Slide

FOR
Veronica Manuel-Gilbert Corporate Manager, Supplier Diversity

Supplier Diversity is a
Fundamental Business Strategy
"Minority-owned and woman-owned businesses are a highly dynamic sector of the U.S. economy, growing jobs and revenues more quickly than the economic average. There are more than 12 million such firms in the United States, and this group includes many valuable partners in our Johnson & Johnson Supplier Diversity Program.
By purchasing goods and services from these businesses, we are directly contributing to the creation of jobs in local communities and strengthening ties to the consumers, patients and doctors who benefit from our products and services." 2/2010 Executive Committee Supplier Diversity Endorsement Letter – Dominic Caruso , J&J VP Finance and CFO and Mark Guinan , CPO

Partnering for Success
What does it take for a supplier to be its customer's strategic partner?
Defined as an on-going, mutually beneficial relationship, supplier partnering with its customers is the highest form of performance differentiation and maturity and is a must for suppliers competing in today's performance and innovation -driven global supply chains. Built on a foundation of shared information and values, partnering encourages parties to share data, risks and even profits. This means that each partner accepts some responsibility for the other's success. This session wil highlight real life examples of how strategic supplier relationships are developed and identify new avenues and opportunities for customer and supplier

NOUN
• • , an associate in an activity or
endeavor or sphere of common interest • a person associated with another or others as a principal or a contributor of capital in a business or a usually sharing its risks and profits • a player on the same side or team as another• a person who is a member of a partnership • provide with a partner • act as a partner• to serve as the partner of

an associate in an activity or endeavor or
sphere of common interest

Supplier Diversity Suppliers and Product Innovation ETHICON, INC - BIHLER
Challenge: Reduce product Challenge: Development of re- Challenge: Combine assembly and development time by 50% while curving process eliminates heat injection molding into a single-piece- significantly reducing development treatment of K Needles. flow LEAN design, while automating manual operations and reducing cost.
Ethicon & Bihler have a patent application for this innovation. Elimination of heat treatment allows for more automation of needle manufacturing flow, Reduced number of operators on resulting in avoiding additional line from 21 to 2 (90% reduction) processing and reduction in cycle Reduced material cost by $5M Reduced material handling Time to market reduced by 50% Est. $1.2MM cost improvement Product Beta-launch June 2010 Women owned and small
Woman owned business
Women owned business
disadvantaged businesses
• Efficient contracting • Supplier integration-NPI process • Joint col aboration • Cost improvements Supplier Diversity and Business model innovation MDD Indirect Machine Parts
Challenge: Improve large spend ($50MM) Challenge: Improve rebate loyalty programs, with 1000+ suppliers, long lead-times, poor gain visibility to customer spend behaviors service and non-leveraged savings and non-leveraged savings.
Repairs/
Turtle & Hughes
Reduction in Suppliers of 25% 10% reduction in rebate processing time Cost Savings of 17% Increased Sales Rep. Efficiencies • Cycle time reduced by 30% • 15% initial savings; 5% expected annually Reduction in escheatment expense • Women owned business
Supplier Rationalization • Supplier rationalization • Efficient contracting • Supplier expertise/Design improvements • Expanded networks of relationships OUR SUPPLIERS – EVERYONE IS BUYING AND SELLING
an associate in an activity or endeavor or
sphere of common interest
COLLABORATIVE STORY
DEVELOPED BY J&J AND
CUSTOMER WITH FOCUS ON
DIVERSE SUPPLIER VALUE ADD -
•Customer focused • Highlights value beyond products •Supplier success stories can provide entry into business opportunities…. • Opportunity for Collaboration with Sales/Marketing and Procurement • Ideally led by affinity group members in Sales/Marketing Note: Requires involvement of legal, copy clearance and other appropriate approvals for publication Published in Walmart.com, JNJ.com and Nov/Dec Diversity Inc. Magazine
EXAMPLE # 4 – END PRODUCT IMPACT STORIES
Veteran Supplier Veteran Patient Success Story
Objective
•Highlight Johnson & Johnson and a key Customer's support of Veteran owned
businesses with the public and veteran advocacy groups
•Show value added support of customer goals accomplished through supplier
diversity and small business goal partnerships
•Show how Supplier Diversity success contributes to Johnson & Johnson's mission,
improving quality of life, and Credo with Veteran patient with link to veteran supplier Strategy
•Demonstrate through compelling story-telling that J&J and customer are partnering to provide
exceptional care to veterans, and doing so by use of Veteran suppliers
•Leverage relationship with Vetrepreneur Magazine for free ad space, co-branding, and potential
editorial coverage (J&J is already a member of NaVoba and has prepaid ad space available) Possible tactics •Advertising: Develop copy for Vetrepreneur ad on impact of J&J and Customer on veteran patients
•Share story on partnership and patient impact in J&J intranet sites (Procurement Portal and
Throughout history, Veterans have demonstrated not only their valor but also their camaraderie toward a shared goal, across branches of military service. Ethicon Endo-Surgery (EES), a Johnson & Johnson's medical device manufacturing company, and Cardinal Health, a leading distributor of healthcare products, believe that these are essential attributes that should be modeled and applied to business practices. They demonstrate commitment to shared goals through their partnership with each other and small veteran-owned businesses. An example of this collaboration is demonstrated by the use of critical components manufactured by a small veteran-owned business; Cook Spring Company, Inc. used in EES medical device products, distributed through Cardinal Health, for use at numerous Veteran Administration (VA) medical provide with a partner, act as a partner, to serve as the partner of Strengthening suppliers by fostering partnerships….
Diverse J&J Pal et Supplier
PROVIDE WITH PARTNERS
• Expand the leveraged
J&J contract pricing –
"Five Traditional & Diverse J&J Contract
offered to J&J contract
• Grew diverse supplier
sale through use by J&J
by $2MM in 1 year
• External manufacturers
and J&J benefit by 20-
25% cost savings
associated with pallets
Strengthening suppliers by fostering partnerships….
+ Diverse
• Grew supplier sales: 10X from $1MM
• Brought 100 jobs to a rural
community that had recently lost
80
• Reduced inventories and
• Faster delivery of >3,000
• $20 million in savings
• Maintained use of diverse
suppliers by directed
partnering with prime
• Grew M/WBE spend with 3
suppliers by 330% from
$600K to >$2MM in first
PROVIDE WITH PARTNERS
to serve as the partner of 2009 Johnson & Johnson provided Tier II
spend to Customers
• 24 customers • 60% were first time requests from hospital • Approximately $5 Billion of sales was attributed to
this group of customers • Customers able to claim over $127 Million in
Diverse Tier II through our program DIVERSE SUPPLIER SOLUTIONS • Our customers expect it
• Your customers expect it
HOW CAN YOU PROVIDE IT
• What is your strategy?
WHO CAN HELP US ACHIEVE OUR MUTUAL GOALS

Source: http://www.dmsca.us/resource/resmgr/Docs/Broadening_the_Business_Case.pdf