A company like Johnson and Johnson (J & J) sells a variety of consumer health pr

ID: 1134201 • Letter: A

Question

A company like Johnson and Johnson (J & J) sells a variety of consumer health products (e.g. Tylenol, Motrin etc.) through many outlets. Consider 2 such channels/outlets --- drugstores (e.g. Walgreens) and stores at the airports (e.g. WHSmith). The first step in achieving strategic fit is to understand the customer needs and the uncertainties these needs impose on the supply chain. Clearly, the customer needs and supply chain capabilities for the two outlets will be different. Discuss the following issues for J & J's Consumer health products sold at the two outlets: Key attributes of customer demand. Effects of customer needs on the implied demand uncertainty for the two outlets? Type/level of responsiveness appropriate for the two outlets?

1. Key attributes of customer demand.

2. Effects of customer needs on the implied demand uncertainty for the two outlets?

3. Type/level of responsiveness appropriate for the two outlets?

Explanation / Answer

Johnson and Johnson drugstores

Johnson and Johnson stores at the airports

Key attributes of customer demand.

Customers can have basic to highly specific demands as customers are people living in a near-by area or people visiting a near-by hospital where drugstore is situated.

Drugstore may require prescription of doctor before fulfilling the order.

Customers generally buy many quantities as a routine home shopping.

Customers belong to that particular region where drugstore is located. therefore, they buy large packs and bigger quantities of products.

Customers will not have specialized demands as they will not be taking prescriptions to these stores. They have demanded of basic character like buying huggies or milk powder.

Customers buy only what is required and in a limited quantity as they have to travel or have to go somewhere else.

Customers prefer to buy a small pack or a sachet that can be comfortably carried.

Effects of customer needs on the implied demand uncertainty for the two outlets?

Inventories have to be managed at a larger scale.

Since there is demand for big packs and things with great offers and deals have to be maintained in stock.

Since Specialized demands can be there, drugstore must keep those medicines and lotions.

Inventories need not t be at a bigger scale.

Demand at an airport store is comparatively less of big sized packs. So, same products in small packs should be maintained at all times.

Type/level of responsiveness appropriate for the two outlets?

Responsiveness can be defined as the ability of the supply chain to respond purposefully and within an appropriate timeframe to customer requests or changes in the marketplace.

Responsiveness is fast but sometimes can be delayed due to shortage of inventory or unavailability of the product. For special drugs, prior order needs to be placed.

Responsiveness is fast as everything of generic type which can be required by customer on a flight is made available in these stores.

Also, there is no requirement of pre-ordering.