case study johnson and johnson

Johnson and Johnson Crisis Management Case Study

Effective crisis management is a crucial aspect of maintaining a company’s reputation and mitigating potential damage during challenging times.

One company that exemplifies successful crisis management is Johnson & Johnson (J&J), a renowned multinational pharmaceutical and consumer goods corporation.

In this case study, we delve into a significant incident that tested J&J’s crisis management capabilities—the Tylenol cyanide poisoning incident in 1982.

Through Johnson and Johnson Crisis Management Case Study , we gain valuable insights into their strategic approach, their commitment to public safety, and their efforts to rebuild trust and brand reputation.

Through this examination, we can extract valuable lessons and best practices for organizations facing their own crisis situations.

Join us as we explore the Johnson & Johnson crisis management case study and uncover the keys to effectively navigating a company through turbulent times.

Background of Tylenol cyanide poisoning incident in 1982

One company that exemplifies successful crisis management is Johnson & Johnson (J&J), a renowned multinational pharmaceutical and consumer goods corporation. In this case study, we delve into a significant incident that tested J&J’s crisis management capabilities—the Tylenol cyanide poisoning incident in 1982.

This tragic event sent shockwaves through the nation and posed a severe threat to J&J’s brand reputation. However, it was the company’s swift and decisive actions that not only saved lives but also set a new standard for crisis management in the business world.

It all began when several individuals in the Chicago area tragically lost their lives after consuming Tylenol capsules that had been tampered with and laced with cyanide.

The severity of the crisis stemmed from multiple factors.

Firstly, the loss of human lives was a tragic and deeply unsettling event, leaving communities in mourning and creating a climate of uncertainty surrounding the safety of consumer products.

Secondly, the incident struck at the core of J&J’s reputation as a trusted healthcare brand. Tylenol, one of their flagship products, was synonymous with reliability and had become a household name. The tampering incident threatened to tarnish J&J’s reputation for quality and safety, potentially leading to a significant decline in consumer trust.

Furthermore, the crisis had the potential to have far-reaching consequences beyond the immediate incident. It raised concerns about the safety of over-the-counter medications as a whole, casting doubt on the reliability of an entire industry.

The impact of the crisis on J&J’s reputation cannot be understated. It was a defining moment that tested the company’s values, credibility, and ability to navigate through a crisis.

How J&J responded to this immense challenge would determine whether they could regain the trust of consumers, rebuild their brand, and serve as a benchmark for crisis management in the corporate world.

Johnson and Johnson Crisis Management Strategy 

Here’s are main features of J&J crisis management stragegy:

Swift response and communication

One of the key pillars of Johnson & Johnson’s crisis management strategy during the Tylenol cyanide poisoning incident was their swift response and effective communication. Recognizing the urgency of the situation, J&J acted promptly to address the crisis and mitigate its potential impact on public safety and their reputation.

Upon learning about the tampering incident, Johnson & Johnson made the immediate decision to recall all Tylenol products from store shelves nationwide. This recall was an unprecedented move, as J&J prioritized public safety over financial considerations. By swiftly removing the potentially contaminated products from the market, J&J demonstrated a commitment to protecting their consumers and reinforcing the trust that had been shaken.

In addition to the recall, J&J proactively communicated with the public, media, and relevant stakeholders. They held press conferences to provide regular updates on the situation, sharing transparent information about the incident, the recall, and the measures being taken to ensure public safety. This open and honest communication strategy helped to establish J&J as a responsible and accountable company, committed to resolving the crisis and protecting the well-being of their customers.

Moreover, J&J collaborated closely with law enforcement agencies and regulatory bodies throughout the investigation. By actively cooperating with authorities, they demonstrated a commitment to holding those responsible for the tampering accountable and restoring public confidence in the safety of their products.

J&J’s decision to recall Tylenol from store shelves nationwide

One of the most significant actions taken by Johnson & Johnson during the Tylenol cyanide poisoning incident was their decision to recall Tylenol products from store shelves nationwide. This recall was a bold and unprecedented move that showcased J&J’s commitment to public safety and their determination to address the crisis head-on.

Recognizing the potential danger posed by the tampered Tylenol capsules, J&J prioritized the well-being of their consumers over any financial implications. Instead of limiting the recall to specific regions or batches of products, they took the proactive and decisive step of recalling all Tylenol products across the United States. This bold decision demonstrated a commitment to protecting the public and preventing further harm.

Transparent communication: public statements and press conferences

Johnson & Johnson (J&J) understood that keeping the public informed and involved was crucial to rebuilding trust and maintaining their reputation as a responsible and accountable company.

J&J promptly issued public statements to address the situation, providing accurate and up-to-date information about the tampering incident and the steps they were taking to ensure public safety. These statements were widely disseminated through various media channels, ensuring that the public had access to the most current information directly from the company.

Furthermore, J&J held press conferences to communicate directly with the media and the public. These press conferences served as platforms for J&J executives and spokespersons to address concerns, answer questions, and provide reassurance. By openly facing the media and engaging in transparent dialogue, J&J demonstrated their commitment to accountability and their willingness to address the crisis head-on.

Cooperation with law enforcement and regulatory agencies

Johnson & Johnson (J&J) prioritized collaboration and cooperation with law enforcement and regulatory agencies during the Tylenol cyanide poisoning incident. Recognizing the need for a comprehensive investigation and the importance of working with authorities, J&J actively engaged with these entities to address the crisis effectively.

J&J immediately reached out to local law enforcement agencies, such as the FBI, and regulatory bodies, including the Food and Drug Administration (FDA). They provided full cooperation, sharing any relevant information and evidence to aid in the investigation. By partnering with these agencies, J&J demonstrated a commitment to finding the culprits responsible for the tampering and ensuring justice was served.

The collaboration with law enforcement and regulatory agencies served multiple purposes. Firstly, it helped expedite the investigation process, leveraging the expertise and resources of these entities to identify the source of the tampered Tylenol products. This cooperation was essential not only for resolving the immediate crisis but also for preventing any future incidents of a similar nature.

Secondly, by actively engaging with authorities, J&J showcased their commitment to public safety and adherence to legal and regulatory requirements. This collaboration sent a clear message that J&J was not only focused on mitigating the immediate crisis but also on preventing any potential threats to consumer well-being.

Introduction of tamper-evident packaging to prevent future tampering incidents

Following the Tylenol cyanide poisoning incident, Johnson & Johnson (J&J) took proactive measures to enhance product safety and prevent future tampering incidents. One of the key steps they implemented was the introduction of tamper-evident packaging, a groundbreaking innovation in the pharmaceutical and consumer goods industry.

Tamper-evident packaging is designed to provide visible indicators of tampering or unauthorized access to a product. J&J recognized that by incorporating such packaging, they could provide consumers with an extra layer of assurance and instill confidence in the integrity of their products.

The new packaging featured several innovative elements, such as foil seals, blister packs, and other tamper-resistant mechanisms. These measures made it visibly evident if a product had been tampered with, allowing consumers to easily identify any potential risks and avoid using compromised products.

By introducing tamper-evident packaging, J&J demonstrated their commitment to learning from the crisis and proactively addressing the vulnerabilities that had been exposed. The implementation of this new packaging was not only a response to the immediate incident but also a long-term solution to safeguard consumer safety and prevent future tampering incidents.

Collaboration with industry and government bodies to establish safety standards

J&J actively engaged with industry associations, regulatory agencies, and other relevant stakeholders to develop and promote stringent safety standards. They collaborated with organizations such as the Consumer Healthcare Products Association (CHPA) to share best practices, exchange information, and develop industry-wide guidelines for product safety and tamper prevention.

Furthermore, J&J worked closely with government bodies, including the Food and Drug Administration (FDA), to establish robust regulations and protocols for product packaging, labeling, and security. They actively participated in discussions and provided valuable insights based on their experience during the crisis, contributing to the development of comprehensive safety standards.

Through these collaborative efforts, J&J played an instrumental role in shaping industry norms and regulatory frameworks. They shared their expertise, lessons learned, and innovative solutions to raise the bar for product safety across the pharmaceutical and consumer goods sectors.

Compensating victims and affected parties

J&J established a compensation fund to assist victims and their families. This fund aimed to cover medical expenses, counseling services, and other related costs incurred as a result of the tampering incident. By offering financial support, J&J demonstrated their willingness to take responsibility for the harm caused and to help alleviate the burdens faced by those affected.

Moreover, J&J engaged in direct communication and outreach to affected parties, expressing empathy and understanding for the challenges they endured. This personalized approach helped to build trust and foster a sense of care and support, showing that J&J was committed to assisting and standing by those affected by the crisis.

Offering refunds and product exchanges to restore consumer confidence

As part of their efforts to rebuild trust and restore consumer confidence after the Tylenol cyanide poisoning incident, Johnson & Johnson (J&J) implemented a customer-focused approach by offering refunds and product exchanges.

Understanding that consumers may have concerns about the safety of their purchased Tylenol products, J&J took proactive measures to address these concerns. They established a refund and exchange program, allowing customers to return any Tylenol products they had purchased, no questions asked. This initiative provided consumers with the opportunity to receive a refund or exchange their products for alternative J&J offerings.

Reintroduction of Tylenol to the market with improved packaging and safety measures

J&J invested substantial resources in developing and implementing enhanced packaging and safety measures for Tylenol products. They introduced tamper-evident packaging, which included innovative features such as foil seals, blister packs, or other mechanisms designed to clearly indicate whether the product had been tampered with. These visible deterrents provided consumers with a sense of confidence and security, knowing that they could easily identify if the product’s integrity had been compromised.

By reintroducing Tylenol with improved packaging and safety measures, J&J demonstrated their dedication to learning from the crisis and implementing tangible solutions. This proactive approach showed that J&J had taken concrete steps to address the vulnerabilities that had been exposed and to prevent similar incidents from happening again.

Recommendations for other organizations facing potential cirisies

Organizations facing potential crises can learn from J&J’s experience and consider the following recommendations:

• Proactive risk assessment: Conduct regular risk assessments to identify potential vulnerabilities and develop strategies to address them. This includes evaluating supply chain security, product packaging integrity, and other areas relevant to consumer safety.
• Crisis management plan: Develop a comprehensive crisis management plan that outlines roles, responsibilities, communication protocols, and steps for rapid response. Regularly review and update the plan to align with changing circumstances and emerging risks.
• Strong internal communication: Establish effective internal communication channels to ensure that all employees are aware of the crisis management plan and their roles during a crisis. This promotes a coordinated response and consistent messaging.
• Regular media monitoring: Implement a media monitoring system to stay informed about public sentiment, detect early signs of potential crises, and respond swiftly to emerging issues. This helps manage reputation and allows for timely interventions.
• Continuous improvement: Embrace a culture of continuous improvement by regularly evaluating and enhancing product safety measures, quality control processes, and crisis management strategies. Learning from past incidents helps strengthen resilience and prevent future crises.

Final Words 

Johnson and Johnson Crisis Management Case Study serves as a remarkable case study in crisis management. The swift response, transparent communication, recall decision, cooperation with law enforcement, and prioritization of public safety played pivotal roles in mitigating the impact of the crisis and rebuilding trust.

J&J’s commitment to consumer well-being over financial considerations, introduction of tamper-evident packaging, collaboration with industry and government bodies to establish safety standards, and their focus on preparedness and having a crisis management plan in place are valuable lessons for organizations facing potential crises.

Johnson and Johnson Crisis Management Case Study serves as a reminder that crises can happen unexpectedly, but with a well-prepared and thoughtful approach, organizations can successfully navigate these challenges, rebuild trust, and emerge stronger than before.

About The Author

Tahir Abbas

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Marketing Strategy of Johnson & Johnson: A Deep Case Study

By Aditya Shastri

Johnson & Johnson (J&J) is an American multinational, founded in 1886, which develops medical devices, medications, and consumer packaged goods. Headquartered in New Brunswick, New Jersey. One of the trusted brands in India today. It is a globally acknowledged brand that has targeted every segment of society with the age being no bar. The ethical standards of the company lead to a strong brand.

This case study is an in-depth analysis of the Marketing Strategy of Johnson and Johnson, along with its marketing mix, marketing campaigns, social media strategy, and business strategy. 

About Johnson & Johnson

Johnson & Johnson is an American multinational company founded by the Johnson brothers in 1886. Its consumer business is centred in Skillman, New Jersey. The company includes approximately 250 subsidiaries operating in 60 countries and its products are sold in more than 175 countries. It has 134,500 employees worldwide engaged in research and development (R&D), manufacturing, and sale of its products.

The company spread its roots in India 70 years ago. Since then it has brought many innovative ideas, products & services to improve the health and well-being of people.

Today Johnson & Johnson company ranks as the world’s sixth-largest consumer health company, the world’s largest and most diverse medical devices, and diagnostics company, the world’s fifth-largest biotech company, and the world’s eighth-largest pharmaceutical company. It is one of the two U.S.-based companies that have a credit rating of AAA, which is higher than that of the United States Government.

Now that we have an overview of Johnson & Johnson, let us go through its marketing mix.

Marketing Mix Of Johnson & Johnson

Marketing Mix is referred to as the 4Ps of marketing – product, price, place, and promotion, that can be controlled by a company to influence consumers to purchase its products. Johnson & Johnson has a wide variety of products. Its marketing mix is as follows:

1. Johnson and Johnson Product Strategy:  

Johnson & Johnson has a wide range of products under its portfolio which are offered under various brands. Its product strategy is divided into three segments: consumer products, pharmaceuticals, and equipment. The product range is extremely broad and diverse. It includes:

• Baby products include soaps, creams, wipes, powders, nappy pads, massage oil, body lotion, and hair oil.
• Skin Care products include Clean & Clear moisturizer, Clean & Clear face wash, body lotion, Neutrogena skin care products, etc.
• Oral Care products include mouth wash which is available in three flavours by the Listerine brand.
• Wound care includes band-aids & Neosporin first aid product lines.
• Women’s health care includes sanitary pads.
• Another major segment is pharmaceuticals which are used for dermatology, contraceptives, anti-fungal, etc.
• Medical equipment is used by professionals including products that are related to circulatory disease, spinal care, etc. Also, it includes diabetes testers and disposable contact lenses. 

2. Johnson and Johnson Price Strategy:  

Johnson & Johnson embraces a rather well-planted price policy. The brand maintains its prices in the consumer price index range. It is the index used in the USA that considers the price of the products which the consumers can afford. The company is also aware of its responsibility in society so for that, it has worked closely with the government to keep the prices reasonable for medical items. 

The prices for goods are based on various factors such as the target segment, production costs, demand, supply, and customer payment capacity. For some products like baby care and consumer products, it has kept prices at a little higher rate, as the consumers are ready to pay extra money for good quality products as well as for the health of their family,

3. Johnson and Johnson Place Strategy:

Johnson & Johnson’s place strategy includes a wide distribution network. Because of its network, its products are widely available. It conducts business virtually in all the countries of the world.

It has rightly taken the opportunity to sell its goods through various online shopping portals and sites with the increasing trend of online shopping and technological advancement. Also, the products are easily accessible at retail stores and modern markets like D-mart, Big Bazaar, Reliance Fresh, etc. 

4. Johnson and Johnson Promotion Strategy:

Johnson & Johnson has invested a high amount of money in R&D and advertising. Prachi Desai, a leading TV actress, has been associated with the company’s advertisements. Its advertisements are placed everywhere through different mediums such as magazines, hoardings, newspapers, etc. The corporation offers various schemes & discounts on products to the customers. As part of the promotional events, it has organized different types of campaigns.

Popular cartoons like Winnie the Pooh & The Little Mermaid are being used in baby care product ads which make the brand highly popular. The baby ads that the company show on television are so delightful, people love such ads. It makes a strong emotional connection with the target audience through its ads.

Many hospitals provide special baby product kits to new mothers when they leave the hospital with their babies. Such schemes gain the trust of the mothers at the early stage.

Now that we know the 4P’s of the marketing mix, let us now understand the business strategy of Johnson & Johnson in the coming section.

Johnson & Johnson Business Strategy 

As a major player in three market segments focusing on the entire process of prevention, diagnosis, and treatment, Johnson & Johnson competes in one-third of the global medical market. It responds to the buying trend of the government and major customers. It is committed to helping individuals think holistically, drawing their attention from multiple perspectives in the disease category.

The main focus is on long-term management, building the long-term assets of our brand, building sustainable customer loyalty, and building the value of shareholders over time. As a result, its product sales ranked first and second in the global market share. Another major factor is organic growth related to innovation, the rest comes from licensing, partnerships and acquisitions. R&D centers in the emerging markets develop the products based on local insights and the needs of the patients.

The mindset of the brand is focusing on new products, new technologies, and the new business models that will truly connect the way its customers live. In the emerging world, the main focus is on expanding its presence to help more and more people.

Now that we understand the business strategy of the company, let us now go through Johnson & Johnson’s marketing strategy.

Marketing Strategy of Johnson & Johnson

In terms of global marketing strategy, Johnson & Johnson has kept up with the times and has established a strong network for distribution. In the countries where it is present, it has penetrated beyond just major cities and is spreading to less populous regions.

The company has gained a reputation for outstanding achievements and performance ever since its inception. It promotes itself through various activities like sponsoring events, creating campaigns, showcasing its CSR activities, etc.

Now let us understand its marketing efforts by looking at some campaigns by Johnson & Johnson in the coming section.

Marketing Campaigns of Johnson & Johnson

Marketing campaigns are very important for any business to succeed. It not only promotes the merchandise but also sends a meaningful message to attach with the customer. Let us look at some successful campaigns of Johnson & Johnson.

• #SoftestTouch – A Marketing Campaign of Johnson & Johnson

The campaign was launched by Johnson’s Baby. Cotton touch is the first-ever baby product to be combined for zero irritation with real natural cotton. The latest brand offerings were welcomed by 700 influencers to the virtual baby shower. The virtual unboxing event consisted of expectant mothers and mothers with babies of 0-6 months of age. A box of products and a personalized certificate of appreciation were given to each influencer.

• “CARE INSPIRES CARE” – A Marketing Campaign of Johnson & Johnson

In 2012, a global study revealed that many people around the world believed that the world was becoming a less caring place. Johnson & Johnson wanted to change this belief and it launched the  CARE INSPIRES CARE   platform to inspire the world. It was based on the belief that each & every person has the power to do things to care for the health and well-being of others. 

Using its global sponsorship of the 2014 FIFA WORLD CUP in Brazil, the company set out to change the belief. Throughout the World Cup, millions of people proved that the power of care could change the world. The care brought people to come together & helped to overcome the differences.  

• “My Health Can’t Wait” – A Marketing Campaign of Johnson & Johnson

Through this campaign, Johnson & Johnson urges patients to prioritize their health and not to delay their healthcare during the pandemic. “My health can’t wait” this campaign took two measures, one focused on educating patients, and the other focused on encouraging doctors to start a dialogue with patients.  Physician resources on the My Health Can’t-Wait website include email templates, surgical checklists and discussion guides, tips for communicating with patients in uncertain times, and tips for communicating via telehealth.

Before starting this work, Johnson & Johnson conducted a survey of approximately 2,000 American adults in June. Through the survey, it found that 88% of people considered health a priority but 70% of people put off some care that they required. So through this campaign, the company wanted people to focus on their health.

Click here to understand more about “My Health Can’t Wait”  

We looked at some successful campaigns by the brand, let us look at the digital presence of Johnson & Johnson in the coming section.

Digital Presence of Johnson & Johnson

A digital presence gives your brand an exemplary platform to speak with consumers. It helps you to interact with your customers & set yourself apart from the competitors.

Johnson and Johnson manages a variety of social media channels & strives to create informative, engaging & supporting communities where it can share information & have conversations. The company tries to reply to all the comments and feedback from the customers.  It has a huge digital presence on Facebook as compared to Twitter and Instagram.

(Twitter page)

(Instagram page)

(Facebook page)

Johnson & Johnson customizes its social media content based on its products & target audience. 

Here we are at the end of the case study, let us conclude in the coming section.

Johnson and Johnson is one of the trusted brands which produces quality products. It is so ubiquitous on the market that even the world of baby and healthy goods sounds incomplete without the company. Its business is as strongly rooted as it was when it first entered the market. The brand has earned the trust of consumers by providing natural products that do not contain chemicals. The organization is well aware that people in different countries have different opinions so that marketing campaigns are centered in different countries.

Thank you for taking the time to read the case study, we hope you found it interesting. Comment down your suggestions. Check out more of our blogs on   IIDE ’s website. Also If you wish to explore digital marketing, IIDE conducts a free Digital Marketing Masterclass every week. 

Author's Note: My name is Aditya Shastri and I have written this case study with the help of my students from IIDE's online digital marketing courses in India . Practical assignments, case studies & simulations helped the students from this course present this analysis. Building on this practical approach, we are now introducing a new dimension for our online digital marketing course learners - the Campus Immersion Experience. If you found this case study helpful, please feel free to leave a comment below.

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Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs...... [Read full bio]

Great analysis!! Especially on their marketing campaigns. Would really love a marketing mix of Mercedes Benz as well.

Wow, I never realized how diverse Johnson & Johnson’s product range is! Their marketing strategies are truly fascinating. Thanks for sharing!

Insightful study of Johnson & Johnson’s varied product portfolio and excellent promotional techniques. I look forward to learning more about their business plan.

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How Johnson & Johnson Made Hard Decisions During Covid

• Joanne Waldstreicher

The company had to decide: Should a drug designed to treat HIV patients be diverted to people with Covid-19 instead?

During a crisis, it’s sometimes hard to pause. There is a natural predisposition to act—to want to help, to jump in and do everything one can. But it’s important to remember that we may end up doing more harm than good if we act too quickly, without first pausing to consider the objective rigor of the data underpinning decision-making as well as the broader impact of the decisions we make. In early 2020, media reports indicated that an antiviral drug produced by Johnson & Johnson that was used to treat people with HIV might be effective against COVID-19. Orders for the medicine surged beyond what the pharmaceutical company could produce. Instead of ramping up production, though, the company paused and followed a specific playbook for responding to crisis. The company worked with internal and external independent experts, transparently laid out and shared the scientific data, and established and globally applied an ethical framework, all to ensure their decision-making process was rational, ethical and equitable. The benefits of this review process were born out months later when clinical studies on HIV antivirals in patients with COVID-19 showed that the drugs were not effective against COVID-19 in people. Acting hastily to fill the influx of orders early in the pandemic would not have helped patients with COVID-19. In addition, diverting the supply would have harmed those who needed the medicines for HIV.

In early 2020, we at Johnson & Johnson found ourselves with an unusual problem: There were too many orders for an antiviral drug used to treat people with HIV. The demand was coming not from HIV patients but from doctors on the front lines of the Covid-19 pandemic. Early media reports indicated that the drug might be effective against that disease, and orders for the medicine surged.

• JW Joanne Waldstreicher , M.D., is Chief Medical Officer, Johnson & Johnson. In this role, she has oversight across pharmaceuticals, devices and consumer products for safety, epidemiology, clinical and regulatory operations transformation, collaborations on ethical science, and technology and R&D policies, including those related to clinical trial transparency and compassionate access. She chairs the R&D Development Pipeline Review Committee for The Janssen Pharmaceutical Companies of Johnson & Johnson, and supports the Device and Consumer Development Committees. Joanne is also a faculty affiliate of the Division of Medical Ethics, Department of Population Health, New York University School of Medicine. Joanne combines broad experience in science and medicine with a passion for advancing transparency and ethics, with a goal of improving the lives of patients and consumers worldwide.

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Case Study: Johnson & Johnson’s Award-Winning Supply Chain Smart Factory

Johnson & Johnson successfully pilots a scalable smart factory strategy to modernize operations and transform how digital capabilities are incorporated  

Company Fact File –

Company : Johnson & Johnson Sector : Health Care Products HQ location: New Brunswick, NJ Revenues : $10 billion+ annually Employees: 5,000+ Web url: www.jnj.com

Health care is a vital part of humanity, and Johnson & Johnson is committed to changing its trajectory by addressing patient, consumer, and customer needs. To accomplish this ambitious goal requires a high degree of visibility, flexibility and resiliency in the manufacturing operation.

Because the external environment has a dynamic impact on production, J&J developed a smart factory strategy that modernizes site operations by building digitally enabled capabilities to solve information, process, product, and human pain points. The smart factory is built upon a cohesive plan and foundation using data along with capabilities such as edge/high performance computing (HPC), process data mining/analytics, asset optimization, AR and VR mobility platforms, and modular systems that are threaded across the value chain – all designed to help optimize flow, improve reliability, resiliency and agility, while ensuring quality and safety.

The Journey to Smart

Many digitalization elements of J&J processes, digital stack, and standard data architecture and design supporting the smart factory began in 2017. Foundational programs like the development of a common data layer architecture, cloud environments, cybersecurity, ERP design, and a next generation manufacturing system platform are needed to ensure access to required data that will enable digital capabilities and solutions that will support processes, people and technologies.

“You can’t look at the individual technologies level,” says Bart Talloen, J&J’s Senior Vice President Supply Chain Strategy, Innovation and Deployment. “It’s all about the ultimate integrated capability for the business that you enable. The interoperability – system thinking – is fundamental because all the elements are interconnected.”

In the first quarter of 2021, the J&J Consumer business segment sites in Lititz, Penn. (USA) and Bangkok, Thailand began the internal diagnostic and review processes for key product value streams and how smart factory initiatives could improve business processes to support the customer. The smart factory process required engagement from all levels of the site’s organization to establish and link short- and long-term business objectives, vision and metrics.

The process included six phases: 1.     Visioning 2.     Diagnostics 3.     Current to future state digital capability 4.     Prioritization 5.     Roadmap 6.     Business planning

The smart factory requires good planning in how investments are made, sequencing, and people skill analysis to ensure optimal performance, agility, and resiliency objectives are met.

Since its inception, the smart factory rollout was extended to two additional J&J consumer sites in the third quarter of 2021 and then deployed across the entire global manufacturing network in the first two quarters of 2022.

“One of the smart factory objectives is for information to flow easily and in an interconnected way that provides insights for faster and more productive decision-making.”

“The right deployment strategy is critical. It’s always important to start small, nimble – what we call test and learn experiments to test something out,” says Talloen. “Then you take the learnings from those test and learns, and that informs you about deployments strategies.”

The Smart Factory Impact

The J&J Smart Factory transformed how the company identifies, tests, and incorporates digital capabilities to solve process constraints including lead times, equipment and labor efficiency, logistics , and planning processes. The first effort was to build a methodology, or playbook, that ensured a common language, definitions, and approach to understanding the transactional flow within a site, across sites and relationships with other supply chain systems areas (planning, procurement, delivery, customer, and product development).

“Systems can work perfectly, everything can be automated, but at the end it’s still people that are core in the execution. It’s critical to deveop these new technology standards that are clearly articulated for not only operators, but mechanics, engineers, quality people, and planning people to really prescribe in a detailed way those standard operating principles,” Talloen says.

Each smart factory capability was taken into consideration so both data and solutions interacted via a digital thread with interconnection to each system. Traditional problem identification and solving by means of process excellence or lean methodologies identified individual pain points and connections. The smart factory strategy allowed teams to understand and visualize the entire transactional process flow and interconnection of people, equipment, processes, and technology.

From there, the J&J Smart Factory strategy drove how the J&J Operating System (JJOS) – the company’s process excellence system – and teams understood the end-to-end information flows on a deeper level, which illuminated not just the sheer number of transactions within the end-to-end information flow, but the high incidence of duplication brought on by disparate systems. The JJOS includes process excellence methodologies, tools, metrics, and performance management principles. In addition, teams were able to identify additional flow breakers that would have not been visible without the need to understand the current digital landscape. The exercise was a critical input to building a smart factory roadmap because one of the smart factory objectives is for information to flow easily and in an interconnected way that provides insights for faster and more productive decision-making, so that operators, supervisor and managers can focus on making products.

“The smart factory strategy enabled J&J to identify common issues that impact business segments, operations, and needs globally.”

Ultimately, identification of common information flow breakers will populate an expanding digital solutions use-case library. Meanwhile, the capability and skilling process of J&J’s people will enable scaling and accelerate lead time reduction and agility around the globe.

Transforming the Way J&J Addresses Challenges

Beginning with the first Consumer pilot sites in Lititz, Penn., and Bangkok, Thailand, the smart factory program helped the locations address business challenges in new ways. In 2021, supply chain disruptions drove new business challenges throughout Lititz’s warehousing and logistics business units. These challenges led the team to use the JJOS tools to diagnose flow disruptions and leveraged the smart factory framework to identify and implement digital solutions.

• Implementation of J&J’s inbound yard management system, YardView, created detailed trailer visibility and yard jockey movement history. The warehouse team built capabilities for enhanced metric reporting and dashboards driving down detention and service costs.
• A digital twin of the production lines and material movements was created to model flow and material handling between the warehouse and manufacturing lines. The event models identified new product flows and 95% of the site’s total volume was converted to a direct-to-truck loading strategy, decreasing on-hand finished goods inventory by more than 50%. This change in shipping pattern, directly from palletizer to truck, removed 14 days of lead time (LT) from the site to distribution center network.
• Outbound container utilization load building, LoadMax, was implemented for the site, increasing container utilization by 4%, reducing costs by 15%, and lowering carbon footprint by 500,000 kg of CO2 emissions. Through the smart factory program, both Consumer sites can now address flow, productivity, and sustainability challenges in day-to-day business and during the pandemic.
• Scheduling tools were developed to replace manual scheduling and create the digital thread linkage between production’s real time output with logistic arrangement.
• Deliver Lighthouse provided goods-in-transit visibility to downstream markets, and best control on order, inventory, and customer services.
• The next gen manufacturing systems platform development and implementation unlocked the value of information about flow breaks in the manufacturing area to accelerate product release and prevent human error.
• Digital citizen development is aiming to help employees resolve real pain points by utilizing no-code/low code solutions (Power Apps, Alteryx, Azure Machine Learning).
• Workforce digital capability building is a systemic approach to all site employees, teaching how the future digital capability looks through a competency assessment and skills-based learning. The competency gap will be mitigated by multi-method, online learning, hands-on coaching, and project assignments.

As a result, J&J Thailand delivered 25% lead time reduction, 15% productivity improvement, and a 20% carbon footprint optimization.

Scaling for Success

The smart factory strategy provides the means to visualize, react, design, and implement digital capabilities and solutions from site, to region, to network at scale. Powered by clear identification of needs and pain points through information and process excellence, IT technology, and value stream mapping, J&J has identified, tested, developed, and scaled multiple technologies across the manufacturing network and sites within the consumer practice by direct development of tools or by leveraging digital capabilities and technologies from other business units.

J&J has continued deployment of the smart factory strategy across the entire J&J consumer network of twenty-one internal manufacturing sites.

“We’re getting into a phase going forward, where we’re integrating end-to-end supply chain and the smart factory-like capabilities all the way from the connection to the supplier to the connection to the customer,” Talloen says.

“The right deployment strategy is critical. It’s always important to start small, nimble – what we call test and learn experiments.”

Further expansion of the smart factory strategy into J&J medical technology and pharmaceutical business segments also began in 2022. The J&J Smart Factory strategy has enabled shared learnings, scalability of technologies, acceleration of the technology decision process and clear global investment strategies across the three business segments.

The smart factory process and strategy has enabled teams across all of J&J to not only identify local or regional issues, but to identify common issues that impact all business segments, operations, and needs globally. It has provided insights and focus to establish standard approaches that can be leveraged at scale to deploy across the regions and sites. Capabilities and technologies can be scaled more readily, people skills advanced more rapidly, and savings and competitiveness increased.

In addition to earning High Achiever status in the Enterprise Integration and Technology category at MLC’s 2022 Manufacturing Leadership Awards program, the J&J Smart Factory strategy and deliverables have been acknowledged in many forums and recognitions:

• World Economic Forum (WEF) Lighthouse Award – J&J Helsingborg Site – Q2 2021
• World Economic Forum (WEF) Lighthouse Award – J&J Thailand Manufacturing Site – Q1 2022
• Association for Supply Chain Management (ASCM) Annual Conference – Q3 2021    M

About the author:

J eff Puma is Content Director for the Manufacturing Leadership Council.

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How Johnson & Johnson’s innovative supply chain technology is helping transform how we work—and live

The company now has more lighthouse designations than any other—a marker of its excellence in manufacturing innovation. learn how johnson & johnson sites are improving how and when we get the healthcare products and services we need and serving as a beacon to other manufacturers worldwide..

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Every day, more and more new technologies that seem straight out of a sci-fi movie—from intelligent robots to self-driving cars—are making headlines.

These advances signal the beginning of what’s known as a Fourth Industrial Revolution that will change the way we live and work. While the Third Industrial Revolution brought digital capabilities to billions of people, the Fourth is characterized by a range of cutting-edge technologies that impact all economies and industries and open up new career paths for science, technology, engineering, mathematics, manufacturing and design professionals.

For companies around the world, identifying and implementing these new technologies—innovations that have the power to affect every aspect of business, from manufacturing, distribution and operations to customer experience—has become a priority. But some have been quicker to adapt than others.

Johnson & Johnson was awarded two new Lighthouse designations, bringing the company total to seven Lighthouse designations across all sectors: Pharmaceutical, Medical Devices and Consumer Health—more than any other company has.

The World Economic Forum established the Global Lighthouse Network in collaboration with McKinsey & Co. in 2018 to accelerate a more comprehensive and inclusive adoption of these technologies in manufacturing. To date, 90 manufacturers from a variety of industry sectors have received Lighthouse designations for their use of Fourth Industrial Revolution technologies to increase efficiency and productivity, in tandem with environmental stewardship.

Just as lighthouses have been used to aid navigation for thousands of years, the Lighthouse recipients are world leaders who’ve adopted and integrated technologies that the World Economic Forum has tapped to show others the way forward.

Johnson & Johnson was recently awarded two new Lighthouse designations: one for its approach to end-to-end customer connectivity in its orthopedics business and one for its Vision Care order-fulfillment operations in London. That brings the company total to seven Lighthouse designations across all sectors: Pharmaceutical, Medical Devices and Consumer Health—more than any other company has.

“The main factor of success is to improve the end-to-end customer experience,” says Kathy Wengel, Executive Vice President & Chief Global Supply Chain Officer for Johnson & Johnson. “Advanced manufacturing technologies contribute to greater efficiencies and connectivity across Johnson & Johnson, while sustaining our commitment to quality, enhancing sustainability benefits for the planet and improving cycle time and visibility for the patients, consumers and customers we are privileged to serve.”

Keep reading to see how the company’s two newly designated Lighthouse facilities, along with the Johnson & Johnson DePuy Synthes site in Suzhou, China, a 2020 award recipient, are not only leading in creating innovative technologies but also sharing what they’ve learned with others.

Johnson & Johnson DePuy Synthes Advance Case Management in Bridgewater, New Jersey

Received Lighthouse designation for: implementing a fully digital platform that ensures that orthopedic surgeons receive the right mix of applicable devices and tools for each patient, minimizing waste and expediting set-up time in the operating room

A digital platform at DePuy Synthes in Bridgewater, New Jersey, resulted in a dramatic reduction in instrument trays required by orthopedic surgeons in the operating room.

Preparation for surgical cases is complex, and inefficient processes drive higher healthcare costs. With the onset of the COVID-19 pandemic, things got even more challenging: Staffing shortages, supply chain disruption and restricted access all impacted efficient case coordination. In the company’s joint-reconstruction business , this created a perfect storm of events, making it harder to have the right product show up at the right time for the right patient.

But Johnson & Johnson’s Supply Chain Customer Solutions team is working to solve these case-coordination challenges. Its Advance Case Management (ACM) platform utilizes a mix of image-based and artificial intelligence algorithms to predict the most likely product range required for surgeons to do primary joint-replacement surgeries.

“Because ACM digitizes the process, there are fewer touchpoints focused on logistics and there’s more time spent supporting customer needs and patient care,” says Jean Nycz, Head of Supply Chain Customer Solutions. “We can predict the sizes of implants required with an accuracy level in the 90%-plus range, plus or minus one size for knee surgeries. Knowing the most likely sizes has fueled a more efficient operating room for surgeons and alleviated some pain points during such an unprecedented time,” says Nycz, who adds that the ACM has also led to up to a 60% reduction in both instrument trays required for cases and instrument-sterilization costs.

Given the trend toward many medical procedures shifting from inpatient to outpatient, these efficiencies have come at just the right time.

“Many procedures that were happening in the hospital are now shifting to ambulatory surgery centers,” says Nycz. “These centers are space-constrained. They don’t have any place for excess implants and instruments, and they rely on accurate and efficient processes to ensure a successful outcome.”

The Bridgewater Lighthouse designation will allow other companies to learn how to digitize processes that were labor-intensive and bring products to customers in a more efficient way.

Johnson & Johnson Vision Care Order-Fulfillment Operations in London

Received Lighthouse designation for: transforming the customer experience by creating a one-stop shop for order management

A highly efficient system at Johnson & Johnson Vision Care in London significantly reduced the company’s carbon footprint, while maintaining its service levels.

The pandemic has changed the way we shop for everything from clothing to contact lenses . Today, people expect a personalized experience and a quicker response time from companies than in the past, whether they’re calling in with questions or shopping online.

Case in point: “A big part of what we ship—up to 25%—is directly to consumers,” says Gaspar Zuniga, Vice President, Supply Chain for Johnson & Johnson Vision. “And the trend accelerated when people couldn’t get their contact lenses in person.”

These changes drove the need for a dynamic virtual call center that relies on advanced technology such as intelligence-based call routing and auto answer. As a result of the improved customer experience, the score of Johnson & Johnson’s Customer Satisfaction Survey jumped 6.4%, going from 85.5% in 2017 to 91.9% in 2020, second only to Amazon.

As a result of the improved customer experience, the score of Johnson & Johnson’s Customer Satisfaction Survey jumped 6.4%, going from 85.5% in 2017 to 91.9% in 2020, second only to Amazon.

Another new system ensures that repeat customers never see a “sold out” message when they log on to order their contact lenses, thanks to a technology that anticipates when they’ll reorder and reserves lenses just for them.

These are just some of the improvements that helped earn the London facility a Lighthouse designation—an honor that provides Johnson & Johnson Vision Care’s supply chain with “a significant sense of pride,” says Zuniga. “We’re invested to deliver on our purpose: to see better, connect better and live better.”

Another source of pride: When Johnson & Johnson Vision Care showcased an end-to-end operating model that encompasses customer service, manufacturing and distribution during a World Economic Forum livestream earlier this year, there was just one question from others in the Lighthouse Network: How could they put this technology to use in their own operations?

“It takes a lot of work to connect it,” Zuniga says. “As a company, we started talking about this seven years ago, and it’s great to see it all come together.”

Johnson & Johnson DePuy Synthes in Suzhou, China

Received Lighthouse designation for: creating an integrated digital platform that improves interconnectivity and efficiency and benefits the company’s large-scale operations

The Johnson & Johnson Medical Ltd. campus in Suzhou, China

A decade or so after the 2006 opening of the Johnson & Johnson Medical campus in Suzhou, the DePuy Synthes factory there, which manufactures orthopedic surgical products, including joint-reconstruction implants, identified the need to produce and distribute its products more efficiently to better service surgeons and patients around the world.

As a result, in 2020, Johnson & Johnson received its first Lighthouse designation in China for its efforts to successfully incorporate advanced technologies at DePuy Synthes Suzhou while protecting the environment.

To enable real-time, interactive and accurate manufacturing processes, Johnson & Johnson employees transformed and improved siloed technologies by leveraging digital analytics to optimize productivity, improve prediction of customer demand and make the supply chain more agile. As a result, productivity increased by 15% at DePuy Synthes Suzhou.

“Creating such a platform has helped us to upgrade manufacturing and end-to-end supply chain capabilities, maximize efficiency and competitiveness at scale and drive business performance improvements,” says Roy Tong, Director of Engineering, DePuy Synthes Suzhou.

A new distribution center warehouse opened at the DePuy Synthes Suzhou campus in 2021 that accelerates the site’s pace at supplying cutting-edge 3D printed surgical products to the Chinese market. Shaving time off order delivery goes a long way in meeting customer expectations, especially in Asia, when orders can actually be delivered the day an order is placed. Eliminating the time required to transport products from the manufacturing plant to a separate distribution facility means that DePuy Synthes Suzhou can serve both surgeons and, in turn, their patients, more expeditiously.

Says Julia Chen, General Manager of DePuy Synthes China: “The growing end-to-end capabilities at the campus are enabling a better experience for our customers and patients.”

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How Poisoned Tylenol Became a Crisis-Management Teaching Model

T he killer’s motives remain unknown, but his — or her, or their — technical savvy is as chilling today as it was 30 years ago.

On Sept. 29, 1982, three people died in the Chicago area after taking cyanide-laced Tylenol at the outset of a poisoning spree that would claim seven lives by Oct. 1. The case has never been solved, and so the lingering question — why? — still haunts investigators.

According to TIME’s 1982 report, Food and Drug Administration officials hypothesized that the killer bought Extra-Strength Tylenol capsules over the counter, injected cyanide into the red half of the capsules, resealed the bottles, and sneaked them back onto the shelves of drug and grocery stores. The Illinois attorney general, on the other hand, suspected a disgruntled employee on Tylenol’s factory line. In either case, it was a sophisticated and ambitious undertaking with the seemingly pathological goal of killing strangers entirely at random. Their symptoms and sudden deaths confounded doctors until the link was discovered, traced back to identical pill bottles that each smelled like almonds — the telltale scent of cyanide. The perpetrator left no margin for error, filling the capsules with poison at thousands of times the amount needed to be fatal.

One victim, 27-year-old Adam Janus, took Tylenol for minor chest pain and died within hours. His younger brother and sister-in-law were killed after taking pills from the same bottle while grieving the sudden, shocking loss at Janus’ house.

TIME’s Susan Tifft wrote of the tragedy’s victims on Oct. 11, 1982:

Twelve-year-old Mary Kellerman of Elk Grove Village took Extra-Strength Tylenol to ward off a cold that had been dogging her. Mary Reiner, 27… had recently given birth to her fourth child. Paula Prince, 35, a United Airlines stewardess, was found dead in her Chicago apartment, an open bottle of Extra-Strength Tylenol near by in the bathroom. Says Dr. Kim [the chief of critical care at Northwest Community Hospital]: “The victims never had a chance. Death was certain within minutes.”

Without a suspect to revile, public outrage could have fallen squarely on Tylenol — the nation’s leading painkiller, with a market share greater than the next four top painkillers combined — and its parent corporation, Johnson & Johnson. Instead, by quickly recalling all of its products from store shelves, a move that cost Johnson & Johnson millions of dollars, the company emerged as another victim of the crime and one that put customer safety above profit. It even issued national warnings urging the public not to take Tylenol and established a hotline for worried customers to call.

Tylenol relatively quickly reestablished its brand, recovering the entire market share it lost during the cyanide scare. Though things could have gone very differently, the episode’s most lasting legacy has been in the annals of public relations, not poison control: the case has since become a model for effective corporate crisis management.

Read the 1982 report on the poisonings, here in TIME’s archives : Poison Madness in the Midwest

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The Renewed, Curious Case Study of Johnson & Johnson

After vaccination concerns.

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Perhaps one of the most iconic brand images from my childhood is the yellow bottle of Johnson & Johnson (J&J) baby shampoo that is distinctly labeled “No more tears.” Founded in 1886, Johnson & Johnson has a long brand history with a focus on healthcare which started with the production of antiseptic gauze and bandages.

From a consumer perspective, it is often difficult to separate perceptions about a brand which stem from its different product lines. Currently, J&J has a wide and varied product mix that spans consumer health products, medical devices and pharmaceutical products. In recent weeks, J&J has been featured in headlines for its Covid-19 vaccine, developed under the Janssen Pharmaceuticals company but still bearing the brand name. The vaccine distribution is currently paused in the United States as the Centers for Disease Control and Prevention (CDC) investigates symptoms related to the vaccine including blood clots while the rollout has been approved to restart in Europe . But a recent YouGov poll suggests a large drop in the perception of safety of the brand’s vaccine after the rollout was stopped.

With over a 130-year history in an industry sector strongly connected to consumer safety and welfare, J&J offers a unique brand case study. In 1982, J&J’s leadership launched a major recall and offered a reward related to the tampering of Extra-Strength Tylenol . Although this tragic incident seemed isolated to the Chicago area, J&J took a more proactive and wide-scale response to prevent further harm. The consumer-centric response is touted as a commendable strategy that allowed J&J to maintain consumers’ trust and quickly reclaim market share in the analgesic market. J&J faced more scrutiny with a Tylenol recall in 2009 and allegations about its talcum baby powder . However, its commitment to social impact garnered it a top spot in The Wall Street Journal’s ranking of the world’s most sustainably managed companies.

So, what impact does the halt in J&J’s vaccine mean for its brand equity? In their seminal paper in Management Science, economist and strategist Dierickx and Karen Cool (1989) describe an organization’s ability to develop a “stock” of assets which grows from strategic investment “inflows” and is reduced by “outflows” (akin to a bathtub that can be filled and also spring leaks). An example is a company’s “stock” of knowledge and intellectual capital. Over time, this knowledge can become outdated and its value as an asset reduced (“outflow”). However, the intellectual capital can be “refilled” with R&D spending. Taking a similar, although not identical, framework, brand equity is an asset that can be diminished or replenished by a brand’s actions (e.g., advertising) and the actions of other agents including media coverage, consumers’ social media chatter, and tangible consumer market outcomes. While the halt in vaccine rollout is surely an “outflow” from J&J’ stock of brand equity, its involvement in the urgent battle against Covid-19 is an “inflow.”

In the long term, the Johnson & Johnson brand will be most strongly impacted by how closely the organization’s actions, cumulatively, align with its brand credo. The first few lines of the credo are: “We believe our first responsibility is to the patients, doctors and nurses, to mothers and fathers and all others who use our products and services. In meeting their needs , everything we do must be of high quality.” Actions that demonstrate a commitment to these constituents, even in the face of obstacles, are likely to refill J&J stock of brand equity.

Debika Sihi

Debika Sihi is an associate professor of business at Southwestern University and is a member of our Adweek Academic Council.

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Johnson & Johnson: Reimagining recruiting with Jibe and Google

About Johnson & Johnson

Johnson & Johnson, a Fortune 100 company, is a multinational manufacturer of medical devices, pharmaceuticals, and consumer packaged goods headquartered in New Brunswick, New Jersey.

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Jibe offers a candidate experience platform and recruiting software that enable companies to build better talent pipelines and fill jobs faster.

By tapping into Google’s search and machine learning capabilities via Cloud Talent Solution, Jibe helped Johnson & Johnson improve the usability and effectiveness of its career site.

Google cloud results.

• Returns more relevant search results and better job-to-candidate matches with Google Cloud Talent Solution
• Increases career site engagement with 45% more click-throughs
• Better job discovery for business critical roles leads to a 41% increase in high-quality job applicants per search
• A faster, more cost-effective recruiting and hiring process
• Able to measure job applicants’ feedback

41% increase in highly qualified applicants for business critical roles

Job seekers can often feel lost or disconnected—like the right opportunity is out there, but they don’t know where or how to look. Employers face a similar challenge when trying to attract the right candidates. Many companies, especially large enterprises, face a talent shortage across a range of critical roles.

For global companies like Johnson & Johnson (J&J), their online career website is an important recruiting tool. It’s the “front door” for talent that could make a vital difference in the company’s future and drive innovation for years to come. However, career sites are often underutilized. If a job seeker doesn’t find a good job match with a quick search, they will likely move on. Too often, that represents a lost opportunity for both the company and the job seeker that could have been avoided with better search results.

“Partnering with Jibe and using Cloud Talent Solution for our career site allows us to do a much better job matching opportunity to talent on a very large scale.”

While J&J receives approximately 1 million applications for 25,000 positions each year, the percent of applicants that were highly qualified for open positions was low. Although the company always has a variety of open jobs on its career site , it noticed that even when strong matches existed between online job seekers and available positions, search results often didn’t highlight or even display the right opportunities. The user interface wasn’t intuitive enough, and job seekers couldn’t easily find their ideal positions.

As J&J began to reevaluate recruiting to take a more relationship-centric and digitally-driven approach, the company began working with Jibe , a career-site solutions provider. Jibe introduced J&J to Cloud Talent Solution , which uses machine learning to better match job listings with job seekers’ interests and qualifications. Using Cloud Talent Solution, companies can build a compelling career-site search experience that helps candidates easily find the jobs most relevant to them. With smarter job searches and recommendations, J&J improved the effectiveness of its career site in just a few weeks.

“Jibe and Google make it easy for a large company to make a real difference in the candidate experience without investing a lot of time, money, or internal resources,” says Sjoerd Gehring, Global VP of Talent Acquisition at Johnson & Johnson. “Now that we’re using Cloud Talent Solution, our career site search results are exponentially better.”

Transforming job searches with better matches

Cloud Talent Solution better connects job seekers with jobs, because it understands the nuances of job titles, descriptions, industry jargon, and skills, matching job seeker preferences with relevant listings based on sophisticated classifications and relational models. It helps decipher job seeker queries and employer job postings, removing the manual effort of optimizing job content for search.

By using the Jibe platform to integrate Cloud Talent Solution with its career site, job seekers are more easily finding what they’re looking for and J&J is filling business critical roles more efficiently. Since integrating Cloud Talent Solution, J&J has seen a 41% increase in high-quality job applicants per search and a nearly 45% increase in click-through rate on its career site.

“Partnering with Jibe and using Cloud Talent Solution for our career site allows us to do a much better job matching opportunity to talent on a very large scale,” adds Sjoerd. “We’re able to take a more personal approach and really connect with job seekers, which is a win.”

“Today’s job seekers expect a prospective employer’s career site to work like the other cloud services they use. Using Google’s machine learning and artificial intelligence, we can help customers like J&J get better search results and return jobs that candidates are more likely to apply to.”

Connecting people with opportunities

J&J is now offering job seekers experiences in line with what they have come to expect as consumers—searching for a job should be as easy as searching for flights, restaurants, products, and other services. Because candidates are familiar with the experience, their level of interaction and engagement goes up, creating a larger pipeline of qualified candidates and filling jobs faster.

“Today’s job seekers expect a prospective employer’s career site to work like the other cloud services they use,” says Joe Essenfeld, Founder & CEO at Jibe. “Using Google’s machine learning and artificial intelligence, we can help customers like J&J get better search results and return jobs that candidates are more likely to apply to.”

A new digital revolution for recruiting

J&J continues to work with Jibe and Google to offer new features which make its career site even more effective. By offering job seekers a transformative, engaging experience, J&J is a more attractive and visible employer, increasing the value of its brand. It’s also continuously improving its recruiting process with end-to-end visibility and feedback from interactions with a million people every year.

“Transforming our career site with Jibe and Cloud Talent Solution directly impacts our ability to attract high-quality talent and hire those candidates faster,” adds Sjoerd. “Lots of people are looking for their dream job, and if it’s here at J&J, we want them to find it quickly and easily.”

• Learn how Cloud Talent Solution can help improve your own career site experience

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Case study: How Johnson & Johnson promotes environmental and social responsibility throughout its supply chain

As the world’s largest and most diversified healthcare company, with 134,000 employees in 60 countries, Johnson & Johnson works with over 70,500 suppliers across its three business segments     Tweet This! : Consumer, Medical Devices and Pharmaceutical. Building a socially and environmentally responsible supply chain is, thus, a key priority.

This case study is based on the 2017 Health for Humanity Report b y Johnson & Johnson published on the Global Reporting Initiative Sustainability Disclosure Database  that can be found at this link . Through all case studies we aim to demonstrate what CSR/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

For Johnson & Johnson, creating a sustainable supply chain reduces sourcing risks, protects brand reputation and, most importantly, has comprehensive positive impacts on both society and the environment. In order to promote environmental and social responsibility throughout its supply chain Johnson & Johnson took action to:

• monitor compliance with the Responsibility Standards for Suppliers
• carry out Environment, Health & Safety (EHS) audits
• conduct social audits

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With this case study you will see:

• Which are the most important impacts (material issues) Johnson & Johnson has identified;
• How Johnson & Johnson proceeded with stakeholder engagement , and
• What actions were taken by Johnson & Johnson to promote environmental and social responsibility throughout its supply chain

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What are the material issues the company has identified?

In its 2017 Health for Humanity Report Johnson & Johnson identified a range of material issues, such as product quality, safety and reliability, ethics and compliance, innovation, global public health, workplace safety. Among these, promoting environmental and social responsibility throughout its supply chain stands out as a key material issue for Johnson & Johnson.

Stakeholder engagement in accordance with the GRI Standards

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The organization should identify its stakeholders, and explain how it has responded to their reasonable expectations.”

Stakeholders must be consulted in the process s of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups Johnson & Johnson engages with:

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics, Johnson & Johnson invited more than 1,500 stakeholders to respond to a survey. Stakeholders were asked to rank topics by importance to them and by their potential for social, environmental and economic impact.

What actions were taken by   Johnson & Johnson to promote environmental and social responsibility throughout its supply chain ?

In its 2017 Health for Humanity Report Johnson & Johnson reports that it took the following actions for promoting environmental and social responsibility throughout its supply chain:

• Monitoring compliance with the Responsibility Standards for Suppliers
• Johnson & Johnson confirms and monitors suppliers’ compliance with its Responsibility Standards for Suppliers by means of a formal assessment and audit program. Assessments are conducted through EcoVadis – a third-party program. EcoVadis assessments involve an initial screening of supplier performance. Subsequently, the results (a score) play an important role in deciding which suppliers may require an on-site audit.
• Carrying out Environment, Health & Safety (EHS) audits
• follow-up technical visits which include expert training and best practice sharing
• business reviews with direct coaching and guidance
• information provided in the Sustainability Toolkit for Suppliers
• supplier relationship management engagement at category level
• participation in supplier capability-building conferences, webinars and other resources that are available through Johnson & Johnson’s membership in the PSCI
• In 2017, Johnson & Johnson carried out 189 EHS audits and technical visits.
• Conducting social audits
• In 2017, to establish an enterprise-wide framework for addressing human rights in its supply chain, Johnson & Johnson expanded the human rights requirements in its updated Responsibility Standards for Suppliers. In addition, a cross-functional Human Rights Working Group met regularly, guiding and informing the development of Johnson & Johnson’s human rights risk assessment approach and audit program. Johnson & Johnson’s supplier social audit program is scheduled to be fully implemented in 2018. Supplier selection and prioritisation criteria will include results for EcoVadis scores regarding Labour and Business Ethics, location in a country considered high risk for violation of human rights and the supplier category.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 308-1 New suppliers that were screened using environmental criteria

2) Disclosure 414-1 New suppliers that were screened using social criteria

Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.

Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:

• Sustainable Development Goal (SDG) 5 : Achieve gender equality and empower all women and girls
• Business theme: Workplace violence and harassment
• Sustainable Development Goal (SDG) 8 : Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
• Business theme: Labor practices in the supply chain
• Sustainable Development Goal (SDG) 16 : Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

78% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism .

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By registering for the next 2-day FBRH GRI-Standards Certified and IEMA approved Course you will be taking the first step in gaining the many benefits of sustainability reporting .

References:

1) This case study is based on published information by Johnson & Johnson, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2)  http://www.fbrh.co.uk/en/global-reporting-initiative-gri-g4-guidelines-download-page

3) https://g4.globalreporting.org/Pages/default.aspx

4) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to Johnson & Johnson: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us .

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Johnson & Johnson Case Study

Johnson & Johnson sells consumer health, pharmaceutical and bioinformatics products in more than 175 countries. Over 270 companies operate under the Johnson & Johnson brand in 60 countries worldwide. The IT division of the global enterprise turned to Amazon Web Services (AWS) when it decided to move to the cloud and redefine its global IT strategy. The company currently leverages the AWS Cloud to run 120 applications and for its big data architecture allowing it to complete highly intensive and complex data modeling. Next, the company plans to triple the number of applications it hosts on AWS and launch 25,000 Amazon Workspaces cloud-based desktops for its consultants and employees to use around the globe.

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Practice of Business Ethics — Case Study of Johnson & Johnson

• By (author): 
• Hiroo Takahashi ( Hakuoh University, Japan )
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• Description
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This book is an excellent book on business ethics and will be an invaluable resource for all readers who are keen to learn about the business ethics and key characteristics of a successful company. It focuses on the case study of a global company, Johnson & Johnson (J&J), which oversees more than 250 operating units throughout the world. Through extensive interviews with top executives at J&J's headquarters, including Masami Atarashi and Mitsuo Hirose and attending workshops, Prof Hiroo Takahashi acquired an in-depth understanding of the management style of J&J, grasped the company's ethics and the code of business conduct which is shared by J&J's members throughout the world.

Sample Chapter(s) Preface Chapter 1: Johnson & Johnson: Its Birth & Our Credo

• Johnson & Johnson: Its Birth & Our Credo
• Global Management System
• The Practice of Our Credo
• Global R&D Network
• Human Resource Management
• SDGs from the Business Ethics Perspective
• J&J's Approach to SDGs
• J&J's Birthplace: New Jersey and New Brunswick
• Learning from J&J's Management
• What is J&J's Business Ethics?

Readership: For readers who are interested to learn about business ethics and the success of Johnson & Johnson, and professionals who would like to become better leaders.

FRONT MATTER

• Pages: i–xii

https://doi.org/10.1142/9789811257261_fmatter

• About the Author

Chapter 1: Johnson & Johnson: Its Birth & Our Credo

• Pages: 1–10

https://doi.org/10.1142/9789811257261_0001

• New Brunswick: The Birthplace
• Feelings of the Johnson Brothers
• Johnson Brothers’ Next Challenge
• The Era of Robert Johnson II
• Drafting of Our Credo

Chapter 2: Global Management System

• Pages: 11–35

https://doi.org/10.1142/9789811257261_0002

• Business Overview
• J&J’s Growth and Development
• J&J’s M&A Strategy
• Management System Characteristics: Centralization and Decentralization
• Johnson & Johnson Corporate Headquarters in New Brunswick
• Corporate Governance Structure
• J&J’s Business Scale as a Healthcare Enterprise

Chapter 3: The Practice of Our Credo

• Pages: 37–49

https://doi.org/10.1142/9789811257261_0003

In the front lobby of J&J’s New Brunswick headquarters, Our Credo is etched on a tall slab of stone weighing 14 tons. (Refer to Figure 3-1) Some Japanese companies display their management philosophies or corporate creeds in the president’s office, but I have never seen one that is firmly set in a slab. On the first floor of J&J Japan’s head office, Our Credo is found in both English and Japanese. Other than the head offices, it can also be seen in many places such as J&J’s Band-Aid factory in New Brunswick, J&J’s Guest House where distinguished guests are received, and also in the manager-level offices, etc. By displaying it with pride both internally and externally, J&J makes sure every employee knows the importance of Our Credo. In such a way, it is shared by each member of the company…

Chapter 4: Global R&D Network

• Pages: 51–60

https://doi.org/10.1142/9789811257261_0004

• Fundamentals of the Pharmaceutical Industry’s R&D Strategy
• What is the Global R&D Network?
• J&J’s Global R&D Network
• J&J’s Research and Development in Japan

Chapter 5: Human Resource Management

• Pages: 61–69

https://doi.org/10.1142/9789811257261_0005

• From Personnel Management to Human Resource Management
• A New Strategic Framework and Leadership Imperatives
• Methods of Human Resource Development
• What is Diversity & Inclusion?

Chapter 6: SDGs from the Business Ethics Perspective

• Pages: 71–82

https://doi.org/10.1142/9789811257261_0006

• A Business Ethics Perspective in Considering SDGs
• Advancement in the Relationship between Companies and the Society
• What is the Shift from CSR to CSV and ESG?

Chapter 7: J&J’s Approach to SDGs

• Pages: 83–102

https://doi.org/10.1142/9789811257261_0007

• What is SDGs?
• J&J’s Efforts to SDGs
• SDGs as Innovation
• The Future of the Capitalistic Society from the Viewpoint of SDGs

Chapter 8: J&J’s Birthplace: New Jersey and New Brunswick

• Pages: 103–107

https://doi.org/10.1142/9789811257261_0008

• The State of New Jersey
• Immigrants from All Over the World
• New Jersey as a Pharmaceutical Industry Cluster

Chapter 9: Learning from J&J’s Management

• Pages: 109–115

https://doi.org/10.1142/9789811257261_0009

• In Pursuit of Active Management: All Goes Back to Our Credo
• M&A as a Growth Strategy: A Partner of the Group Companies
• Main Company’s Strategic Perspective: Strong Leadership of the Small Headquarters
• Open Innovation: A Global Network for New Product Development
• What is Diversity? What is Diversity & Inclusion Aiming For?

Chapter 10: What is J&J’s Business Ethics?

• Pages: 117–139

https://doi.org/10.1142/9789811257261_0010

• The Basics of Business Ethics
• The Concept of Business Ethics
• What are Examples of Practical Illegal Conduct in Business?
• Changes in Social Norms
• The Beginnings of CSR and Corporate Crisis Awareness
• An Awareness of Crisis in Europe: The Birth of European CSR
• The CSR Trends in Japan
• From CSR to CSV: What is Strategic CSR?
• The Diversity of Management and Business Logic
• The Relationship Between Japanese Corporations and Business Ethics

BACK MATTER

• Pages: 141–156

https://doi.org/10.1142/9789811257261_bmatter

Hiroo Takahashi is Professor Emeritus of International Management and Business Ethics in the Graduate School of Business at Hakuoh University, Japan. He was a visiting scholar at Stern School of Business, New York University (1971–73), Visiting Professor at Rubin School of Business, Pace University, New York (2003–4), Visiting Professor of NIDA Business School, Thailand (2016–), Sofia University, Bulgaria (2016–) and Southern Taiwan University of Science & Technology (2010–18). He was also a director at the Business Research Institute in Tokyo.

He obtained his PhD Degree at Chuo University, Tokyo.

Prof Takahashi specializes in Organization Structure, R&D strategy and Business Ethics of Global Corporations. He has done field studies of over 200 Multinational Companies such as Nestle, 3M, Johnson & Johnson, IBM, Xerox and Japanese Multinationals in the past thirty years. Dr Takahashi has published numerous articles and books such as Organization Strategy of Global Management , Global Management of R&D , Ethics Code of Global Business and Leadership of Global Business . He published a new book with the title Modern International Management Strategy in 2011, The Challenge for Japanese Multinationals in 2013 with Palgrave Macmillan, England, Business Ethics as Strategy in 2016, with Maruzen, and Everything originated from Milk — Case of Nestle (Japanese Version) with Dobunkan Publishing in 2019.

Sample Chapter(s) Preface Chapter 1: Johnson & Johnson: Its Birth & Our Credo

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Home » Management Case Studies » Case Study of Johnson & Johnson: Using a Credo for Business Guidance

Case Study of Johnson & Johnson: Using a Credo for Business Guidance

Johnson & Johnson, founded by Robert Wood Johnson and his brothers James and Mead in 1886, has grown into the world’s most comprehensive manufacturer of health care products and related services for the consumer, pharmaceutical, and medical devices and diagnostics markets. Today, Johnson & Johnson consists of more than 250 operating companies, employing approximately 121,000 employees, with more than 50,000 of those in the United States. Johnson & Johnson has operations in 57 nations and sells products all around the world. Johnson & Johnson’s product categories include, but are not limited to: allergy, colds, and flu; baby care; cardiology; dental care; diabetes care; first aid; medical devices and diagnostics; oncology; prescription drugs; skin and hair care; and vision care. The company’s sales have increased every year for since 1946, and in 2006, global sales were $53.9 billion and net earnings were $11.1 billion. Moreover, Johnson & Johnson was ranked ninth on Fortune’s 2006 “America’s Most Admired Companies” list and fourth on Fortune’s 2006 “Global Most Admired Companies.”

The key points of the Johnson & Johnson Credo address the company’s four responsibilities. In descending order of emphasis, these responsibilities may be summarized as follows:

• The company’s first responsibility is to meet the needs of everyone ¾ doctors, nurses, patients, mothers, fathers, and others ¾ who use the company’s products. Johnson & Johnson does this by providing quality products that are reasonably priced, and by ensuring that suppliers and distributors have the opportunity to make a fair profit.
• The company’s second responsibility is to the company’s employees throughout the world, treating them fairly and with dignity, seeking to involve them, and providing them with competent and ethical management.
• The company’s third responsibility is to the various communities where it operates, seeking to improve those communities and sharing in the burden of such improvements.
• The company’s last responsibility is to the stockholders, seeking to make a sound profit in order to provide a fair return to the owners and to enable the company to innovate and grow so that fair returns are maintained in the future.

The full Credo was in a format that people could understand, and Robert Wood Johnson II demanded that people adhere to it. Very importantly, the company created appropriate organizational mechanisms to bring the Credo to life, and to support and reinforce it. The Johnson & Johnson Credo “may sound a bit corny ¾ and so may J&J’s devotion to it: It’s posted in every J&J facility around the world and carved in an eight-foot chunk of limestone at company headquarters in New Brunswick, N.J. But Johnson made sure everyone bought into it.”

The Johnson & Johnson Credo continues to guide the company’s decisions and actions regarding its responsibilities to customers, employees, the community, and stockholders. The Credo guides Johnson & Johnson’s operations in Africa, Asia and the Pacific Rim, Eastern and Western Europe, Latin America, the Middle East, and North America. Ralph Larsen, a former chief executive officer of Johnson & Johnson, maintains that the Credo provides a constant source of guidance for the company and that it is the foundation for everything the company does. Although the credo has been revised and updated at different points throughout its existence, the essential responsibilities endure. To help ensure the continuing viability of the credo, Johnson & Johnson employees periodically participate in a survey to evaluate how the company performs it responsibilities.

Discussion Questions

• From your perspective, what role(s) should business play in the contemporary world?
• What implications does the Credo have for Johnson & Johnson’s view of the role(s) it should play in the contemporary world?
• What implications does the Johnson & Johnson Credo have for the attitudes and job behavior of the company’s employees?
• Would you like to work for a company like Johnson & Johnson? Why or why not?

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Johnson & Johnson: The Tylenol Tragedy

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Johnson & Johnson Reaches Deal for $8.9 Billion Talc Settlement

The company faces a flood of lawsuits claiming its talc products caused cancer. The proposed settlement requires approval by a bankruptcy court, but has the backing of plaintiffs’ lawyers.

By Tiffany Hsu

Tiffany Hsu has followed the Johnson & Johnson talc litigation closely for more than five years.

Johnson & Johnson said on Tuesday that it had agreed to pay $8.9 billion to tens of thousands of people who claimed the company’s talcum powder products caused cancer, a proposal that lawyers for the plaintiffs called a “significant victory” in a legal fight that has lasted more than a decade.

The proposed settlement would be paid out over 25 years through a subsidiary, which filed for bankruptcy to enable the $8.9 billion trust, Johnson & Johnson said in a court filing. If a bankruptcy court approves it, the agreement will resolve all current and future claims involving Johnson & Johnson products that contain talc, such as baby powder, the company said.

In a statement, a group of lawyers who represent nearly 70,000 plaintiffs, including families of people who died of ovarian cancer and mesothelioma, described the deal as a “landmark” and a “significant victory for the tens of thousands of women suffering from gynecological cancers caused by J.&J.’s talc-based products.”

For the deal to become final, the court would first have to accept a new bankruptcy filing by the Johnson & Johnson subsidiary, LTL Management, and the settlement itself; the company also needs to persuade enough claimants to support the settlement plan. Johnson & Johnson created LTL in 2021 in a maneuver to shield itself from the talc litigation, but an earlier bankruptcy filing by the unit was challenged by the plaintiffs and dismissed this year by a U.S. appeals court, which ruled that a bankruptcy wasn’t the right way to resolve the matter.

If approved, the settlement would end a long-running legal drama that has weighed on Johnson & Johnson’s image. Its baby powder, although not a top seller, is one of the company’s most recognizable brands, and many of the plaintiffs claimed that the talc used in the product was contaminated with asbestos, a known carcinogen.

Some lawyers involved in the cases opposed the settlement, though they acknowledged that approval by the court would apply to all plaintiffs.

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Johnson and Johnson Essay

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List the Alternatives

Analyze the alternatives in the case, recommendations, works cited.

Johnson and Johnson being one of the largest pharmaceutical companies in United States, has experienced growth within its’ various sections. The firm hasn’t been so much affected by the expiry of patents on drugs since it took the necessary precautions and still experiences high sales. The new manager of J&J has the challenge of maintaining the high level of sales during his tenure (Johlke and Duhan 265-267). The company faces new rivalry from the market that has seen its sales slowing down.

Its’ new invention, drug-coated stent, has been held for a long time by the Food and Drug Administration and possibly will face fierce competition from Boston Scientific Corporation whose stent is preferred in the market. This is because J&J stent is highly priced and medical personnel say that its’ use is so much involving as compared to the rest. The rate at which the company acquires assets has also declined over the past few years (Barret 177-182).

The firm has to embark on increasing the rate of acquiring assets and building of small businesses. These business enterprises must be given full independence on strategy implementation and financial control. Instead of waiting for the approval of one drug, Waldo should drive the company towards scientific advancement that will enable innovation of other drugs.

Besides dealing with drugs, the company should look into how they can also produce other medical devices. Good communication network should be established between the firm and its constituent businesses. This should be for accountability purposes and enhancement of all the company’s operations (Kohli 53-8).

The firm only managed to buy fifty two businesses over a period of ten years. This is not convincing since its below the expectations of a big company such as J&J. Improvement in the research and development will enable the company to expand its capacity to accommodate more employees and also improving on its ability to produce quality products.

Currently the company employs approximately nine thousand three hundred scientists within its labs (Barret 177-182). Forming partnership with other related companies will interfere with J&J independent nature that it has enjoyed for several years. The increased sales from the sale of brand will mean that the company commands a big percentage of the customer base (Cravens and Piercy 2009).

The firm needs to work on the projects that will enable it offer extra services and enable them reduce on the cost of production. This might as well be linked to the company’s’ researchers working on an invention that enables easy prediction and identification of those suffering from certain diseases like cancer.

The brand of the company should also be designed to depict the firm’s scientific nature; this will assist in luring consumers hence promoting the products sales (Grönroos 3-12). The use of this idea was practically experimented in the year 2002 and the results were positive since the sales increased by 4.9% from the year 2000 (Barret 177-182).

In order to improve on its research and development programs, J&J should form partnership with other related companies since it will help in cost sharing and also improvement of drug output and quality. The manager needs to recruit aggressive sales personnel who will attack the market from every corner applying appropriately the elements of the market mix. This will ensure that their competitors are not given enough space to device new strategies.

Barret, Amy. “Staying on Top: Johnson and Johnson case Study”. Business week , May 6 (2003): 177-182

Cravens, David and Piercy, Nigel. “Strategic Marketing”. McGraw Hill. 9 th edition. 2009.

Grönroos, Christian. “Relationship Approach to Marketing in Service Contexts: The Marketing and Organisational Behavior Interface”. Journal of Business Research , Vol. 20, (1982): 3-12.

Johlke, Mark and Dale Duhan. “Testing Competing Models of Sales Force Communication”. Journal of Personal Selling & Sales Management . Vol. 21 (4), (2000): 265-277.

Kohli, Jaworski. “Market orientation: Antecedents and consequences”. Journal of Marketing, 57, (3) (1993): 53-81.

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IvyPanda. (2018, July 8). Johnson and Johnson. https://ivypanda.com/essays/johnson-and-johnson-case-study/

"Johnson and Johnson." IvyPanda , 8 July 2018, ivypanda.com/essays/johnson-and-johnson-case-study/.

IvyPanda . (2018) 'Johnson and Johnson'. 8 July.

IvyPanda . 2018. "Johnson and Johnson." July 8, 2018. https://ivypanda.com/essays/johnson-and-johnson-case-study/.

1. IvyPanda . "Johnson and Johnson." July 8, 2018. https://ivypanda.com/essays/johnson-and-johnson-case-study/.

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Lewandowski v. Johnson & Johnson: The Beginning of a New Era

August 20, 2024 by Jeff Zimon, Esq.

Jeff Zimon, Esq.

Founder, partner.

Lewandowski v. Johnson & Johnson is a game changer. Just like the 401(k) retirement plan fee cases brought on more than twenty years ago, this lawsuit has a real impact. Regardless of its outcome, the claims against Johnson & Johnson (J&J) in the proposed class action litigation brought by Ann Lewandowski have generated industry-wide focus and concerns regarding group health and prescription drug plan strategies, approaches and compliance. This lawsuit puts a spotlight on the fundamental principles of ERISA fiduciary responsibility and plan document compliance on all health and prescription drug plans.

Many important questions are being asked. Did the J&J internal fiduciary committee get it wrong? Are these claims legitimate? Would J&J allow its covered persons to pay such large amounts for drugs when lower-cost options are available? Does J&J not have a compliant prescription drug plan document and summary plan description?

Motivated by the lawsuit’s claims, plan sponsors, benefits brokers, advisors and consultants are now evaluating the claims to understand the merits of the claims, the impact on health and prescription drug plans and how the claims affect their businesses. Naturally, a number of industry professionals have written commentaries on this lawsuit. Candidly, many commentators have overlooked important aspects and potential gaps in the claims. Notably, those of us with experience on both sides of the proverbial ERISA aisle, the retirement plan as well as the group benefit plan sides, immediately see the parallels of these ERISA fiduciary claims to those that continue to impact the retirement plan community. We immediately think about the nature of the allegations, how they likely will be pursued by the plaintiff and defended by the defendants.

The lawsuit basics

A study of this lawsuit, the parties and the claims begins with the basics. On February 5, 2024, Ann Lewandowski, a participant and covered person under what is described as the Group Health Benefits Plan of Johnson and Johnson and Affiliated Cos. sued J&J and an administrative committee, its individual members, including members of management, in a 75-page class action lawsuit. Plaintiff alleges various breaches of ERISA fiduciary duties best summarized at a high level as gross mismanagement of prescription drug benefits. These prescription drug benefits are provided under medical plans sponsored by J&J (the “J&J Rx plan”). Noting that J&J is also a pharmaceutical manufacturer, plaintiff alleges that mismanagement led to millions of dollars in higher payments, premiums, deductibles, co-insurance and more.

Notably, a complaint, which is the starting point of a lawsuit, has certain requirements. First, the plaintiff must have standing – or the right to bring the claim. Federal law is particular about this concept, which is derived from Article III of the U.S. Constitution. Next, if there is standing, the plaintiff must satisfy something referred to as the “notice pleading rules.” The lawsuit does not have to contain every single assertion of fact or every allegation or point of proof. It must be sufficient to raise facts that demonstrate some type of violation of law, and under federal constitutional requirements, it must have resulted in some harm or damage. In response to the lawsuit, the J&J defendants must file an answer or they can move to dismiss the case in its entirety.

Unpacking the allegations is no simple task. And we will not address every claim in detail. To start, we will provide an overview of the claims. In general, the lawsuit claims assert that J&J, through its committee and individuals as ERISA fiduciaries, failed to:

• Exercise required fiduciary prudence before selecting a pharmacy benefit manager (PBM).
• Exercise required fiduciary prudence in agreeing to make its ERISA plans and beneficiaries pay unreasonable prices for prescription drugs.
• Exercise required fiduciary prudence in agreeing to contract terms with its PBM that needlessly allows the PBM to enrich itself at the expense of the company’s ERISA plans and their beneficiaries (including the failure to monitor the drug formularies, supervise conflicted third parties or to conduct an adequate review).
• Properly carve out their specialty drug program from their broader contract with the PBM.
• Protect plan assets and beneficiaries’ interests (by failing to steer beneficiaries to lower cost options).
• Actively manage and oversee key aspects of the company’s prescription drug program.
• Provide the ERISA required plan document and summary plan description upon request.

No plan document/summary plan description?

A critical error would be to trivialize the allegation that J&J failed to produce the ERISA required Plan Document and Summary Plan Description (SPD). A properly constructed plan document/ SPD is not only legally required but essential to the overall operation, management and delivery of prescription drug benefits. Besides, a clear claims procedure might have allowed the defendants to address certain claims before the lawsuit in an administrative process. The commonly provided prescription drug schedules of benefits, related flyers and hand-outs just don’t cut it, especially when plan design calls for the management of prescription drug use and costs. Properly tuned documentation creates the rules to manage the various aspects of solid prescription drug benefit designs and includes formulary designations, step therapies, drug exclusions, specialty protocols, other exclusions and restrictions, carve-outs, potential patient advocacy and alternative funding, networks, supply rules, generic drug access and more.

Is it true that J&J does not have a plan document/SPD for the J&J Rx plan? Perhaps, but not likely. But, even if it does, the failure to produce such documents comes with a potential penalty of up to $110 per day per violation. If plaintiffs can generate multiple unmet requests on this point, with more than 130,000 employees, that theoretically adds up.

It is possible that J&J does not and did not have a full or complete plan document/SPD and that J&J used inadequate hand-out types of documentation. Why? Unlike group health insurers, PBMs have just not been in the plan document business. This is a huge gap in the industry that is potentially exposed by this lawsuit.

There are virtually no third-party resources for self-funded plans to obtain a separate prescription drug plan document/SPD, except for ERISA lawyers, which can be an expensive, but capable resource and EZ ERISA, at ezerisaplan.com, an existing compliance website that fortuitously launched a complete DocSmart Rx product last summer. (For full disclosure, this author created this compliance resource website some 10 years ago).

If J&J does not actually have a fully compliant plan document/SPD, everything that J&J would like to enforce and manage regarding the J&J Rx plan is subject to challenge and may be completely unenforceable.

So, it is important if you use a separate PBM for your prescription drug plan to make sure you have a fully compliant, complete prescription drug benefit plan document and SPD.

What is missing in the fiduciary claims?

Questions arise from the lawsuit that compel consideration of the ERISA fiduciary roles and responsibilities. How is the selection of a PBM an ERISA fiduciary function? Are all acts by the J&J Committee and its members subject to the ERISA fiduciary standards? Are actions by the PBM subject to the ERISA fiduciary rules? These questions are critically important in the evaluation of the claims, and in our learning about what we do to ensure that in the group health and prescription drug benefit space, we are complying with the ERISA standards.

Importantly, there seem to be concepts relating to an ERISA fiduciary relationship and fiduciary functions not stated concisely in the lawsuit. Critically important to the plaintiff’s claims regarding the selection of its PBM, Express Scripts, is that the selection of an ERISA fiduciary is a fiduciary process. This raises the question as to whether Express Scripts is a fiduciary relative to the prescription drug benefit plan.

The threshold fact to determine fiduciary status is that Express Scripts must perform ERISA fiduciary functions for the J&J Rx plan to select Express Scripts as a fiduciary determination by the committee. This determination begins with an assessment of Express Scripts’ roles and responsibilities as the PBM.

Notably, there are functions related to ERISA plans that are non-fiduciary functions that may be performed by the plan sponsor or third parties. Non-fiduciary functions include the sponsor’s right to establish a plan’s benefits and determine the rules and plan design for such a plan. Non-fiduciary functions also include ministerial acts. These often include basic calculations, which for prescription drug plans, include for example, the amount of a deductible or copay that applies to a prescription or determining if a particular supply line is in-network or out-of-network.

There are other functions that refer or relate to the exercise of any discretionary authority or control respecting management of such prescription drug plan, or the exercise of any authority or control over the disposition of the J&J Rx plan assets. Similar in concept to a third-party administrator that administers a self-funded group health plan, a PBM acts to administer prescription drug benefits. When a PBM has such discretionary responsibility or authority in the administration of an ERISA plan, the PBM is an ERISA fiduciary. For example, the approval of the payment of a prescription drug for a covered person is a fiduciary function. A PBM often controls and moves the plan’s money to pay for a claim, which is the control over a plan asset and, again, a fiduciary function. The determination of medical necessity is generally a fiduciary function. Claims processing determinations and appeals are fiduciary functions. So, under ERISA, the selection of an ERISA fiduciary is a fiduciary function. In this case, the selection of Express Scripts as a PBM will likely be determined to be a fiduciary function, although all of the activities of Express Scripts are not fiduciary in nature.

It is repeatedly alleged that the defendants breached their fiduciary duty in the selection of Express Scripts as the PBM. Plaintiff repeatedly alleges that the PBM is in conflict and engages in tactics that harm the participants and that are designed to enrich the PBM. Specifically, plaintiff alleges that, “Defendants failed to engage in a prudent and reasoned decision-making process before agreeing to a PBM contract that requires the plans and their beneficiaries to pay Express Scripts … prices.”

Caution is warranted because not all of the activities regarding the J&J Rx plan design or the conduct of the PBM are within the scope of fiduciary duties. The broad allegations about the pricing structures and a failure to use bargaining power and consider other strategies for the delivery of prescription drug benefits require a separate evaluation as to whether they are fiduciary functions. But, for this purpose, the threshold is met. The selection of Express Scripts is a fiduciary decision, to the extent that Express Scripts is providing fiduciary services.

There is learning from the alleged wrongdoing in this regard. We can consider how group benefits brokers, consultants and advisors evaluate prescription drug managers, PBMs and others. We can evaluate how we focus that effort to not only serve to meet the ERISA required functions, but also to build and maintain ERISA prescription drug plans that work for our participants and manage and control cost reasonably.

In many cases, unlike what is alleged in the lawsuit, group insurance brokers are looking to alternative methods and functions. The lawsuit alleges a failure to negotiate contracts. Contract negotiation and market evaluations are commonly done by many brokers and consultants. Buying power based upon a group insurance broker’s customer base or the employ of group purchasing organizations are examples of how brokers employ buying power in negotiations. Assessment and evaluation of the deliverables, including drug categories, the application of formularies and related strategies, clinical evaluation of utilization, the consideration of other resources, bolt-on providers and other alternative providers is done by group insurance brokers as part of their work to assist employers in the efforts to deliver prescription drug benefits. Time will tell what J&J did here.

Fundamentally, ERISA fiduciary rules are not about the answer. The fiduciary standards also do not require that participants be offered or given the lowest-priced product or services. The standard mandates a process whereby the fiduciary engages in prudence and diligence, under the circumstances then prevailing to evaluate the role of a PBM fiduciary, as others would in the exercise of such a determination. So, many of the suggestions of alternatives made in the lawsuit might have been appropriate for consideration. But there is no fiduciary mandate in this regard. That said, if it can be shown that after a reasonable, prudent and diligent process, Express Scripts was still selected, then the fiduciary standards may have been satisfied. Of course, the opposite is also true. If a PBM was selected based upon a haphazard, limited or deficient process, then, the consequences that flow from such a potential failure expose the selecting fiduciaries to liability.

It will be very interesting to see what facts are demonstrated regarding the process and evaluations conducted by Aon, the broker for the J&J Rx plan. In the meantime, many brokers and consultants continue to diligently evaluate plans and programs of benefits, access buying power when appropriate, negotiate over pricing, services and availability and work to achieve the goals and objectives of the employer client appropriate for such circumstances. As such, many group benefits brokers are already assisting their clients in fulfilling their fiduciary responsibility relative to the selection of a PBM fiduciary for the delivery of group prescription drug benefits and, of course, a compliant prescription drug benefit plan document/SPD.

Author note: Jeff Zimon, J.D. is an ERISA attorney with more than 30 years of experience. Jeff is the founder of Zimon LLC, a boutique ERISA and employee benefits law firm and is also the creator and founder of an industry-leading group benefits compliance resource, EZ ERISAPlan – ezerisaplan.com.

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J&J in Talks With Holdouts to $6.5 Billion Talc Settlement

Johnson & Johnson said on Friday it is negotiating with plaintiffs’ lawyers who have opposed the company’s proposed settlement of lawsuits alleging its baby powder and other talc products caused cancer, seeking to eliminate holdouts to the deal.

J&J has announced plans to finalize a $6.48 billion global settlement through the bankruptcy of a subsidiary company, after earlier efforts were rebuffed twice by federal courts.

J&J says the majority of claimants support its settlement offer. But it has paused a vote count for a short time so that it can gather additional votes from plaintiffs who have until recently opposed the deal.

“We have agreed to a short extension of the certification timeline,” said Erik Haas, J&J’s worldwide vice president of litigation, in a statement. “This will allow these plaintiffs’ attorneys time to speak to their claimants to now consider supporting the plan.”

Andy Birchfield, a lawyer who has led opposition to J&J’s proposed bankruptcy settlement, said he welcomed negotiations with claimants but is prepared to resist another Chapter 11 filing.

“Our ultimate objective is fair compensation in a timely manner for ovarian cancer victims. If J&J is becoming more reasonable by negotiating with some claimants, we applaud that,” Birchfield said in a statement.

“For now, we are continuing to fight for our clients and if J&J chooses the bankruptcy route for the third time, we will oppose it and we believe the company will fail.”

J&J plans to place a subsidiary into bankruptcy if it gets at least 75% of the talc claimants to vote for its settlement proposal.

The bankruptcy settlement would end all talc lawsuits alleging that J&J products cause ovarian cancer, and it would prevent similar cases from being filed in the future.

J&J faces lawsuits from more than 62,000 plaintiffs alleging that its baby powder and other talc products were contaminated with asbestos and caused ovarian and other cancers. J&J denies the allegations and has said that its products are safe, do not contain asbestos and do not cause cancer.

The current proposed bankruptcy settlement focuses on claims involving ovarian and other gynecological cancers , building on the company’s previous settlement outside of Chapter 11 proceedings of most lawsuits alleging that its talc caused mesothelioma, a deadly cancer linked to asbestos exposure.

By using a subsidiary’s bankruptcy to file for bankruptcy, J&J seeks to force all plaintiffs into one settlement – without requiring J&J itself to file bankruptcy.

Bankruptcy judges can enforce global settlements that permanently halt all related lawsuits and forbid new ones.

Outside of bankruptcy, any settlement J&J reached with some clients would still leave holdouts or future plaintiffs with the right to sue – and leave the company exposed to potential multibillion-dollar verdicts that encouraged it to pursue a bankruptcy settlement in the first place.

J&J has prevailed in many of the ovarian cases tried to date, but the litigation has also resulted in some large verdicts for plaintiffs, including a $2.12 billion award in favor of 22 women who blamed their ovarian cancer on asbestos in J&J talc.

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