Johnson & Johnson

Making a difference upstream through targeted risk management

Benefits:

  • Enables smarter risk management

  • Provides opportunity for improved supplier engagement

  • Arms buyers with knowledgeable insights

A convergence of two trends led Johnson & Johnson to work with WWF to analyze risk within the company’s supply chain—the emergence of palm oil as a growing environmental risk and increased interest from consumers in naturals and naturally derived ingredients.

At the same time, the company was also cognizant that a lot of assumptions are wrapped up with naturals—people assume that they are better from a personal health stand point and environmental one—if it’s good for them, it must be good for the planet. Given the risks identified with palm oil, the company knew that this implicit belief from consumers needed to be managed responsibly.

With a strong sense of responsibility and deep commitment to sustainability, Johnson & Johnson embarked on a journey to better understand what some of those risks might be around other naturally derived materials that the company sources.

The analysis uncovered that Johnson & Johnson could be more focused and targeted on the issues they engaged their suppliers on to get the answers they needed more quickly. Instead of asking suppliers a generic, and often lengthy, set of questions, the risks and hotspots identified enables the Johnson & Johnson’s buyers to ask a specific supplier of a specific ingredient in a certain geography as few as three questions that would result in information that can inform purchasing decisions.

“It’s not necessarily about getting a lot of information; it’s about getting the right information,” says Paulette. “From our suppliers’ point of view – it’s question fatigue. They are getting asked so many questions. And we have a responsibility to ask the right questions to get just the right information so that we can be as smart as possible in our decision making.”

Johnson & Johnson is now distilling the findings into a set of tools and resources to equip their procurement organization. Together, WWF and Johnson & Johnson will host a training in the summer of 2014 to arm the company’s buyers with the knowledge and insights needed to effectively manage potential risks or issues for a given commodity and geography.