J&J Manufacturing for the FutureStrategy, Approach, Status & Outlook

Bart Talloen GE Digital Day April 10, 2017

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J&J, the Most Broad-Based Healthcare Company

PharmaceuticalsConsumer Products Medical Devices

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Formed Accelerated Transforming

Stage I

2009-2012

JJSC Organization

Created

Central Procurement

Customer Logistics

Services

Quality & Compliance

Project

Accelerate

CoEs in Plan, Source,

Make, Quality, OSE

Global category

management

Global Consumer Supply

Chain

Early Days

Independent Supply

Chains

Segments

Geographies

Functional excellence

Breakthrough

Performance

Fast-track innovation

Agile customer solutions

E2E value

Connected visibility

Strong foundations

Stage II

Thru 2015

Stage III

Thru 2020

Pre-2009

J&J Supply Chain Transformation

Supply Chain as a

cost center

Stabilizing and

fixing the base

Improving the

customer

experience

SC as

competitive

advantage

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J&J Supply Chain Aspiration

Fast Track Innovation

Superior innovations

First to priority markets

Nimble and responsive culture

Agile Customer Solutions

Flexible business/delivery models

Strategic alliances

Integrated channels to market

End-to-End

Customer-centric outcomes

Optimized value chains

Transformational productivity

Top TalentIntegrated SustainabilityProactive QualityPreferred Partner

Connected Visibility & Technology

VisionSet a new standard in healthcare, fueling industry-leading

growth by becoming the best supply chain in the world

MissionStrengthen customer trust by reliably supplying high-quality

products, services and solutions to better the lives of billions

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WHY & WHAT

MFF Vision & Mission

Consumer

MDCMD

Pharma

J&J Supply Chain Strategy

Segment Business Strategies

A New World of

Healthcare

intersecting with

A New World of

Technology

Internal Environment

External EnvironmentTrends & Disruptors

Personalization

Speed, Agility & Responsiveness

Access & Affordability

Profitability

Customer & Market Demands

Outcomes & Experiences

Sustainability

J&J Manufacturing for the Future (MFF) Strategy – Framing

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2016-2018 2020+2018-2020

Accelerate & broaden the

deployments/do more E2E

Leverage ext. partnerships

Performance transformation

Discover and Test &Learn

Start capability building

Gain early insights, realize

quick wins & early results

A holistic operating model

Mature capabilities &skills

Maximize E2E value, new

business models emerge

COMMUNICATION AND CHANGE MANAGEMENT

Engage segments, functions and other stakeholders and refresh/refine deployments

based on learnings/insights and progress

Build Organization Capabilities, Competencies and Skills

Integrate Mfg. For the Future into the Base Business

DEVELOP

& TEST

ACHIEVE

CRITICAL

MASS

SUSTAINABLE

ECOSYSTEM

Build 2020 MFF strategy Refine 2020 MFF strategy Create 2025 strategy

HOW – 3 Stage Journey

J&J Manufacturing for the Future (MFF) Strategy – Framing

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J&J Mfg. for the Future Journey – Stage 1: 2016 - 2018

Scale & operationalize MFF technology

platforms currently in development (e.g.

3D printing, CODEC, 5GT lens mfg)

Explore, evaluate, POP new disruptive

technologies, tools & capabilities (e.g. J4

new transformative digital technologies)

Prove applicability & business value

through targeted “Test & Learn” sprints

(e.g. Assets Performance Optimization,

Integrated Quality, Smart Factory)

Prioritized Initiatives Within & Across Focus Areas

Deploy Technology & Applications

Roadmaps

Build Individual, Institutional & Organizational

Capabilities

Framework & Focus Areas

Infl

ue

nc

ers

Pa

rtne

rship

s

Organization

Foundational Enablement

EHSProactive

QualityTechnology Systems Process

Customer

Essential Resources

DISRUPTIVE TECH, MATERIALS & SERVICES

MANUFACTURING DIGITALIZATION (J4.0)

DATA THREAD & ADVANCED ANALYTICS

SUSTAINABLE MFG

ORGANIZATION & CAPABILITIES

Conduct Customer Centric User Cases

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J4 will enable supply chain transformation by creating smart factories, smart supply chains & smart solutions

Smart Solutions – Transformational Impact

Leverage Smart SC and Smart Factory capabilities

Facilitation of the digital ecosystem through IIoT

“On demand” customer fulfillment

Applications enabling the cyber-physical interconnected

enterprise

Smart Supply Chain – Linking Building Blocks

Adapts instantaneously to changing environment and

customer needs

End-to-end visibility

Real-time production optimization across plants

Smart Factory – Digital Mfg. Building Blocks

Highly automated and connected

Customized production

High asset utilization & integrated quality

Decision making with real-time operating information

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ice

s

Fo

rw

ar

dP

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so

na

liz

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On

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es

B

illi

on

s

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“Test & Learn” Programs: Objectives

Test & Learn Pilot

Objectives

Every T&L program is composed of individual T&L pilots, which are

designed to quickly test new technologies & tools within a very focused

and practical scope. Every pilot has specific objectives in support of the

overall T&L Program

Test & Learn Program

Objectives

Prove applicability and demonstrate business value from the

introduction of new disruptive technologies:

1. Prove feasibility and quantify potential impact of these technologies

2. Learn which specific individual & organizational capabilities and skills

are required to operationalize these new technologies

3. Develop scaling and broader deployment methodology & approach,

to be activated based on a robust stage gate review and deployment

decision

Initial “Test & Learn” Programs are centered around “advanced analytics”

and “manufacturing digitalization” capabilities:

Asset Performance Optimization

Integrated Quality

Smart Factory

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Outlook for Next 6 Months…

Continue the prioritized Initiatives within and across the Focus

Areas, accelerate Test & Learn Programs

A holistic MFF Strategy is in development, drawing on focus area

mini-strategies and customer-centric use cases

Suppliers and Partners are defined, shaping up and being

evaluated through Test & Learn pilot engagements

Capabilities are being identified, prioritized and developed at the

individual, institutional, and organizational levels

Initial business impact expected in 2nd half 2017, momentum

building for 2018 broader scale and more E2E deployments

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Q&A