Johnson & Johnson Quality Analysis
BSOP588 Quality Management
Aug 2013

Introduction

Johnson & Johnson manufactures health care products and pharmaceuticals along with providing related health services for consumers. The company sells products such as hair, skin care and acetaminophen products, surgical and diagnostic equipment worldwide. Johnson & Johnson's brands include numerous household names of medications and first aid supplies. Some of the company’s better known consumer products are Tylenol medications, Johnson's baby products, the Band-Aid line, Neutrogena beauty products and Acuvue contact lenses. Three brothers, Robert, James and Edward Johnson, found Johnson & Johnson in New Brunswick, New Jersey in 1886 (jnj.com). The brother’s company published "Modern Methods of Antiseptic Wound Treatment," in 1886; the book became one of the standard teaching texts for antiseptic surgery (jnj.com). Two years later Johnson & Johnson pioneered the first commercial first aid kits, the kits were designed to help railroad workers, but soon branched out to treating all forms of standard injuries (jnj.com). Johnson & Johnson later launches maternity kits to make childbirth safer for mothers and babies. The attention to new mothers and their babies lead Johnson & Johnson to the Company's successful baby care business. Johnson & Johnson is headquartered at New Brunswick, New Jersey and has more than 275 operating companies in 60 countries with over 128,000 employees (jnj.com). The company ranks as:
•The world’s sixth-largest consumer health company.
•The world’s largest medical devices and diagnostics company.
•The world’s fifth-largest biologics company.
•And the world’s eighth-largest pharmaceuticals company.
(jnj.com)
While Johnson & Johnson has sustained its success for over several decades it has experienced setbacks recently in the form of quality problems with its products. In 2010 Johnson & Johnson recalled 288 million items, including over 130 million bottles of Tylenol, Zyrtec, Motrin and Benadryl for infants and children (nytimes.com). That recalled was not limited to over the counter products; 93,000 units of Johnson & Johnson’s Hip Resurfacing System were also recalled (nytimes.com). With the resources needed for the recall coupled with the loss in consumer faith resulted in the company’s revenue felling from $16.6 billion in 2009 to $15.6 billion in 2010 (nytimes.com). Some of that revenue loss can be associated with a weak economy from the 2008 financial crisis but Johnson & Johnson reported that $922 million was spent on litigation settlements from the faulty hip resurfacing system (nytimes.com). The recent quality issues for Johnson & Johnson are overwhelming and while the issues of consumer faith can be debated the financial evidence is clear and improved quality most become the company’s primary focus.
Problem Statement Johnson & Johnson did not build its success and gain the trust of millions of consumers over the last century by always having the quality issues that have made recent headline news. The recent quality issues that have plagued Johnson & Johnson will continue to have severe consequences to include lost customer faith, profit, and market share. With such a long history of high quality the question must be asked why the recent problems with varies products? By answering the previous question it can assist with answering the question how to improve the recent quality problems that Johnson & Johnson face.
Literature Review and Analysis When taking a general look at quality different perspectives and approaches are revealed. The focus of quality can be placed in several areas including product/service, management and process. Johnson & Johnson is such a large and complex organization that it must have focus in all areas. With all the product recalls it would appear that Johnson & Johnson need only focus on quality in the area of their product but that would be false. To gain a better understanding of how Johnson & Johnson can improve its quality this paper will first examine what is quality. When quality comes to mind usually it is thought of in terms of product superiority when compared to similar products, quality is also viewed in terms of product defects. There are many definitions and thoughts on what quality is. Joseph M. Juran suggest that quality has two definitions, the first being that quality means “features of products which meet customer needs and thereby provide customer satisfaction (Rose 2005).” Mr. Juran’s first meaning suggest that quality is determined by the intended customer and how the product or service meets their specifications. The second part of Juran’s meaning is “freedom from deficiencies (Rose 2005).” This second meaning is probably a more common thought of quality due to defects in a product being more clearly visible than customer needs being met as Juran’s first definition explains. With all the recalls Johnson & Johnson has suffered the company is clearly falling short of Juran’s second definition of quality. Perhaps looking beyond the physical aspect of quality is what is required for Johnson & Johnson. Looking at quality in terms of a physical product helps simplify defining what quality is. The more challenging aspects of defining what quality is with a non-physical item such as customer service, training, and most importantly management. Even with non-physical items the Juran’s definition holds true, customers define what is good quality. Quality in management is the foundation of quality throughout the entire organization; this is a focal point with Total Quality Management (TQM). Fundamentals of Total Quality Management by J. Dahlgaard explains that TQM is a corporate culture characterized by increased customer satisfaction through continuous improvements, in which all employees in the firm actively participates (Dahlgaard 2002). All employees especially the top brass as revealed in “Organizational Excellence through Total Quality Management” must understand their role in quality. The book explains that quality of products in a company is determined by the philosophy, commitment and the quality policy of the top management and the extent to which this policy can be put in actual practice (Lal 2008). Knowing that quality is a culture and requires top management attention means it must be applied in every aspect of the organization, not just products that can be held in your hand. Knowing that quality is required from top to bottom in an organization is not a foreign concept to Johnson & Johnson. The pharmaceutical giant has had a well-deserved reputation of quality but as shown earlier in this paper quality for Johnson & Johnson has started to falter. The resent failures coupled with past success bring the issue of quality sustainability in focus for Johnson & Johnson. Quality sustainability can be viewed as adapting to a changing environment; this is especial true for a company with a track record of success such as Johnson & Johnson. Mohamed Zairi gets very in depth with quality sustainability in his book “Total Quality Management Sustainability”. Zairi defines sustainability as “the ability of an organization to adapt to change in the business environment to capture contemporary best practice methods and to achieve and maintain superior competitive performance” (Zairi 2002). Based on Zairi’s findings quality sustainability is about organizational competitiveness which equates to organizational survival. Johnson & Johnson’s loss in revenue as a result of recent quality issue threatens the company’s survival. If adapting quality to the environment is fundamental to an organization surviving economically then the organization must know who and what they are adapting to. The organization must adapt to the customer because as stated early the customer defines quality. Consumers are getting more educated and have more chooses, as a result customers are requiring more quality. According to Project Management: A Systems Approach to Planning, Scheduling, and Controlling customers are demanding: higher performance requirements, faster product development, and specifically in the case of Johnson & Johnson fewer defects/rejects (Kerzner 2009). Johnson & Johnson does not have the luxury of some companies of only having to adapt to customers. A critical part of the environment Johnson & Johnson must adapt to are the every changing regulation’s of the pharmaceutical industries. Even without the defects and recalls that have plagued Johnson & Johnson the last couple year’s improvement should always be sought out in any organization but in the case of the pharmaceutical company quality improvement should be priority number one. According to author Dhirendra Kumar the improve step is the most important phase of Six Sigma’s DMAIC process, the strategy process Six Sigma uses for organizational quality improvement (Kumar 2006). Kumar states that the improve phase is the most important because it focuses on reducing the amount of variation found in the process (Kumar 2006). The reduction in variability is important to the solution of many process problems (Kumar 2006). This is vital for Johnson & Johnson due to the large amount of mass manufacturing they do with a successful record prior to recent years. With quality in question the easy answer is to say “improve it”. That improvement with quality is not simply going to happen with a memo coming down from top management saying “improve quality, over”. The improvement is a balance or even joggling act of many factors. Michael Milakovich writes that quality improvement is based on interpersonal relationships between cost, competition, market share, productivity, and profit (Milakovich 2006). Most company’s resources are limited so if more resources are devoted to the best money can buy in terms of materials and personnel there can be a risk associated with that philosophy. If an organization employs this “best of everything” tactic then the company runs the risk of rising cost and possible decreased profit if their market share is not increased. Johnson & Johnson has always understood this balance with obtaining high quality. The company credo states “We must constantly strive to reduce our cost” it also states “business must make a sound profit” (jnj.com). In the case of Johnson & Johnson the company has plenty of resources in the form of obtaining the best materials and personnel to produce quality products, which leads to their quality problems being an internal organizational problem.
Recommendation
Johnson & Johnson does not require a complete overhaul based on its decades of high quality products. The company should focus on and examine past success by modifying current practices to improve quality. In order to improve in deficient areas the before mentioned Dhirendra Kumar explains that for improvement to happen it must be a commitment beyond financial resources (Kumar 2006). In Kumar’s book he lists the following as common utilized goals and commitments that are required for improvement:
• A totally satisfied customer
• A commitment to a common language throughout the business
• A commitment to common and uniform quality measurement techniques throughout the business
• Improvement goals based on uniform metrics
• Goal-directed incentives for both employees and management
• Common training material on “why,” “how,” and “when” to achieve a goal
(Kumar 2006) A form of reverse engineering could assist Johnson & Johnson with quality problems. Looking back to when quality issues first started to appear may give insight to when quality began to suffer, just as scientific look for the first case of a virus to find a cure. Did a cost cutting measure lead to quality suffering as the company dealt with the balance of quality and profit during the economic crisis of 2008? Did a new FDA regulations force a reaction from Johnson and Johnson that created a source of quality problems? These are just a couple of possible events that could have occurred that caused Johnson & Johnson to drift from its history of high quality products, all avenues most be investigated. Lastly Johnson & Johnson should hire an outside agency to help assist with qualities problems. The agency would gather data on all products not just products with a known history of defects. Gathering data on products with high defects is obvious but gather data on products with low defects is just as important. If Johnson & Johnson can identify best practices within its organization it will make it greatly easier to reproduce that success in other areas of the company that are suffering.
Reflection
What I have learned the most while working on this paper is how quality has to be the mindset and culture of the entire organization. The textbooks I gathered information from did not just focus on creating systems or processes of double and triple checking products, most mentioned nothing of the sought. To use a sports analogy, it’s about more than the X’s and O’s when it comes to quality. Some books discussed methods of getting your entire organization to simply want to always do better which will constantly keep quality in focus. Those tactics of striving for more in product, service, and self are lessons I can use regardless of career field I’m in.

Reference Page 1. Johnson & Johnson. (2013, august).
Retrieved from http://www.jnj.com/about-jnj 2. Can Johnson & Johnson get its act together. (2011, Jan 15).
Retrieved from http://www.nytimes.com/2011/01/16/business/16johnson-and-johnson.html?pagewanted=all&_r=0 3. Johnson & Johnson recall hip implants. (2010, August 26).
Retrieved from http://www.nytimes.com/2010/08/27/business/27hip.html 4. Johnson & Johnson profit falls. (2011, Jan 25).
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