PROBLEM CONTEXT
Company background
Johnson & Johnson, established in 1886, is a leading international company based in the USA, specializing in the manufacture of medical devices, pharmaceuticals, and consumer goods As a prominent component of the Dow Jones Industrial Average, it ranks among the top 37 companies in the 2018 Fortune list.
500 magazine of the largest United States corporations by total revenue The company is one of the most valuable around the word.
Johnson & Johnson, headquartered in New Brunswick, New Jersey, operates 250 branches across 60 countries, with products available in over 175 nations In 2018, the company reported a sales volume of $81.5 billion.
For nearly 125 years, Johnson’s® has been dedicated to creating the gentlest baby products in the world, suitable for every age and stage of a baby's life This commitment to gentleness extends beyond their products; it reflects the company's values Johnson and Johnson Vietnam (LTD), part of the global Johnson and Johnson family, is based in Ho Chi Minh City and is recognized as a leading brand in the consumer health sector, specializing in baby care items like body wash, shampoo, wipes, and baby powder.
The Deliver Operations division at Johnson & Johnson oversees the importation of products and services, managing all processes from manufacturers to local distributors This division focuses on optimizing supply-side activities to enhance customer value and secure a competitive advantage in the market.
Supply Chain division coordinates the logistics of all aspects of the supply chain which consists of five steps:
• The capable of imported products or export
• Producing (concentrated on efficient and effectiveness)
• Products returned and destruction (for defective or unwanted products) Human
Resource organization chart as following areas:
The Supply Chain Department plays a crucial role in managing a diverse range of consumer healthcare products, including well-known skin health brands like NEUTROGENA, AVEENO, and CLEAN & CLEAR Additionally, it oversees over-the-counter (OTC) products such as TYLENOL and essential health goods like LISTERINE, BAND-AID, and JOHNSON’S.
Figure 3: Johnson & Johnson consumer health products
1.1.2 Key competitors of Johnson & Johnson products
In Consumer Products segment, other major companies include Unilever International, Nestle, Kimberly-Clark Corporation, and Procter & Gamble Among of competitors, Johnson
& Johnson gains appropriately 10.4% of the total contribution in terms of sales volume.
Figure 4: Top five suppliers in Fast Moving Consumer Goods (FMCG) industry Source: Neilsen’s research in 2019
Johnson & Johnson currently ranks fourth in Fav Score, trailing behind competitors like Procter & Gamble, Unilever, and Colgate-Palmolive To enhance customer loyalty and drive repurchases, the company must adopt a proactive approach and respond swiftly to market demands Elevating its position in the rankings is essential for improving sales performance.
Figure 5: Top 3 competitors in consumer healthcare products
Figure 6: Gartner 2020 Supply Chain Top 25
Industry awards and recognitions serve as valuable benchmarks for assessing our progress through the perspectives of external stakeholders I am proud to announce that Gartner, Inc., a leading global research and consulting firm, has ranked us #3 on the 2020 Supply Chain Top 25 list This accolade highlights Johnson & Johnson's commitment to enhancing customer focus while advancing our operations in digital, planning, and manufacturing technologies More significantly, it underscores the vital role each of us plays in shaping the future of the supply chain for our customers and the industry as a whole.
To explore the scope of level alternatives, it's essential to identify various methods for adopting and implementing a level strategy This article will present and discuss six approaches to positioning strategy, focusing on attributes such as the price consumers are willing to pay, product functions, target audience, classification, and competition For instance, Johnson & Johnson has established a mission of providing "the gentlest baby products in the world" for 125 years, effectively positioning itself by the product user in comparison to competitors like Unilever, P&G, and Nestlé.
Figure 7: Top 3 competitors in consumer healthcare products Source: J&J marketing department source
J&J Consumer Vietnam imports products from J&J Malaysia and Thailand, specializing in third-party logistics (3PL) services The company manages handling, storage, and transportation for various distributors, including DKSH, Tien Thanh, and Duong Anh, as well as key accounts like Coopmart and convenience stores such as Bach Hoa Xanh, Concung, Circle K, and The Guardian.
Figure 8: Distribution channel in Vietnam
Figure 9: Consumer distributor in Vietnam Source: J&J Supply Chain Vietnam
Table 1: Key retails chain in Vietnam
Johnson & Johnson's distribution channels encompass both general and modern trade, positioning it competitively in the market In 2019, the company achieved a Fav Score ranking of fourth, as reported by Nielsen research For 125 years, Johnson & Johnson has been recognized for offering the gentlest baby products worldwide.
Situation and symptom analysis
In 2019, CEO Alex Gorsky highlighted robust sales and earnings growth, primarily fueled by the strong performance of the Pharmaceutical sector, enhanced results in the Medical Devices division, and increased profitability in the Consumer business.
SEGMENT COMMENTARY in financial report Q4-2019 and full year 2019
Sales in the pharmaceuticals division increased by 3.5%, reaching $10.55 billion, driven by robust growth in the anti-inflammatory drug Stelara and the cancer treatment Darzalex This positive performance helped mitigate declines in sales from the cancer drug Zytiga and the anti-inflammatory drug Remicade, which faced challenges from generic competition.
Table 2: Reported sales by quarter – Unit: MM Dollar
Reported sales by quarter – Unit: MM Dollar
Sales in the medical-devices sector decreased by 0.5%, totaling $6.63 billion While certain product categories, including contact lenses and artificial hips, experienced sales growth, the overall performance was impacted by a decline in surgical products Mr Gorsky expressed disappointment regarding the surgical segment's performance and indicated that the company is formulating strategies to improve it.
Medical Devices operational sales, excluding the net impact of acquisitions and divestitures grew 5.3%* driven by the growth of electrophysiology products.
Table 3: Reported sales by quarter – Unit: MM Dollar
Reported sales by quarter – Unit: MM Dollar
In 2019, sales of consumer healthcare products, including Neutrogena beauty items and Tylenol medicine, increased by 0.9% to reach $3.57 billion While over-the-counter medicine sales saw a rise, this growth was somewhat countered by a decline in sales of baby care products, particularly Johnson’s Baby Powder.
Table 4: Reported sales by quarter – Unit: MM Dollar
Reported sales by quarter – Unit: MM Dollar
Table 5: Reported sales by YTD – Unit: MM Dollar
Reported sales by YTD – Unit: MM Dollar
Quarter 2019- YTD 2018- YTD Percentage Change
Source: Johnson & Johnson quarterly report
In summary, it is obvious to show that sales growth rate significantly declined around 14% in terms of baby care products segment since the first quarter in 2019.
Otherwise, main competitors are consistently organic sales growth, for example, P&G (7%),Nestle (4%) and Unilever (3%) as the figure 8 below:
Figure 10: Organic growth among top main competitors
Since the first quarter of 2019, the consumer sector has experienced a significant decline of approximately 14% in sales growth for baby care products In contrast, both the medical device and pharmaceutical sectors have shown strong sales performance with notable increases Consequently, the decline in the consumer sector is viewed as a warning sign for the company.
1.2.2 Symptom 2: Low customer service level
Recent customer experience indicators show a slight improvement in customer service levels compared to 2018 Understanding distributors' expectations is crucial for meeting and exceeding customer needs and desires To effectively measure customer satisfaction, an annual survey should be conducted, focusing on three key factors: Emotion, Effectiveness, and Ease.
Figure 11: Organic growth of main competitors
Figure 12: Deep-dive analysis of customer surveys
A 2019 customer service survey reveals a significant gap in supply chain effectiveness compared to key competitors, highlighting that proactive communication is 50% less effective and the delivery of complete orders, including late ones, is 37% lower than competitors This indicates that improving these effectiveness indicators is a primary concern for Supply Chain Operations.
In addition, Distribution complaint showed that incorrect quantity (short, over and wrong products) and late delivery are key contributors cause low customer service level in supply chain service
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Incorrect delivery location/address
Product not delivered on time
Table 6: Deliver Service Excellence in 2019
Deliver Service Excellence Jan Feb Mar Apr May Jun Jul Aug Sep Oct Total
Product not delivered on time
Figure 13: Distribution complaint based on category
The primary distribution complaint highlighted in the survey is the issue of incorrect quantities, indicating significant shortcomings in delivery service effectiveness This finding underscores the need for improvements in service reliability to enhance customer satisfaction.
In conclusion, Customer service level versus competitors is prominent symptom that Johnson
& Johnson Consumer Healthcare sector should pay more attention based on primary data including actual deliver service issue and customers’ survey.
PROBLEM IDENTIFICATION
Possible problems
2.1.1 The first tentative problem: High Mean Absolute Percentage Error (MAPE)
The MAPE data indicates that the accuracy of forecasts for the Full Year 2018 and Year-to-Date November 2019 is weak and inaccurate, failing to meet the Key Performance Indicator (KPI) benchmarks within the reasonable forecasting zone For instance, the forecast accuracy for November 2019 stands at 69%, while the year-to-date accuracy is only 57.5% This poor forecasting performance is linked to subpar sales results in 2019 In the following chapter, the author will propose several solutions for improvement based on an operational review.
Figure 14: MAPE monitoring between 2018 and Year to Date (YTD) Nov-2019
The Mean Absolute Percentage Error (MAPE) is a widely used metric for assessing demand planning accuracy, valued for its independence ratio Recommended in many leading textbooks, MAPE was notably utilized in the preliminary measurements of the module competition, as highlighted in Kim's summary This metric effectively quantifies the average percentage of error in demand forecasts, providing critical insights for improving accuracy.
Meanwhile, Lewis (1982) summed up a table in details including typical MAPE values for industrial and business data and their interpretation.
Table 7: Interpretation of typical MAPE values MAPE percentage Forecast accuracy
Source: Lewis textbook published 1982, page40
MAPE has a significant drawback, as it can generate infinite or undefined values when actual values are zero or nearly zero To address this issue, the author proposes an alternative metric for assessing forecast accuracy known as the mean arctangent absolute percentage error (MAAPE).
Mr Ly Nhat Vu, a CLS specialist, emphasizes the critical importance of demand accuracy in minimizing the destruction of slow-moving goods in the market During the monthly S&OP meetings, the team extensively discusses the MAPE indicator; however, they have yet to identify the root causes behind the significant inaccuracies in forecasting, particularly in zones exceeding 50%.
2.1.2 The second tentative problem: High Forecast BIAS
Forecast bias is a really key concern in terms of demand forecast YTD-2019, at the end of
2019 was worse than at the first sixth months It increased significantly from 5.3% in August up to 25.1% in Dec-2019 as table 6 below:
Table 8: Forecast bias performance in 2019
Month Target Bias in reporting month YTD-2019
According to Hanaa El Sayed (5) argued that BIAS KPI shows the planning deviation is compared to totally actual performance.
Forecast bias refers to the tendency to inaccurately predict demand, leading to either over-forecasting or under-forecasting A positive bias occurs when the forecast exceeds actual demand, indicating an overestimation Conversely, a negative bias arises when the forecast falls short of actual demand, signifying an underestimation.
Effective product planning requires reliable and unbiased forecasts, as no successful products can emerge from flawed predictions Utilizing trend and tracking tools is essential for quality control and ensuring accuracy Each cycle's tracking mechanism is evaluated across specific areas to maintain this standard.
After each cycle, BIAS is recalculated and updated to assess overall tracking and trends A demand forecast history that completely avoids bias will revert to a zero value within 13 gaps In the worst-case scenario, the outcome could be +13 (indicating a low forecast) or -13 (indicating a high forecast) Typically, if the forecast database shows a value greater than 4.5 or less than -4.5, it raises concerns that BIAS may become uncontrollable.
A swift investigation into improving forecast accuracy reveals that addressing bias is crucial Once bias is identified, correcting forecast errors becomes relatively straightforward This can be achieved by adjusting the forecast appropriately during challenging situations—such as increasing it in instances of low-forecast bias and decreasing it when high-forecast bias is present.
Organizations must recognize forecast bias as a significant barrier to enhancing their supply chains, as it leads to either excessive inventory from over-forecasting or lost sales from under-forecasting Most companies experience a combination of both issues: they hold stranded or slow-moving inventory due to overestimation, which ties up working capital, while simultaneously facing unmet customer demand from underestimation Addressing these biases is crucial for optimizing inventory management and improving overall supply chain efficiency.
Ms Nguyen Thuy Huong emphasizes the leadership team's goal of achieving at least an 11% increase in sales performance in 2019 compared to 2018 To meet this objective, a strategic focus on the consumer sector will be implemented through monthly budgeting and action plans, which will be integrated into demand forecasts If business leaders fail to recognize effective strategies during the planning process, a potential 3% gap may arise, indicating a lack of clarity Furthermore, with the impending closure of unrestricted shipping for finished goods in 3 to 3.5 months, any absence of clear guidance necessitates a downward revision of demand planning to avoid biases in projections.
2.1.3 The third tentative problem: Low On Time IN Full (OTIF)
In 2019, On Time In Full (OTIF) monitoring was crucial for assessing delivery performance within the supply chain OTIF measures the reliability of deliveries by tracking whether distributors receive their products on time and in the correct quantities, ensuring optimal supply chain efficiency.
We utilize OTIP to assess the effectiveness of logistics performance for our distributors The total quantity of shipping cases delivered must encompass all cases ordered by the customer, reflecting their needs and the overall readiness of the orders The total number of cases delivered refers to the outer cartons dispatched from the distribution center Timely delivery is measured against the customer's requested shipping date and appointment time In instances where delivery dates do not align with customer expectations, standard delivery lead times will be established.
Mr Tran Trong Tuan, Customer Logistic Service Manager, highlighted that the On-Time In-Full (OTIF) performance has not met targets following the transition to new distributors and transporters The lack of familiarity with customer rules and policies among transporters has led to delivery delays and full shipment rejections at the end of the sales cycle Additionally, the shift from authorized to regular distributors presents significant challenges, as the new distributors are not fully committed to promoting J&J products Consequently, the low level of customer service has contributed to the poor on-time in-full performance metrics.
2.1.4 The fourth tentative problem: High turn-over rate
According to turn-over rate in Supply chain; turn-over rate is high The attrition rate contributes 26.66% in year 2019
Table 9: Turn over-rate in Supply Chain
Org Health Green Green Green
Credo Survey Completed Completed Completed
Chowdhury Abdullah and Hasan highlight that employee turnover is a significant metric applicable to all organizations, defined as the percentage of employees who leave a company and the time required for their replacement.
A M., & Hasan, M N (7) also cited staff quite ratio is risen a vital problem, especially in the area of human resource management To fulfill the basic needs and offer an excellent working condition facility as employees’ satisfaction, competitive salary and good recruitment approach Every firm want to increase the productivity and lessen turnover,thereby leading to be profitable Another approach demonstrated that both lower job satisfaction level and staff commitment are with the higher rate of turnover (Tam and Le, 8).
The central problem
High turnover rates and complex processes can hinder supply chain performance According to Kim (10), new metrics like MAPE, BIAS, and OTIC provide clearer insights into this performance The author emphasizes that addressing inefficiencies in supply chain performance, particularly in customer service logistics and Sales & Operations Planning (S&OP), should be a central focus for improvement.
Sales and Operations Planning (S&OP) serves as a strategic tool that aligns goals, ambitions, and actions across various teams within a firm, as highlighted by Stewart The output plan generated through S&OP is derived from the supply chain and is coordinated at both functional and positional levels, ensuring cohesive operational execution.
Hanna (5) emphasizes that achieving a balanced supply-demand dynamic enhances stock management and elevates customer satisfaction levels Sales and Operations Planning (S&OP) is crucial for improving business performance, ensuring timely deliveries, and enhancing planning capabilities This model integrates all operational functions, providing visibility into plans, conducting risk assessments, and driving measurable results through effective S&OP Key Performance Indicators (KPIs).
The analysis of planning forecasts involves evaluating metrics such as MAPE, BIAS, and OTIF, while also examining historical trends The next step focuses on analyzing actual demand trends and forecasting accuracy Additionally, S&OP KPIs require thorough problem validation and tailored analysis for each key performance indicator It is essential to collaborate with business partners to align KPI methodologies and develop effective action plans.
Stewart Gordon defines competence as an intangible resource that reflects a firm's ability to excel in a specific area Conversely, a company demonstrates competence when it possesses the necessary knowledge, capabilities, and attitude for successful operations.
Conducting KPI analysis is crucial for firms to enhance their understanding of sales performance and improve decision-making accuracy By utilizing KPI to transition from quantitative research to qualitative insights, leadership teams can gain clarity on the planning processes in place This approach ultimately aids organizations in refining future decisions and boosting performance outcomes.
Low level of customer service BIAS
Low sales revenue and profit Growth company
Figure 17: Final update cause and effect map of Johnson & Johnson company by using literature review and data according to in-depth interview, primary and secondary data.
CAUSE VALIDATION
Potential causes
Through an in-depth analysis utilizing depth interviews, primary and secondary data, and theoretical frameworks, three potential causes—MAPE, BIAS, and OTIF—have been identified This investigation aims to validate these causes as the primary contributors to the existing challenges faced by the company.
Transportation plays a crucial role in the manufacturing sector by facilitating the movement of goods efficiently throughout the supply chain It is essential for both supply and demand forecasting, as carriers manage the flow of information and inventory from the point of origin to delivery.
Figure 18: The routine of information and transportation in a basic supply chain management
Morash EA and Clinton SR emphasize the critical role of time compression in the transportation of finished goods within the supply chain, highlighting its importance for both internal and external stakeholders Distributors aim to ensure timely and complete shipments to enhance customer satisfaction Consequently, delays in shipping can lead to customer service issues and complaints.
Finished goods can sustain damage during transit or warehouse operations, often due to workers loading incorrect items at shipping locations This results in over, short, or damaged (OS&D) shipments, leading to customer dissatisfaction and potential losses to competitors Effective transportation is a critical factor in logistics and supply chain management, ensuring that the right products are delivered in perfect condition, at the right time, and to the correct locations.
In 2019, the On-Time In-Full (OTIF) performance was recorded at 94.5%, falling short of the target of 98% A deeper analysis indicates that the primary factors contributing to this shortfall were issues related to transportation and delivery, as well as customer-related failures.
Table 10: OTIF failure analysis FY-2019 OTIF result
Transport performance is crucial for meeting customer demands for high-quality services Timely and reliable shipping of goods is essential in supply chain design, ensuring that customer needs are met precisely when required Efficient Supply Chain Management is fundamental for organizational growth and sustainability, highlighting the importance of effective management practices.
3.1.2 Potential cause 2: Customer service failure
Logistics leaders and top management recognize that physical distribution is essential for delivering customer service to distributors Key attributes of customer service and sales teams include product availability, order acknowledgment, real-time inventory information, and delivery quality Effective physical distribution is crucial for enhancing customer service, which directly influences market demand Many experts agree that customer service is a critical factor in evaluating providers While marketing often dominates the physical distribution authority, a high level of customer service allows marketing to focus on cost efficiency The interplay between marketing and physical distribution, driven by customer service, ensures that companies can secure and maintain repeat customers, aligning with the primary objectives of both the marketing department and the organization as a whole.
When a service failure occurs, organizations often focus on resolving the issue to maintain customer satisfaction, but they may neglect to learn from past mistakes Systematically tracking service failures allows organizations to gather valuable insights and enhance their reputation By understanding where service delivery excels and where improvements are needed, companies can ensure a more effective approach to achieving service excellence.
A comprehensive analysis of service failures indicates that late orders and order management issues are significantly impacting OTIF performance, as illustrated in Figure 13 Between January and December 2019, the average percentage of late orders was alarmingly high at 25% per month, with fluctuations that lacked clear explanations.
Figure 19: The percentage of late order.
Tracking customer perceptions of service effectiveness involves identifying and inspecting customer views on the severity of various failure types, classifying these failures, and ensuring all customer service representatives understand the established criteria and standards Implementing recovery strategies for subsequent purchases enables managers to evaluate their service recovery performance Furthermore, supervisors can monitor the balance between complaint handling costs and their impact on brand reputation.
3.1.3 Possible cause 3: Customer order un-expectation
Hanaa El Sayed emphasizes the importance of effective root cause investigation to address bias errors, internal and external losses, and customer case fill rates Identifying the root causes of low customer service and defects in product quality is crucial By reviewing data over time, organizations can pinpoint significant issues and initiate resolutions in key areas.
Table 11: Root cause analysis for MAPE & error bias
In an ideal scenario, service providers would deliver the exact products and quantities that distributors require, often without additional costs However, in reality, placing orders with suppliers involves complexities, particularly due to Minimum Order Quantities (MOQs) MOQs represent the smallest order size that suppliers are willing to accept, which can be defined by the number of units or the total order value For instance, many global suppliers require a minimum order value exceeding USD 2000.
Understanding the minimum order quantities for each product variant is crucial, as they must be accurately reflected in the master data Failure to do so can lead to costly errors and unnecessary delays in processing purchase orders.
Low minimum order quantities (MOQs) significantly influence inventory management and stock movements By allowing lower MOQs, suppliers enable stakeholders to maintain reduced inventory levels and replenish stock only when necessary.
In the recent supply chain monthly meeting, it was noted that customer orders falling below the Minimum Order Quantity (MOQ) account for approximately 13% of total monthly orders This discrepancy contributes to increased errors in Mean Absolute Percentage Error (MAPE) and BIAS.
The firm is dealing with a new setting MOQ to meet customer expecting a fast delivery and a reasonable price
3.1.4 Possible cause 4: Slow moving stock and obsolete (SLOB)
ALTERNATIVE SOLUTION
Suggested Solutions
After validating causes through primary data, in-depth interviews, and literature reviews, it becomes clear that transportation issues are the root cause of low customer service levels To address this challenge, the author explores various solutions, including enhancing the performance of transportation service providers (2PL), disengaging from the current transportation vendor, and transitioning to in-house transporters.
4.1.1 Solution 1: Enhance transportation service provider (2PL) performance
A survey conducted by Levans in 2007, involving 406 logistics and supply chain executives, revealed a significant disconnect in internal transportation modes, which could hinder companies' success in managing an omni-channel supply chain The challenges of order fulfillment speed and customer service costs are expected to persist for years Additionally, Politis highlights the "Seven R’s of logistics," emphasizing the importance of delivering the right products in the correct quantity, condition, and location, at the right time and price Consequently, the transportation and logistics sectors are pivotal in driving digital transformation to meet customer expectations for fast and cost-effective delivery.
Digital transformation in the transportation and logistics market emphasizes the importance of electronic transfer, enabling quick responses and offering a competitive edge through real-time data management Research indicates that a significant percentage of professionals recognize the positive impact of advancements in real-time operations on their business processes Furthermore, it is evident that transportation and logistics are increasingly characterized by ubiquitous and hyper-connected systems.
In response to the evolving digital landscape and the emergence of Digital 4.0, J&J Supply Chain has evaluated and addressed risks associated with digital transformation By implementing "FAREYE," the company aims to enhance connectivity among third-party logistics (3PL), customer service teams, and customer destinations, focusing on two primary objectives.
Effective information management is crucial in today's world, focusing on delivering the right information at the right time to support the appropriate processes, individuals, contexts, and objectives.
In today's fast-paced global environment, customer service demands have significantly increased, with customers expecting rapid responses and precise information Meeting these heightened expectations requires effective communication delivered at the right time, ensuring that businesses can provide accurate answers to their clientele.
4.1.2 Solution 2: Disengage current transportation service vendor
Nazmul (11) summaries that actively transportation mode users’ preferences for multiple solutions during the temporary and its active transportation lanes It also assesses the loyal of users in the event.
Disengaging a service provider due to poor performance may seem like a viable option; however, it is often more beneficial to maintain the vendor relationship instead of frequently switching providers By issuing alerts, companies can give service providers an opportunity to rectify existing issues Utilizing collected data, such as on-time delivery rates, product return statistics, and the number of corrective and preventive actions taken by suppliers, can help facilitate better coordination with service providers.
Understanding supplier performance is crucial for maintaining an organized supply network, as highlighted by Jean-Paul Rodrigue Effective evaluation processes can lead to cost reductions, minimized risks, and enhanced quality for both suppliers and clients By utilizing relevant supplier quality metrics aligned with company goals, businesses can identify and address underlying supplier issues, even those unrecognized by the suppliers themselves This approach fosters significant improvements in supplier performance and overall operational excellence.
Many businesses struggle to initiate the supplier selection and qualification process, often uncertain about the most effective methods or desired outcomes While they recognize the importance of measuring supplier performance through metrics, they may lack the knowledge of the purpose and goals behind this evaluation.
Third-party transportation offers a competitive edge as providers aim to deliver improved and cost-effective services However, clients may face risks such as fluctuating quotes due to changing market conditions and potential delays in service availability These third-party companies vary in size and scope, catering to diverse transportation markets Notable global players in this sector include established logistics providers like UPS, FedEx, and DHL, alongside emerging startups in trucking and local delivery services.
4.1.3 Solution 3: Move to inhouse transporters
J&J employs an in-house transporter to efficiently manage and execute their logistics operations, ensuring all transport duties are clearly defined The organization maintains oversight of the transportation vehicles, focusing on cost-effective, short-term solutions that prioritize performance and appropriate compensation.
Solution comparation
After evaluating the three aforementioned solutions, the author proposes exploring alternative options, including improving the performance of the current transportation service provider (2PL) and considering a transition to an in-house transportation system Ultimately, the goal is to present multiple solutions that align with budgetary constraints and practical capabilities to identify the most effective approach.
Table 13: Solution description comparation based on theory
No Alternative solution Descriptions Sources
1 Enhance transportation service provider (2PL) performance
- Manage 3PL more effectively by KPI, Scorecard, …
- Increase co-operation between company and 3PL.
2 Disengage current transportation service vendor
Replace the current transporter by new one
Stop using transporter and move back to perform logistics internally
The author conducted an analysis of feasible and infeasible solutions, providing organizations with clear insights to improve customer service and boost sales performance.
Enhance transportation service provider (3PL) performance
- Can perform internally by adopting new tools for management.
- Being able to do in 2 months.
Disengage current transportation service vendor
- Find a better transporter: UPS, Fedex, Fast Deliver…
- Regional management decision -> Out of scope of Channel team.
- Being able to do in
Move to onshore transporter - Regional management decision-> Out of scope of
- Being able to do in
Finally, feasible solution is selected based on timeline, capability and cost The author would like to explore benefit and expected results of enhance transportation service provider (2PL) performance
Table 15: Benefit and expected results
Enhance transportation service provider (2PL) performance
1.Performance management for warehousing, inventory management, packing, transportation:
- Set clear KPI for performance
- Generate daily and weekly reports; and monthly scorecard to record 1/ complaints, quality of services 2/ better performance
- Review contracts and revise clauses where applicable
Avoid all potential problems by:
- Ensure the performance of all related processes meet expectation by putting more control
- Actively resolve when the performance does not meet target
- Based on the regulations and policy and service terms to measure the service
Commitment to quality management/continuous improvement by:
- Minimize the damage to products
- Delivery full-value products to customers
- Disengage current transportation service vendor Deploy interpretive ranking
Find the best one to select Select the highest quality 3PL vendor
Benefit Expected results process (IRP)
The author would like to proposal final solutions with timeline, project leader and estimated cost after analysis multiple solutions including benefits, cost and feasible ….
Table 16: Design plan and expected results
Number of suggested delivered orders
Number of order capture by FAREYE
Expected result 2PL must record time delivery of 464 orders from FAREYE app
Need to improve Not well controlled drivers who are not allocated and dedicated for full J&J account Challenging, action plans
DHL faces challenges in creating new accounts for drivers, as the app is not compatible with iOS devices This limitation is significant since the majority of drivers rely on iPhones for app installation and support.
- On time training completion for new driver users.
- J&J will train for DHL Coordinator of TPT how to collect data from FAREYE to understand End to End process including incompletion deliver order weekly.
- Proactively connect with sub-contractor to train for drivers in terms of responsibility how to use this app and record on system after each order.
- Every day, TPT coordinator will track and monitor the real time through FAREYE app
Timeline 2 months after KICK OFF project
Estimated cost 50.000.000 VND for buying FAREYE app Person in charge Deliver Operations Lead (1 Head count)
Customer Service Team (2 head count)
This thesis identifies key issues affecting sales performance in customer logistics services at JNJ Vietnam, particularly highlighting MAPE, BIAS, and OTIP from S&OP as central problems contributing to delivery service issues like late deliveries, quantity discrepancies, and damaged goods To achieve high customer service levels and improved sales performance, it is essential to build a strategic organizational structure supported by key factors The thesis aims to clearly articulate the real challenges faced in the consumer sector, enabling the company to implement effective solutions and select the best options through impact assessment By understanding these issues and providing data-driven resolutions, the company can enhance employee motivation and drive substantial business results, including increased sales performance and effective S&OP.
Primary and secondary data are essential sources utilized in research, with primary data being specifically collected to address particular problems This original data serves a targeted purpose in problem-solving, while secondary data offers alternative insights that can complement primary research and potentially resolve research challenges.
This study utilizes both primary and secondary data to gather comprehensive insights Secondary data is sourced from reliable internal company resources, including Marketing and Supply Chain reports, Customer Logistic Service (CLS) metrics, Warehouse Operations data, and relevant sales performance documents Additionally, literature reviews, books, journals, and research contribute to understanding the business model and workflow The collected data is then compared with real-world scenarios to extract specific information For primary data, a qualitative approach is adopted due to time constraints and limited access to sensitive information from the company and its business partners.
The primary method for collecting qualitative data was through in-depth interviews, with the researcher conducting three rounds of individual interviews and one group interview with internal company respondents Each interview lasted between one to two hours, utilizing clearly designed open-ended questionnaires to extract valuable information To achieve a comprehensive understanding of the study's phenomenon, the in-depth and group interviews were conducted in a systematic order.
The first interview is in-depth discussion conducted for each of following five people as following areas:
Interviewee: Senior Customer Service Logistics Specialist – Mr Ly Nhat Vu
Interview method: via Skype business (chatting)
I am currently working on my final thesis for the ISB program, focusing on the ineffectiveness of supply chain performance at JNJ Vietnam I would appreciate your insights on a few questions, and please rest assured that your feedback will remain confidential Thank you for your participation.
Question 1: Could you please share with me the customer process at J&J?
Answer 1: All right, after receiving orders from customers, our customer service will confirm orders if there is not out of stock After that, Customer service will prepare document, book truck and arrange delivery.
Question 2: Do you often face with difficulties when to arrange shipments? If yes, can you share me more details about this?
Answer 2: A lot… Being a coordinator of Operations departments I faced with a lot of challenge encounter of deliver service issue such as late delivery, warehouse operations of wrong picking, quantity issue (shortage, surplus and wrong products) or wrong documentation
Question 3: How do you deal with challenge encounter?
Answer 3: I have already reported these challenges to my boss who is coordinating with related departments to figure out the root causes It seems that it is not too much improvements.
Question 4: What factors cause those difficulties in your point of view?
Answer 4: Demand accuracy is very importance to reduce destruction goods with slow moving products in the markets S&OP monthly meeting a lot of MAPE indicator However, there have not found the root cause to analyze the reason to inaccurate forecasting zone (>50%).
Question 5: How does your company have to pay attention of wrong MAPE to fix the problem? How many percent of MAPE improvement since 2019?
Answer 5: From my point of view, MAPE monitoring is not central focus of the company So, the outcome of MAPE is fluctuate but, the trend is always higher than 50% I still have not seen any clear action plan to go down 50%.
Interviewee: Business Quality – Van Thi Hoang Lan – Modern Trade of Co-opmart
Interview method: via Skype business (chatting)
I am currently working on my final thesis for the ISB program, focusing on the "Ineffectiveness of Supply Chain Performance in JNJ Vietnam." I would appreciate your feedback on a few questions, and please rest assured that your responses will remain confidential Thank you for your participation.
Question 1: Could you please share with me the customer complaint process at J&J?
Answer 1: Well, customer complaint handling at J&J is quite complicated and not quick to give resolutions as other competitors such as Unilever, P&G and Nestle
Question 2: Do you often face with difficulties when to place orders? If yes, can you share me more details about this?
Answer 2: The process is not clear caused I have had a lot of difficulties such as promotion programs, Minimum of Quantity (MOQ) and OTIF calculation I am really hard to handle deliver service issue for example, late delivery, wrong products delivery, out of stock and document issues such as invoice, packing list, and purchasing orders.
Question 3: How do you deal with challenge encounter?
Answer 3: I am always keeping the records of deliver service issue Then, I will monitor the track and trend to review in the management review and data for improvements.
Question 4: What factors cause those difficulties in your point of view?