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FOREIGN TRADE UNIVERSITYBUSINESS ADMINISTRATIONOPERATION MANAGENMENTARGUMENT: JOHNSON & JOHNSON’S SUSTAINABLE PROCUREMENT PROGRAMLecturer: PGS, TS. Trịnh Thị Thu Hương Class : CID – FS Group 4:Đỗ Thị Diệp Anh Mai AnhĐào Thị Phương Anh Nguyễn Thị Ngọc Ánh Đào Thị Hải YếnHanoi, 26. SUSTAINABLEPROC...

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FOREIGN TRADE UNIVERSITY BUSINESS ADMINISTRATION

OPERATION MANAGENMENT ARGUMENT: JOHNSON & JOHNSON’S SUSTAINABLE PROCUREMENT PROGRAM Lecturer: PGS, TS. Trịnh Thị Thu Hương Class: CID – FS02 Group 4: Đỗ Thị Diệp Anh Mai Anh Đào Thị Phương Anh Nguyễn Thị Ngọc Ánh Đào Thị Hải Yến

Hanoi,

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26.4.2020

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Contents 1. Significance of the Study..................................................................................3 2. Study objectives...............................................................................................3 3. Study methodology..........................................................................................4 I- Introduction.......................................................................................................................................4 II - Responsibility Standards for Suppliers..................................................................................5 Sustainability and Environmental Responsibility...................................................9 Management Systems............................................................................................9 III – Evaluating system......................................................................................................................10 IV - Impact Johnson & Johnson’s sustainable procurement program..........................12 1. Benefit of Program.........................................................................................12 2. Difficulty of Johnson & Johnson to apply program........................................13 V - REFRENCES.....................................................................................................................................13

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SUSTAINABLE PROCUREMENT PROGRAM 1. Significance of the Study. Industrial production is one of the biggest factors that do harm to the environment. The industrial process itself is harmful, and some firms even make it worse by ignoring their social and environmental responsibility to maximize profits. Fortunately, many leading firms, such as Johnson & Johnson has taken one step further into sustainable development. The findings of this study will acknowledge Johnson & Johnson’s Sustainable Procurement Program, the beneficial effects that the program brings to the environment and the company itself. It will prove that, with a smart vision and actions, especially during the buying process, firms can optimize their profits while saving and appreciating the environment which they benefit from, and at the same time improve firms’ images.

2. Study objectives. In this study, we will clarify Johnson & Johnson’s Sustainable Procurement Program, on how the green movement has taken part in the company’s supply chain by setting up a responsibility standard, which any suppliers who want to become a partner of the company have to deliver. Adding up to that, we will study the company’s way of evaluation to make sure, and to encourage its suppliers to take actions to meet Johnson & Johnson’s vision and attitude toward the environment positivity. The last to be mentioned in this study is the impact that the Sustainable Procurement Program brings to the environment and the company profit, as well as the improvement in Johnson & Johnson’s image in the field.

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3. Study methodology. In order to study this topic, we mainly use a secondary source of information. As we were curious about sustainable supply chain management, we have looked up some reliable online sites and found out that Johnson & Johnson was listed as Top 10 Green supply chains by Supply Chain Digital, and also has its name among CDP’s Supplier Engagement leaderboard. Taking a look closer on Johnson & Johnson’s official website, the company shows a strong attitude towards the environment and society, and has carried out the “Sustainable Procurement Program”. Most of the information and numbers we include in our study are from Johnson & Johnson’s Toolkit for suppliers and its annual Environmental Report. Besides that, sources from online magazines and articles are also used as references.

I- Introduction. 1.

J&J company.

Johnson & Johnson is a multinational corporation founded in 1886 in America. The company develops medical devices, pharmaceutical, and consumer packaged goods. Headquartered of Johnson & Johnson is located in New Brunswick, New Jersey. Besides, the consumer division is located in Skillman, New Jersey. As of that of 2018, Johnson & Johnson corporation has:  250 subsidiary companies.  Operating in 60 countries.  Sold products in over 175 countries.  More than 78,000 suppliers around the world.  Top 10 sustainable supply chain management by Supply Chain Digital.

Johnson & Johnson is also known for its work on sustainable development, as it “strives to improve access and affordability, create healthier communities, and put

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a healthy mind, body and environment.” One of Johnson & Johnson’s most dominant effort on sustainability is its Sustainable Procurement Program.

2. Sustainable Supply Chain Management definition. Sustainable supply chain management is the integration of environmental factors into supply chain management, including product design, sourcing and selection of raw materials, production processes, and distribution of final products to consumers. In Johnson & Johnson, supply chain sustainability is practiced by building up a responsible supply base. They set up a framework with various standards to ensure all of its suppliers are involved in this sustainable process.

II - Responsibility Standards for Suppliers. One of the most important elements included in Johnson & Johnson’s Sustainable Procurement Program is the Responsibility Standards for Suppliers. These standards are strongly based on the company’s Credo, which is built focused on 4 main objects:  The customers: J&J claims to deliver high-quality products, while constantly striving to reduce their cost so that their products maintain reasonable prices.  The company’s employees: J&J believes every employee must be considered as an individual, whose dignity is thoroughly respected. Employees’ family responsibility must be fulfilled, and there must be equal opportunity for employment, development, and advancement for those qualified.  The communities: J&J encourages civic improvements and better health and education. Opening opportunities for suppliers that are run by women, minor firms and minority ethnic. Most importantly, J&J protects the environment and natural resources that they are privileged to use.

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 The stockholders, suppliers, and distributors: Their suppliers and distributors have an opportunity to make a fair profit. And stockholders are provided fair returns. Based on the above credo, these standards illustrate their internal and external values of customers, regulators, investors and business relationships. They find that all their business relationships are more effective when it has trust and mutual respect. Therefore, J&J find suppliers who can perform the commitment which classified by level below: 1. Conform to the applicable laws and regulations 2. Behave with good attitudes and ethical practices 3. Quality is important in business processes 4. Respect employments and human rights 5. Encourage the health, safety and well-being of employees. 6. Sustainable development and operates it with an environmentally responsible manner. 7. Perform management systems and continuous improvement. 8. Health Care Compliance & Privacy (HCC&P). 1. Conform to the applicable laws and regulations All suppliers of J&J Companies are promoted to comply with laws and regulations. Legal compliance is related to quality, ethical practices, working methods as well as health, safety and environmental protection to adapt with industrial standards. 2. Behave with good attitudes and ethical practices  In all business transactions, suppliers are expected to behave ethically and honestly.  Support standards of conducting fair business, including business methods, accurate advertising with fair competition.  Prohibiting suppliers from giving, offering a bribe to any person and also taking a bribe from any person regardless of whether bribing is direct or indirect in any reason.  Conflict of financial or professional interest is prohibited.  Not allow to disclose confidential information of customers or employees.  Maintain an environment of collaboration and innovation.  Follow the principles of replacement, refinement and reduction of laboratory research animal testing and treat any animals used in ethical methods.

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3. Quality Suppliers of J&J should provide goods and services which meet the customer’s need as well as minimum requirements for quality, including compliance with selling regulations:  Establish and maintain Quality controls system to protect the integrity of the goods and services provided.  Inform the J&J Company of any proposed changes in specifications, methods, suppliers, materials, components, manufacturing, sourcing processes, manufacturing locations or equipment to determine the impact on Johnson & Johnson products.  Notify the J&J Company of important inspections and legal issues by Health Authority.  Ensure that all pallets used to supply goods to any J&J Company comply with the J&J Pallet Policy. 4. Respect employments and human rights  Prohibits discrimination on the basis of race, color, or national origin, gender, pregnancy, HIV status, health status, sexual orientation.  Do not treat or threaten to cruelly, inhumanely with any individual such as inhumane treatment includes sexual harassment or abuse, corporal punishment.  Not engage in any form of human trafficking.  Ensure that employees have freedom of movement and are free to leave their employment after reasonable notice.  Respect workers' right to present their concerns at workplace through the grievance mechanism.

5. Encourage the health, safety and well-being of employees.  Provide necessary facilities and equipment such as exit areas, fire alarms and detection systems to ensure the employees and visitors in safe manner.  Provide safety and health information related to hazardous materials and occupational health.

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 Identify hazardous materials and occupational health potential emergency situations, implement preventive measures to execute emergency response procedures.  Organize health programs to impact employee’s health positively. 6. Sustainable development and operates it with an environmentally responsible manner.  Perform working methods which minimize the environmental impact of operation including natural resource consumption, material selection gas emissions…  Avoid releases of hazardous into the environment to prevent impacts on the local community.  Implement programs to manage wastes responsibly in regard to the environment, employee safety and human health. 7. Perform management systems and continuous improvement  Illustrate management commitment and accountability of senior management through formal policies, goals and procedures.  Comply with procedures to maintain, develop and control documents, records.  Ensure that the data must be protected and security.  Provide resources to manage risks to comply these standards.  Supporting the maintenance of a safe and secure supply chain by providing reliable products which produced through appropriate authorization and on demand.  Develop, implement and maintenance of training programs to achieve the appropriate level of knowledge, skills and abilities. 8. Health Care Compliance & Privacy (HCC&P)  Comply with applicable legalese in local area as well as international with ethical standards, completely prevent bribery, kickbacks, illegal payments.  Avoid any actions which could inappropriately influence on the medical decisions of health care professionals and the purchasing decisions of whom buy their products and services, including health care professionals, government regulators and inspection authorities.

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 Respect the privacy as well as personal information of employees who can access to the information of patients, business partners, customers, healthcare professional... Besides, allow to collect information only for business purposes legally with security policies. Of all the above criteria, in order to support the Sustainable Procurement Program, Sustainability and Environmental Responsibility and Management Systems for Suppliers is written in their Responsibility Standard for Suppliers (2017) as below:

Sustainability and Environmental Responsibility Suppliers to Johnson & Johnson Companies are expected to operate in a sustainable and environmentally responsible manner. As such, they shall:  Work to reduce the environmental impacts of their operations including natural resource consumption, materials sourcing, waste generation, wastewater discharges and air emissions.  Implement programs to manage wastewater and air emissions ensuring compliance and protection of human health and the environment.  Prevent accidental spills and releases of hazardous materials into the environment and adverse environmental impacts on the local community.  Implement programs to manage solid waste(s) compliantly and responsibly in regard to the environment, employee safety and public health, from generation through collection, storage, transportation and ultimate disposal.  Implement programs to ensure products do not contain restricted or banned materials.  Implement programs to verify that plant/forest materials and derivatives purchased are legally harvested and exported/imported.

Management Systems Suppliers to Johnson & Johnson Companies are expected to manage their activities systematically in order to maintain business continuity, meet the standards set forth in this document and to improve their operations continually. As such, they shall:  Demonstrate senior management commitment and accountability through policies, objectives and formal processes.

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 Implement processes to develop, maintain and control documents and   

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records, as well as any appropriate compliance-related requirements. Implement and maintain processes and standards for data integrity and security to ensure that it is protected, complete and accurate. Provide resources, including competent personnel and appropriate infrastructure, to manage risks and ensure conformance to these Standards. Implement processes to control the production of products and/or materials for any Johnson & Johnson Company, manage change effectively and ensure customer requirements are satisfied. Implement processes to manage nonconformity, incident response and emergency situations related to products, business operations/continuity and these Standards, including the reporting of such events to applicable regulatory authorities and Johnson & Johnson Companies as appropriate. Identify and implement improvement goals, performance objectives and actions, including effective complaint investigation, internal audit and corrective action processes. Develop, implement and maintain training programs that achieve appropriate levels of knowledge, skills and abilities in management and workers to address these expectations. Assist in maintaining a safe and secure supply chain, by supplying authentic products manufactured through appropriate authorization and according to the requirements issued by any Johnson & Johnson Company; and Implement processes to extend applicable elements of these Standards to their own partners and suppliers.”

III – Evaluating system. Johnson and Johnson company believes that the successful of the company depends on their ability to cooperate with suppliers that both provide the highest quality products and services and are philosophically and strategically joined with their commitment to their social and environmental responsibilities. Therefore, they are always trying to find the way that helps the company to improve its supply chain, are not only financially but also sustainable. In 2008, the company established its Procurement Sustainability Initiative to link procurement activities

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with sustainability undertakings. This program brings many achievements and positive signs for the company since it started.

PRACTICES: SUPPLIER ASSESSMENT Maintaining strict controls in their supply chain is the main way that the company chooses to reduce negative influence on the environment and people. They strive to work with suppliers who can meet their requirements and all suppliers have to experience the process of assessment. The supplier assessment and improvement processes. As describe below, Johnson and Johnson takes the following steps to manage and assess their supply chain relationships responsibly.  Step 1: At the beginning, supplier view considers supplier location and what products or services it provides.  Step 2: High priority suppliers are evaluated using a formal EHS&S risk assessment (internal process or by our external partner – EcoVadis) and an on-site audit (if high risk).  Step 3: Suppliers are finally assigned ratings of high, medium or low which triggers specific follow-up actions.  Step 4: Supplier improvement is monitored and support is provided through their EHS&S training and development programs. In term of the formal assessment, all suppliers are expected to conform to their Responsibility Standards for Suppliers. Firstly, risk assessments are administered by a globally recognized third-party program called EcoVadis. EcoVadis is a leading provider of business sustainability ratings for global supply chains. The EcoVadis assessment is matched to J&J’s Responsibility Standards for Suppliers and provides us with an assessment of a significant part of our footprint. It is recognized across industries and sectors and is also used by our peers making it more efficient for our suppliers to complete. The EcoVadis assessment score is primarily used to demonstrate conformance to the J&J Responsibility Standards for Suppliers. It is also used as a tool to monitor a supplier’s Environmental, Health, Safety & Sustainability risk, and their efforts to mitigate any concerns. In some instances, Johnson & Johnson uses the score as a measure of supplier performance when making commercial business decisions.

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The requirements for all enrolled suppliers are transparent and communicated through their publicly available Supplier Sustainability Toolkit (the “Toolkit”). Suppliers are expected to achieve at least one of the following goals: 1. Publicly report two or more sustainability goals and track progress over time. Suppliers have to disclose information or evidence of a minimum of 2 specific, measurable and time-bound goals in the below goal areas.  Environment (Energy reduction, Waste reduction, Water use reduction)  Social (Workforce injury/illness reduction, Workforce wellness, Community investment)  Suppliers & Supply Chain (Suppliers standards and policies, Supplier engagement/improvement programs) 2. Participate annually in CDP Supply Chain reporting. Supplier has to disclose its energy use and emission to the project a...