consisted of an operational increase of 16.5%.
It had a negative impact of 1.6% from currency. Sales in the US increased by 25%.
Sales outside the US increased by 5%. The segments positive contributors were
new products as well as the companys existing core products.
The Medical Devices and Diagnostics segments revenue for 2014 was $27.5
billion. It was 3.4% lower than the revenue for 2013. It consisted of an operational
decrease of 1.6%. It had a negative impact of 1.8% from currency. Sales in the
US decreased by 4.3%. Sales outside the US decreased by 2.7%. The segments
positive contributors were orthopedic products, cardiovascular care products,
biosurgicals, and energy products in the specialty surgery business.
As a percentage of sales, the pre-tax profits for consumer products,

pharmaceuticals, and medical devices in 2014 were 13.4%, 36.2%, and 28.9%,
respectively.
Other big pharma companies include Pfizer (PFE), Merck & Co. (MRK), and
Novartis AG (NVS). These companies are also in diversified segments. However,
the percentage contribution of pharmaceuticals is higher for these companies
compared to Johnson & Johnson. Merck & Co. forms about 6.46% of the total
assets of the Health Care Select Sector SPDR ETF (XLV).
Share price performance

The above graph shows Johnson & Johnsons share price performance compared to
its peers. On an annualized basis, the company delivered returns of 13.4% from
February 2010 to February 2015. In the same timeframe, Merck & Co. (MRK),
Pfizer (PFE), and Bristol-Myers Squibb Co. (BMY) each delivered annual returns
of 14.2%, 18.5%, and 24.9%, respectively.
What Were Johnson & Johnsons Outstanding Expenses?
Expenses
As a percentage of sales, Johnson & Johnsons (JNJ) net profit increased from
19.4% in 2013 to 22% in 2014. The company achieved lower expenses, as a
percentage of sales, for 2014compared to 2013.
Cost of product sold

Johnson & Johnson was able to improve its gross profit margins by concentrating
on the sale of high margin products. The company also made cost reduction efforts
across many businesses. As a percentage of sales, the company achieved a lower
cost of products sold by 0.7% in 2014 to 30.6%compared to 31.3% in 2013.
Selling, marketing, and administration expenses
Selling, marketing, and administration expenses include salaries, shipping and
handling, marketing and advertising, and other operating expenses incurred by the
company. With over 126,500 employees in over 275 Johnson & Johnson operating
companies, the company has to incur huge salary costs.
It noticed an increase of 0.6% in selling, marketing, and administration expenses
for 2014compared to the year before. However, comparing the expenses as a
percentage of sales, these expenses showed a dip of 1.1% at 29.5% in 2014

compared to 30.6% in 2013.
Research and development expenses
Johnson & Johnson is committed to investing in research and development. It aims
to deliver innovative and high quality products. As a percentage of sales, the
research and development expenses were nearly the same for 2014 and 2013. The
companys research and development focus shifted partially from the Medical
Devices and Diagnostics segment to the Consumer Products segment.
Net earnings
As a percentage of sales, the company was able to improve its net earnings to 22%
in 2014compared to 19.4% in 2013. This was due to increased sales in the
pharmaceutical business and a higher concentration on high margin products sales.
Also, the company focused on cost reduction efforts across many businesses.
Other big pharma companies include Eli Lily and Company (LLY), Merck &
Co. (MRK), and Novartis AG (NVS). Johnson & Johnson forms about 10.54% of
the total assets of the Health Care Select Sector SPDR ETF (XLV).
Johnson & Johnsons Gross Margin Increased
Cost of products sold

The cost of products soldalso known as the cost of goods sold, or COGSis
the direct cost attributable to the production of goods. It includes the cost of raw
materials, packaging material, direct production costs, and certain freight costs. A
lower COGS means a higher gross margin for the company. COGS are also linked
to inventory turnover. Inventory turnover measures how fast the company turns
over its inventory within a year.
The above chart shows a comparison of COGS for big pharma companies with
headquarters in the US. Over three years, the trend is different for each company.
For Johnson & Johnson (JNJ), COGS decreased from 32.2% in 2012 to 30.6% in
2014. This resulted in an increase in gross margin from 67.8% in 2012 to 69.4% in
2014.
Increase in gross margin

Johnson & Johnson is a family of companies. It consists of over 265 operating
companies. The companys gross margin increased due to the following reasons:
higher sales of higher margin products
lower costs associated with strong volume growth in the Pharmaceuticals

segment
cost reduction efforts across many of the businesses

While the gross margin increased noticeably, the increase was partially offset by:
incremental intangible asset amortization expense related to Synthes and the

Medical Device Excise Tax
increased amortization expense due to the royalty buyout agreement with

Vertex for Incivo
total intangible asset amortization expense for 2013 was $1.4 billionit was
$1.1 billion for 2012
The change in COGS improved the net earnings to 22% of sales in 2014
compared to 19.4% in 2013.
Other big pharmaceutical companies

While the sales for Johnson & Johnson increased year-over-year, or YoY, for 2012
2014, the sales for big pharma companies like Pfizer (PFE), Merck & Co. (MRK),
Eli Lily and Company (LLY), and Bristol-Myers Squibb Co. (BMY) reduced
during the same period. This led to an increase in COGS for all of the other
companies.
Pfizer forms about 7.40% of the total assets of the Health Care Select Sector SPDR
ETF (XLV). In recent years, it noticed sales dip due to patents expiring for two of
its drugsLipitor and Viagra. Lipitor is a drug that lowers cholesterol. Viagra is a
drug for erectile dysfunction.
Johnson & Johnson Invested in Research and Development

Research and development
For a big pharma company like Johnson & Johnson (JNJ), research and
development, or R&D, plays a vital role in maintaining a healthy revenue stream.
These expenses relate to the process of discovering, testing, and developing new
products and improving the existing range of products. These expenses also ensure
product efficacy and regulatory compliances before the launch.
The above chart compares the R&D expenses for Johnson & Johnson, Pfizer
(PFE), Merck & Co. (MRK), Eli Lily and Company (LLY), and Bristol-Myers
Squibb Co. (BMY). As a percentage of sales, the R&D expenses for Johnson &
Johnson were around 11.4% in 2014. For the Pharmaceuticals segment, the R&D
expenses were about 8.3%. For the Consumer Products segment, the expenses
were nearly 0.85%. For the Medical Devices and Diagnostics segment, the
expenses were about 2.2%.
The company has its own R&D centers strategically located in Asia-Pacific,
Boston, California, and London. It offers entrepreneurs quick access to all of the
resources for the Johnson & Johnson Family of Companies.
The company invests in R&D to ensure the delivery of high quality and innovative
products. It develops new drugs through R&D to be ready with new products and
patents by the time existing patents expire. This is a constant process. As a
result, R&D is important for any companys growth. The in-process R&D, or
IPR&D, refers to recently discontinued or delayed development projects.
For each segment, the contribution of R&D as of December 2014 is listed below:
ten major new product filings and over 25 brand line extensions between
2013 and 2017
11 new products already launched between 2009 and 2013
nearly 50 compounds in early development
nearly 100 ongoing discovery projects

30 major new product filings expected between 2014 and 2016

Consumer Products segment
20 key product launches expected globally in 2015
Patent expiry
Johnson & Johnson lost exclusivity on two patented drugs in 2013Aciphex and
Concerta. Velcade is a cancer treatment drug. It lost exclusivity in 2014. One of the
key drugs is Remicade. Its for autoimmune diseases. Its expected to lose
exclusivity in the European Union in 2015. Its expected to lose exclusivity in
the US in 2018.
Teva Pharmaceutical Industries (TEVA) lost exclusivity on Copaxone. AstraZeneca
(AZN) lost exclusivity on Nexium. Merck & Co. (MRK) lost exclusivity on
Nasonex. Eli Lily and Company (LLY) lost exclusivity on Evista in 2014. Johnson
& Johnson forms 8.23% of the total assets of the iShares US Pharmaceuticals
(IHE) and 10.54% of the SPDR Health Care Select Sector ETF (XLV).
What Risks Does Johnson & Johnson Face?
Key risks
Johnson & Johnson (JNJ) faces a unique combination of risks. The risks are in
addition to specific risks in the pharmaceutical industry. Through Enterprise Risk
Management, the company identifies potential events that could affect it.
It manages the associated risks and opportunities. The company provides assurance
that its stated objectives will be achieved.
Geographic risk
Johnson & Johnson operates in over 60 countries. Its products are sold in over 200
countries. Also, nearly 55% of its total revenue is from sales outside the US. The
widespread network reduces the geographic risk. Any changes in the social,
regulatory, and economic environment in one of the markets wont affect the
business adversely.
Currency risk
Currency risk is one of the major risks that can impact Johnson & Johnson. The
company receives nearly 55% its revenue from non-US markets. For 2014, the
company faced nearly a 2.4% negative impact of currencies in the Consumer
Products segment, a 1.6% negative impact of currencies in the Pharmaceuticals

segment, and a 1.8% negative impact of currencies in the Medical Devices and
Diagnostics segment.
Legal risk
Johnson & Johnson is exposed to legal riskslike patent rights and prohibition
rules. For patent rights, the company is already looking for an extension for
its largest selling drugRemicade. The patents are set to expire in 2015 in some
European countries. The patents are expected to retire in 2018 in the US.
For 4Q14, one of the subsidiarys manufacturing facilities was charged for
allegedly violating regulations dealing with the handling of certain wastes. It was
charged by the California Department of Toxic Substances Control. The company
agreed to perform certain remedial actions and pay ~$400,000 to settle the claim.
Integration risk after a merger
The company tries to minimize the integration risk after a merger by maintaining a
decentralized management structure. Johnson & Johnsons executive committee is
the main management group thats responsible for the companys strategic
operations and resource allocation. The committee oversees and coordinates the
activities of the Consumer Products, Pharmaceutical, and Medical Devices and
Diagnostics segments.
Johnson & Johnson, Pfizer (PFE), Merck & Co. (MRK), and Gilead Sciences
(GILD) form over 30% of the total assets of the Health Care Select Sector SPDR
ETF (XLV).
Where Does Johnson & Johnson Stand in the Industry?
Johnson & Johnson and its peers

Johnson & Johnson (JNJ) is a diversified company. It has operations in
the Consumer Products, Medical Devices and Diagnostic, and Pharmaceuticals
segments. Some of the other big pharma companies include Pfizer (PFE), Merck
and Co. (MRK), and Novartis AG (NVS).
For medical devices, large companies include Medtronic (MDT) and Boston
Scientific (BSX). For orthopedic implants, the major pharmaceutical companies
include Stryker (SYK) and Zimmer Holdings (ZMH). For consumer products,
other prominent companies include Procter & Gamble (PG) and Unilever NV
(UN).
Big pharma and healthcare companies generally carry high debt on accounting
balance sheets. Therefore, EV/EBITDA (enterprise value to earnings before
interest, tax, depreciation, and amortization) is often used to value capital-intensive
companies. The above chart shows Johnson & Johnsons forward EV/EBIDTA
multiple trend over five yearscompared to the industry trend.
EV/EBIDTA multiple
The forward EV/EBIDTA multiple represents the futuristic enterprise multiple over
the next 12 months. Johnson & Johnsons EV/EBIDTA multiple is much lower
than the industry average. Stocks like Bristol-Myers Squibb Co. (BMY) and Eli
Lily and Company (LLY) have a higher enterprise multiple.
PE multiple
The price-to-earnings, or PE, multiple is one of the simplest multiples used for
valuations. A forward PE multiple represents the estimates of the PE multiple for
the next 12 months. Analysts estimates suggest that Johnson & Johnsons forward
PE ratio increased from 15.5x in 2014 to 16.1x in 2015. The PE ratio is hovering
around 19x for the industry.
Also, the estimate for the PEG, or PE-to-growth, ratio is 2.76. The company is
trailing at a lower PE due to Remicades expected patent expiration. Its the largest
selling drug. It contributes to over 9% of the total revenue. However, the forward
PE is expected to be higher due to an estimated increase in sales and new product
launches.
When Johnson & Johnson is compared with its peersincluding Pfizer, Merck and
Co., and Eli Lily and Companyits the only company that had an increase in
revenue and net earnings year-over-year, or YoY, for the last three years.
Annualized returns
Johnson & Johnsons annualized returns are 14.14%, 19.77%, and 13.58%,
respectively, for one-year, three-years, and five-years. For the industry, the returns
are 16.19%, 20.54%, and 15.39%, for similar periods, respectively.
Ratings
Johnson & Johnson was awarded a AAA rating by Standard & Poors, Moodys,
and Fitch.
Johnson & Johnson, Merck and Co., Pfizer, and Gilead Sciences Inc. (GILD)
together form over 30% of the total assets of the Health Care Select Sector SPDR
ETF (XL
Understanding Johnson & Johnsons Ownership Structure
Ownership structure
Johnson & Johnson (JNJ) is a publicly traded company. It has been listed on New
York Stock Exchange since 1944. Its common stock is part of the Dow Jones
Industrial Average. The company is one of the Fortune 500 companies. Johnson &
Johnsons market capitalization is ~$280 billion.
Passive investors
The above graph shows Johnson & Johnsons ownership structure in January 2015.
Its dominated by passive investments. Passive investors arent involved with the
companys day-to-day activities. These investments account for more than 80% of
the total ownership structure. Black Rock, The Vanguard Group, and State Street
Corp. are the top three holders with 6.17%, 5.89%, and 5.72%, respectively, among
the investment research firms or the mutual fund investors in the company.
Banks, pension funds, government, and insurance companies together account for
about 11% ownership in Johnson & Johnson. The banks stake increased from
1.36% in January 2012 to 1.59% in January 2015. Pension funds stake decreased
from 3.83% in 2012 to 2.81% in 2015. The governments stake increased from
0.25% in 2012 to 1.37% in 2015.
Active investors
Active investors including hedge funds and individual investors. Together,
they account for ~2.5% ownership. Hedge funds holdings decreased from 2.38%
in 2012 to 1.55% in 2015.
Overall, there are 3,334 institutional owners holding 2.1 billion shares. Out of
these, 75.6% are floating shares. Insiders hold around 0.02% shares.
ETFs holdings
Johnson & Johnson is a major part of the Health Care Select Sector SPDR ETF
(XLV). It forms 10.54% of XLVs total assets. Other parts include Pfizer (PFE),
Merck & Co. (MRK), and Gilead Sciences (GILD) with 7.40%, 6.46%, and 5.94%
of XLVs total assets.
What is Supply chain Management?

Supply chain management (SCM) is the oversight of materials, information, and
finances as they move in a process from supplier to manufacturer to wholesaler to
retailer to consumer. Supply chain management involves coordinating and
integrating these flows both within and among companies. It is said that the
ultimate goal of any effective supply chain management system is to reduce
inventory (with the assumption that products are available when needed). As a
solution for successful supply chain management
Fig: supply chain Diagram
Supply chain management (SCM)

Major functions of supply chain are marketing, manufacturing ,procurement
,operations , inventory, warehousing ,distribution and customer service
The process begins with customer order and ends with delivery of goods and
service
These functions are managed through supply chain participants who could be many
at each stage in the chain.
Supply chain consist of all stages involved in servicing the customer to fulfill the
expectations
A supply chain is an extended enterprise where participants in the chain have
specific contributing roles to the goal of reaching the customer
How Do You Do Supply Chain

Management (SCM)?
A firms SCM efforts start with the development and execution of a long-term
supply chain strategy. Among other things, this strategy should:
Identify what supply chains the firm wants to compete in.
Help managers understand how the firm will provide value to the supply
chain.
Guide the selection of supply chain partners, including suppliers,

subcontractors, transportation providers, and distributors.
As firms struggle to understand what supply chains they compete in, it is often
valuable to map the physical flows and information flows that make up these
supply chains. From these maps, firms can begin to understand how they add
value, and what information is needed to make the supply chain work in the most
effective and efficient way possible.
Of course, the firms supply chain strategy does not exist in a vacuum. It must be
consistent with both the overall business strategy and efforts within such areas as
purchasing, logistics, manufacturing and marketing.
What is the Importance of Supply Chain

Management?
Supply Chain Management (SCM) is an essential element to operational efficiency.
SCM can be applied to customer satisfaction and company success, as well as
within societal settings, including medical missions; disaster relief operations and
other kinds of emergencies; cultural evolution; and it can help improve quality of
life. Because of the vital role SCM plays within organizations, employers seek
employees with an abundance of SCM skills and knowledge.Supply chain
management is critical to business operations and success for the following
reasons:
SCM is Globally Necessary
Basically, the world is one big supply chain. Supply chain management touches
major issues, including the rapid growth of multinational corporations and strategic
partnerships; global expansion and sourcing; fluctuating gas prices and
environmental concerns, each of these issues dramatically affects corporate
strategy and bottom line. Because of these emerging trends, supply chain
management is the most critical business discipline in the world today.
Reasons for SCM in Society
Supply chain management is necessary to the foundation and infrastructure within
societies. SCM within a well-functioning society creates jobs, decreases pollution,
decreases energy use and increases the standard of living. Two examples of the
effect of SCM within societies include:
o
Foundation for Economic Growth

A society with a highly developed supply chain infrastructure that includes
interstate highways, a large railroad network, ports and airports is able to trade
many goods at low cost. Business and consumers are able to obtain these goods
quickly, resulting in economic growth.
Reasons for SCM in Business

Clearly, the impact that SCM has on business is significant and exponential. Two
of the main ways SCM affects business include:
o
Boosts Customer Service

SCM impacts customer service by making sure the right product assortment and
quantity are delivered in a timely fashion. Additionally, those products must be
available in the location that customers expect. Customers should also receive
quality after-sale customer support.
Improves Bottom Line

SCM has a tremendous impact on the bottom line. Firms value supply chain
managers because they decrease the use of large fixed assets such as plants,
warehouses and transportation vehicles in the supply chain. Also, cash flow is
increased because if delivery of the product can be expedited, profits will also be
received quickly.
Supply chain management helps streamline everything from day-to-day product
flows to unexpected natural disasters. With the tools and techniques that SCM
offers, youll have the ability to properly diagnose problems, work around
disruptions and determine how to efficiently move products to those in a crisis
situation.
INTRODUCTION
We need different types of goods in our day-to-day life. We may buy some of these
items in bulk and store them in our house. Similarly, businessmen also need a
variety of goods for their use. Some of them may not be available all the time. But,
they need those items throughout the year without any break. Take the example of
a sugar factory. It needs sugarcane as raw material for production of sugar. You
know that sugarcane is produced during a particular period of the year. Since sugar
production takes place throughout the year, there is a need to supply sugarcane
continuously. But how is it possible? Here storage of sugarcane in sufficient
quantity is required. Again, after production of sugar it requires some time for sale
or distribution. Thus, the need for Storage arises both for raw material as well as
finished products.
Fig: Warehouse
Storage involves Proper arrangement for preserving goods from the time of their
production or purchase Till the actual use. When this storage is done on a large
scale and in a specified manner it is called warehousing.
The place where goods are kept is called warehouse. The
person in-charge of warehouse is called warehouse-keeper.APTE
Warehousing refers to the activities involving storage of goods on a large-scale in a
systematic and orderly manner and making them available conveniently when
needed. In other words, warehousing means holding or preserving goods in huge
quantities from the time of their purchase or production till their actual use or sale.
Warehousing is one of the important auxiliaries to trade. It creates time utility by
bridging the time gap between production and consumption of goods.
The effective and efficient management of any organization requires that all its
constituent elements operate effectively and efficiently as individual SBUs /
facilities and together as an integrated whole corporate. Across the supply chains,
warehousing is an important element of activity in the distribution of goods, from
raw materials and work in progress through to finished
products .It is integral part to the supply chain network within which it operates
and as such its roles and objectives should synchronize with the objectives of the
supply chain. It is not a Stand-alone element of activity and it must not be a weak
link in the whole supply chain network.
Warehousing is costly in terms of human resources and of the facilities and
equipments required, and its performance will affect directly on overall supply
chain performance. Inadequate design or managing of warehouse systems will
jeopardize the achievement of required customer service levels and the
maintenance of stock integrity, and result in unnecessarily high costs.
The recent trends and pressures on supply chain / logistics-forever increasing
customer service levels, inventory optimization, time compression and cost
minimization have inevitably changed the structure of supply chains and the
location and working of warehouses within the supply chains network.
WAREHOUSING & INVENTORY MANAGEMENT
Certainly the old concept of warehouses as go downs to store goods has been
outdated. Warehouses perhaps better referred to as distribution centers; exist
primarily to facilitate the movement of materials to the end customer. There are
exceptions such as Strategic stock-holding, but in all commercial applications;
effective and more efficient movement of materials to the customer is the key, even
if some inventory has to be held to achieve this. Warehouses are built in all shapes
and sizes, form facilities of a few thousand square
meters handling modest throughputs, to-despite the previous comments-large
capital intensive installations with storage capacities in the 1,00,000- pallet-plus
range, and very high-hundreds of pallets per hour throughputs.
However, the concept of throughput rather than storage, and the pressure to
optimize inventory with improved customer service level have also seen the
development of distribution centers that do not hold stock-the stockless depot
such as trans-shipment depots with more cross-docking operations. Another issue
that has exercised companies in recent days has been the degree of technology to
utilize in warehousing operations. The choice spans from conventional
warehousing racking and shelving with fork-lift or even manual operations
through to fully automated systems with conveyors and automated guided vehicles
(AGVs) and from carousels to robotic applications. The reasons for the choice of a
particular technology level are not always clear cut, and run the gamut of financial,
marketing and other factors, from companys image or flexibility for future change
through to personal perception of the appropriateness of a particular technology to
a particular business or company.
Need for Warehousing

Warehousing is necessary due to the following reasons.
(i) Seasonal Production- You know that agricultural commodities are harvested
during certain seasons, but their consumption or use takes place throughout t
Therefore, there is a need for proper storage or warehousing for these
commodities, from where they can be supplied as and when required.
(ii) Seasonal Demand- There are certain goods, which are demanded seasonally,
like woollen garments in winters or umbrellas in the rainy season. The production
of these goods takes place throughout the year to meet the seasonal demand. So
there is a need to store these goods in a warehouse to make them available at the
time of need.
(iii) Large-scale Production - In case of manufactured goods, now-a-days
production takes place to meet the existing as well as future demand of the
products. Manufacturers also produce goods in huge quantity to enjoy the benefits
of large-scale production, which is more economical. So the finished products,
which are produced on a large scale, need to be stored properly till they are cleared
by sales.
(iv) Quick Supply - Both industrial as well as agricultural goods are produced at
some specific places but consumed throughout the country. Therefore, it is
essential to stock these goods near the place of consumption, so that without
making any delay these goods are made available to the consumers at the time of
their need.
(V) Continuous Production- Continuous production of goods in factories requires
Adequate supply of raw materials. So there is a need to keep sufficient quantity of

stock of raw material in the warehouse to ensure continuous production.
(vi) Price Stabilization- To maintain a reasonable level of the price of the goods in
the market there is a need to keep sufficient stock in the warehouses. Scarcity in
supply of goods may increase their price in the market. Again, excess production
and supply may also lead to fall in prices of the product by maintaining a balance
of supply of goods, warehousing leads to price stabilization
Issues affecting Warehousing

Since warehouses, stores and distribution centres have to operate as essential
component elements within supply chains net work, key decisions when setting up
such facilities must be determined by the overall supply chain strategies for service
and cost. The factors that should be considered include the following.
WAREHOUSING &
Market and product base stability
Long term market potential for growth and for how the product range may expand
will influence decisions on the size and location of a warehouse facility, including
space for prospective expansion. These considerations will also impact on the
perceived need for potential flexibility, which in turn can influence decisions on
the type of warehouse and the level of technology to be used.
Type of materials to be handled:

Materials handled can include raw materials, WIP, OEM Auto spare parts,
packaging materials and finished goods in a span of material types, sizes, weights,
products lives and other characteristics. The units to be handled can range from
individual small items through carton boxes, special storage containers for liquids,
drums, sacks, and palletized loads. Special requirements for temperature and
humidity may also have to be
Types of warehouse
After getting an idea about the need for warehousing, let us identify the different
types of warehouses. In order to meet their requirement various types of
warehouses came into Existence, which may be classified as follows.
i. Private Warehouses
ii. Public Warehouses
iii. Government Warehouses
iv. Bonded Warehouses
v. Co-operative Warehouses
i. Private Warehouses The warehouses which are owned and managed by the
Manufacturers or traders to store, exclusively, their own stock of goods are known
as private warehouses. Generally these warehouses are constructed by the farmers
near their fields, by wholesalers and retailers near their business centres and by
Manufacturers near their factories. The design and the facilities provided therein
are according to the nature of products to be stored
ii. Public Warehouses
The warehouses which are run to store goods of the general public are known as
public warehouses. Anyone can store his goods in these warehouses on payment of
rent. An individual, a partnership firm or a company may own these warehouses.

To start such warehouses a license from the government is required. The
government also regulates the functions and operations of these warehouses.
Mostly these warehouses are used by manufacturers, wholesalers, exporters,
importers, government agencies, etc
iii. Government Warehouses
These warehouses are owned, managed and controlled by central or state
governments or public corporations or local authorities. Both government and
private enterprises may use these warehouses to store their goods. Central
Warehousing Corporation of India, State Warehousing Corporation and Food
Corporation of India are examples of agencies maintaining government
warehouses.
iv. Bonded Warehouses - These warehouses are owned, managed and controlled
by government as well as private agencies. Private bonded warehouses have to
obtain license from the government. Bonded warehouses are used to store imported
goods for which import duty is yet to be paid. In case of imported goods the
importers are not allowed to take away the goods from the ports till such duty is
paid. These warehouses are generally owned by dock authorities and found near
the ports.
v. Co-operative Warehouses
These warehouses are owned, managed and controlled by co-operative societies.
They provide warehousing facilities at the most economical rates to the members
of their societ
Johnsons & johnsons warehouse

Johnsons & Johnson 222 carry forward agent(CFA) in India

Motherhouse is Bhiwandi (MH) and Ghaziabad (UP )
This are five warehouse in Mulund plant (layout)
1) Main WH=14,449 sq. Ft.
2)BAND AID =2,969 sq. Ft.
3)IFC 1=9,636 sq. Ft.
4)M7= 3,000 sq. Ft
5) TALC = 8174 sq. Ft.
Fig : Talc warehouse
Fig:Main warehouse
MULUND LOCATION
BHIWANDI
ADI ENTERPRISE
VAKOLA
MLL
Process of Warehouse
Handling of Material
Receiving : the carrier delivering material should report at a designated Area

in the warehouse The carrier will present document given by the supplier t
Warehouse personal to check for correctness of the document and verify PO
and document,
Proper document in the name of Johnson & Johnsons security Inward entry
on the reverse of document and correct name & Address of consignor &
consignee in the document and Excise invoice ,material name Description
code Quantity and unit ,vendor status ,transporters copy of the Excise
Invoice ,COA / test report, vendor batch no ( all Raw

material),Manufacturing Date / Exp Date of consignment ,LCN number ( all
printed packaging material )

Upon getting clearance from receiving section for document correctness
.Park vehicle in front of Unloading bay .place stopper on either side of the
wheel of vehicle to ensure the vehicle does not move

Unloaded the material batch wise /lot wise from the vehicle on the Pallet
Such that different Batch /lots of the material are store on separate pallet
The vehicle carrying Band aid material unloaded separately all cosmetic
material are cleared from the unloading bay before band aid material are
unloaded and vice versa

During unloading that material is protected from rain water or any dired
contamination
The warehouse supervisor verify and ensure that the remaining shelf life of
raw materials are as per the guide line The shelf life of active ingredient of
Band Aid should be than 3 and half years ,If less than it should be informed
to warehouse incharge ,Q&C and sourcing

Ensure to inspect the incoming drums and bags / Boxes for transit damages
Drums that are damaged in transit or subject to rough handling during and
unloading are to be rejected during the income warehouse inspection

Drums that have miner dents and not structurally damaged are Acceptable
Minor scratches rusts that are not in the patch of pouring are acceptable
Drums where the material have leaked or are stained with inspect /birds
dropping molds are unacceptable

Thick layer of dust /dirty or cartons and unusual print (such foot prints) are
unacceptable
Torn cartons with contents exposed or visible or unacceptable
Holes that are deep and penetrate into material inside are unacceptable
Paper /plastic bag that are torn .stained or have material leaking through are
unacceptable Bags that are wet unacceptable as well
Stocks that are rejected due to the above reasons to be physically transferred
to Rejected storage area or Return to supplier
After that De-dusting process:
Place the pallet with material to be cleaned inside the de-dusting booth
Switch on the booth by pressing the grren button
Walt for the de-dusting cycle to be completed
Remove the pallet from the de dusting booth
Fig: De dusting Booth
Turn the pallet 180 deg .Again place the same pallet inside the de-dusting
booth same process
Packaging materials which are bulky in nature or come in large quantity can
be cleaned by vacuum cleaner or clean lint free cloth

Raw talc de dusting booth the material will be de dusted using vacuum
cleaner or clean free cloth
Verify the gross weight
Verify the gross weight of the Raw material containers bags. In recorded
sheet GILR the weighing of BKC drums will be 100%

Packaging material randomly verify the gross weight of the counting
number of boxes and the standard quantity mention on the pack whichever
is applicable
After that to fill check list for Goods Inward Inspection Record
INTRODUCTION
Supply Chain Management is the process of planning, implementing, and
controlling the operations of supply chain with the purpose to satisfy customer
requirements as efficiently as possible. Supply chain management spans all
movement and storage of raw materials, work-in- process inventory, and finished
goods from point-of- origin to point-of- consumption. It is a cross functional
approach to managing the movement of raw materials into an organization and the
movement of finished goods out of the organization toward the end consumer.
Supply Chain management is also the combination of art and science of improving
the way company finds the raw components it needs to make a product or service
and deliver it to customers. It seeks to enhance competitive performance by closely

integrating the internal functions within a company and effectively linking them
with external operations of suppliers and channel members. Moreover, this has
been a prominent concern for both large and small companies as they strive for
better quality and higher customer satisfaction.
In a supply chain, a company links to its supplier upstream and to its distributors
downstream in order to serve its customer. The goal of supply chain management is
to provide maximum customer service at the lowest possible costs.
Companies now are competing supply chain-to- supply chain rather than
enterprise-to- enterprise requiring for more intimately connected relationships.
Customer markets and supply chains are no longer limited by physical proximity,
and businesses are sourcing from and managing a greater number of far-flung
partners and channels.
Success of a company now depends on effective global supply chain management,
its ability to deliver the right product to the right market at the right time. The
complexity involved in managing supply chains that span continents and dominate
markets demands strategies and systems that are adaptable.
Managing Supply Chain for Global Competitiveness takes a strategic look at all of
the core functions of global supply chain management which includes product
design, planning and forecasting, sourcing, outsourcing, manufacturing, logistics,
distribution, and fulfilment. An example to illustrate this theory on the supply
chain management is the Johnsons & johnsons, Inc.
Competitive and Supply Chain Strategies
In its business, diversity and inclusion provide a competitive advantage that

drives business results.
Its brands appeal to an extraordinarily diverse array of customers and they

are sold by an equally diverse group of retailers.
It understands the needs of our consumers and customers
Uses diversity in our supplier base and in everything we do.
Commitment to purchase from a supplier base representative of our

employees, consumers, retail customers and communities.
Developing partnerships with minority-owned and women-owned suppliers

helps us build the world-class supplier base we need.
Creates mutually beneficial relationships that expand PepsiCo's sphere

of activity. It helps build community infrastructure by providing
employment, training, role models, buying from other minority and womenowned business and supporting community organizations
OBJECTIVES OF THE PROJECT
The purpose of research is to discover answers to questions through the application of

scientific procedures. The main aim of research is to find out the truth which is hidden and
which has not been discovered as yet.
The objectives of this study/project as follows:

A well designed Supply chain is expected to support the strategic objective of :
To study the working of JOHNSONS & JOHNSONS

To study how to handle material
How to manage Inventory
Management of people
Solving supplier problem
Customer service performance improvement
Reduction of pre & post production inventory
Minimize inventory by means of active like standardization ,variety reduction,etc
Minimum total cost of operation & procurement
Product quality control
Flexible planning & control procedure
Achieving maximum efficiency in using labour ,capital & plant through the company

A Study On Suuply Chain Management at Johnsons

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Johnsons & johnsons Pvt Ltd

A STUDY OF SUPPLY CHAIN MANAGEMENT AT

In partial fulfillment of the requirements for

Under the guidance of

Johnsons & johnsons Pvt Ltd

A STUDY ON SUPPLY CHAIN MANAGEMENT AT JOHNSONS &

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

S.A.V ACHARYA INSTITUTE OF MANAGEMENT

: NIKUMBHA SHAILESH MUKUND

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

Introduction to the subject/ topic

Introduction to the industry/sector

Introduction to the company

Literature Review (Secondary Data)

Analysis and Findings

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

Bibliography and References

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

multinational pharmaceutical and

biotechnology company, headquartered in Mumbai, India, Belgium, Surrey in

Fig 1.1 Cipla Mfg plant,Mumbai

Product and service

Johnsons & johnsons Pvt Ltd

2) Glaxo smith Kline consumer health care:

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

Glaxo Smith Kline

Glaxo was founded in the 1850s as a general trading company in Bunnythorpe,

Johnsons & johnsons Pvt Ltd

Tropical Research Laboratories opened in 1902. In the 1920s Burroughs Wellcome

Johnsons & johnsons Pvt Ltd

and Recherche et Industrie Thrapeutiques in Belgium in 1963 to focus on

Johnsons & johnsons Pvt Ltd

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

3) P&G (PROCTER GAMBLE)

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

Procter & Gamble Co., also known as P&G, is an

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

SAV Acharya Institute of Management studies, Shelu

Johnsons & johnsons Pvt Ltd

Fig no: Johnsons & johnsons headquarter US

most compressive manufacture of health care