Procurement for Social Good

April 30, 2019

Johnson & Johnson’s procurement organization plays a significant role in shaping its enterprise supplier base. The department is focused on increasing the global diversity of its suppliers, supporting social enterprises, and outlining stronger sustainability standards. Chief Procurement Officer Julian Hooks challenges all procurement professionals to use their spending power to make a difference in the world.

Johnson & Johnson is a global health care and wellness company that touches over one billion lives every day. It has immense reach and scale, and the brand is committed to “caring for the world, one person at a time.” Its procurement organization plays an important role in activating the mission.

J&J’s procurement department consists of over 1,600 people, manages over $30 billion of spend, and works with over 70,000 suppliers. While savings is part of procurement’s contribution to the company, it also incorporates purpose and innovation into its work to propel the company forward.

The brand knows that its immense spending power can be used to make a positive impact on communities around the world. The procurement organization works to secure a diverse and inclusive supply base and uphold strong standards among its many partners. Here are some examples of this approach in action.

  • Mental health. J&J has a business relationship with a health care communications agency in the U.K. that employs people who have struggled with mental illness. Many of the employees have suffered career setbacks as a result of their illnesses. This is a type of social enterprise, a business built to benefit society, and it empowers a segment of the population that J&J is committed to helping. Plus, the work this company produces is enhanced by the variety of perspectives its employees contribute.
  • Diversity and inclusion. Working with diverse and inclusive companies helps J&J’s bottom line. It gives the brand a competitive advantage and enables J&J to speak to its diverse target audiences more authentically. The supply diversity program affects $9 billion of spend and 51,000 jobs.
  • Human rights. Slavery is an issue in many parts of the world, and J&J works to ensure transparency at every part of its supply chain to prevent working with businesses that do not abide by the company’s ethical standards.
  • Deforestation. Carbon dioxide levels in the atmosphere are rising, and deforestation is a major contributor to this problem. J&J works with forestry industry bodies to define standards and practices that minimize impact in regard to deforestation. J&J works with sustainable plantations, and it doesn’t employ suppliers that cause destruction or loss of biodiversity.
  • Climate change. Puerto Rico is the fifth largest manufacturer of pharmaceuticals in the world, and when Hurricane Maria hit, J&J’s supply chain was disrupted. The brand risked not being able to provide surgeons with necessary medical equipment. To help get manufacturing sites up and running quickly, J&J supported the people of Puerto Rico with child care, groceries, and laundry services. Only after Puerto Ricans got the help they needed with life’s basic necessities could businesses expect to run again.


Q&A Julian Hooks, Chief Procurement Officer at Johnson & Johnson


Q. How do you encourage your procurement team to understand the marketing industry?

A. They spend time with the industry. We send people to spend days or weeks to understand how others operate.

Q. With advertising constantly changing, how have you structured your team to make sure it’s agile and able to keep up with the industry?

A. We have a big team, over 1,600 people. We have a small group who leads strategies and the Center of Excellence. Then we have groups that are linked to our businesses: consumer, medical device, and pharmaceuticals. We have category teams like our marketing category team, and we have operations. We’re trying to build the ability to manage portfolios. A good example would be not to have too many fixed organizations and have fewer people in fixed roles. Have more people be able to move from one project to another based on what the need is.

Q. How do you guide your marketing procurement staff to provide value versus just cost savings?

A. It comes down to the fact we have a balanced scorecard in procurement, and people’s goals and objectives are set to that balanced scorecard. Those KPIs are what people are measured on, and that’s how people are rewarded.

Source

"Procurement for Social Good." Julian Hooks, Chief Procurement Officer at Johnson & Johnson. 2019 ANA Advertising Financial Management Conference, 4/30/19.

You must be logged in to submit a comment.