Lean Operations in Practice Over

¶ … Lean Operations in Practice

Over the last several years, the operations management of corporations has been increasingly brought to the forefront. This is because globalization is having a major impact upon the marketplace by encouraging more competition. Over the course of time, a variety of firms have been forced to lower their cost structure to maintain market share. One area that executives have been concentrating on to improve their competitive advantages is in operations management.

In the case of Johnson and Johnson, the firm has a formalized structure in place that will: address the needs of shareholders and it provides the organization with a strategic direction. However, beyond these levels of control is when the company subdivides into a number of segments to include: Consumer, Pharmaceutical, Medical Devices and Diagnostics. To organize these segments is: the Group Operating Committee. Their responsibility is to coordinate with the different divisions to ensure that the firm is meeting the larger organizational objectives. Once this takes place, is when managers will have more control in setting the procedures and daily tasks for: various groups, teams and segments. The basic idea is that upper management will state to various departments the overall goals for productivity, sales and earnings. To reach these benchmarks, supervisors are given the responsibility of working with employees to establish strategies for achieving these objectives. This is significant, in showing how the company is able to adjust with a host of challenges by having an operational philosophy that uses flexibility and oversight to meet the goals for the firm. To fully understand how this is achieved we will examine the strategies that are used by managers to increase productivity and reduce costs. Together, these different elements will provide the greatest insights as to how this philosophy has helped the company to adapt with: the transformations in the health care and pharmaceutical sectors. ("Company Overview," 2012)

The Operational Strategy of Johnson and Johnson

Like what was stated previously, Johnson and Johnson is taking a decentralized approach with each of the different segments. As the company will set, the long-term goals for the entire organization; while each segment will run as an independent business. This strategy allows the various divisions to more effectively react to the demands of customers without having to worry about the large bureaucracy. At the same time, their ability to use the resources of the firm itself, gives specific departments tremendous amounts of support when it is needed. ("Our Management Approach," 2012)

The basic approach of Johnson & Johnson is to establish partnerships with firms, which can help contribute to the corporation's bottom line growth. A good example of this occurred in 2009, when the company purchased Red Script Ventures. This is a small venture capital firm that invests in biotechnology startups. The investment that Johnson and Johnson made in this company, allowed them to locate an organization that will address the firm's specific needs. At the same time, it is reducing costs (in comparison with trying to start an operation on their own). The combination of these factors, allowed Johnson & Johnson to increase their productivity and profits margins by finding a firm with an established track record. Over the course of time, this will help with integrating different ideas into their business model (which will increase operational efficiency). ("Inside Johnson and Johnson's," 2011)

To ensure that the all the departments have the necessary resources; a segment was established to focus on addressing possible supply chain issues (i.e. Johnson & Johnson Supply Chain). Their duties are to work with each division and see how they can integrate the latest it technology into each segment's operation. The way that this takes place, is managers will work with Johnson & Johnson Supply Chain members, to create a process that follows the basic strategy utilized by the entire organization. ("Pathways to Patients," 2012) (Stevenson, 2012, pp. 663 -- 698)

The difference is that each department will integrate select elements of this solution to improve productivity and reduce costs. This helps each segment to have a customizable platform that is integrated with the company's protocol. Once this takes place, is when each unit can work more effectively. While, it is ensuring that every division has the tools to communicate with other departments and managers. Over the course of time, this allows executives to have high degrees of transparency and freedom to improve the operations of specific segments. This is when the cost structure will decrease and the underlying rates of productivity will rise. ("Pathways to Patients," 2012) (Stevenson, 2012, pp. 663 -- 698)

Evidence of this can be seen with comments from Ajit Shetty (Corporate Vice President for Johnson & Johnson Supply Chain) who said, "Our supply chain organization is a large part of who we are as a company and plays a vital role in our ability to meet the needs of our customers. We have deployed a new supply chain operating model that will enable growth, drive quality and compliance, and help us run more efficiently so we can more effectively serve patients and consumers worldwide. Ultimately, this new approach to the supply chain will improve the experience our customers have when doing business with Johnson & Johnson companies while generating incremental value for our businesses." ("Pathways to Patients," 2012) This is significant in illustrating how the current approach being used by Johnson and Johnson is increasing the underlying levels of: growth, productivity and profit margins. In the future, this helps the firm to adjust to the challenges that they are facing inside the marketplace. (Stevenson, 2012, pp. 663 -- 698)

This is allowing the company to address the needs of customers more effectively. One of the biggest challenges facing most firms, is they can become too successful. This is problematic, as it will often lead to less focus on the needs of the customer (i.e. waiting in lines). Once this happens, is when many individuals will often complain about how the company has poor quality control surrounding the products and services that it is delivering. (Stevenson, 2012, pp. 800-831) ("Zoomerang," 2012)