How did the company benefit from integration?
Case Study: Johnson & Johnson
Johnson & Johnson Uses Organizational Design to Integrate Marketing and Purchasing Johnson & Johnson, a global company known for high-quality products and brands, is showing how the creative use of organizational design can promote integration between some important supply chain groups. Supply management professionals, who are part of the support activity called procurement, have a wide range of internal customers. One internal customer group is marketing, which is responsible for activities that could benefit from the involvement of professional supply managers. Executive managers have assigned a sourcing manager to J&J’s corporate marketing and promotion strategy team to support their efforts when developing contracts. Examples of service areas where the marketing team requires contract support include printing, convention and meeting space, media purchases, promotional displays and tradeshows, marketing research, and advertising and promotion. For example, sourcing involvement resulted in a reduction of company-wide printing suppliers from 600 to 5. By being part of the marketing strategy team, the sourcing professional adds value to the marketing and promotion process. She verifies that every unit within the corporation is charged the same best rate from suppliers and reserves the right to audit advertising “job jackets” and costs. She controls the buying of advertising and media support while working to gain most favored customer status with media suppliers. In short, she assumes a major part of the contracting process that marketing simply does not want. This allows marketing professionals to focus on those areas where they can make the greatest contribution. Although this sourcing manager currently supports only U.S. marketing, her business plan calls for providing support to worldwide marketing units over the next several years.
You will need to put your critical thinking cap on and imagine you are the executive implementing these strategies.
1. How did the company benefit from integration?
2. How do these activities create a cost-benefit for companies? What are your thoughts?
3. What are your thoughts on what it means to be integrated within the supply chain?
4. Why are internal customers important?
Source: Purchasing and Supply Chain Management, 6th edition, Monczka, Handfield, Giunipero, Patterson, 2016