Buddy : Nancy Daga ( 23PGDM094)

Buddy : Arpan Aggarwal

Q1. Identify the additional factors to be considered for network/inventory optimization.
1. Lead Time and Cumulative Lead Time
Lead time on distant products may add time on the shipping as well as the receiving end which in turn will add time to
the entire process. This could impact safety stock levels that are essential to maintain optimal service levels.
2. Variability of Demand and Supply
Disruptions in supply will be the result of factors like weather, shipping, logistics issues, etc. To tackle such
disruptions, quick communication is effective to intimate the customers of their order status. Variability in demand
patterns is essential to understand to help set appropriate inventory levels.
3. Service Level
There might be different expectations of various markets from Regional DC -> Global DC -> Manufacturing sites, so
service level agreements need to be aligned accordingly.
4. External Factors
External factors like geopolitical factors, regulatory changes and economic conditions can impact the supply chain
network
5. Supply Network
Supplier reliability and their performance can majorly impact the lead time which in turn will impact the service levels
and efficiency of the supply chain.
Q2. Evaluate different network models across industry and identify the best fit for given data points and
requirements.
In order to analyse the best network model, we need to first understand J&J’s business model. The Company operates
through three business segments: Consumer, which relates to the development and marketing of baby care, oral care, skin
care, over-the-counter pharmaceutical, women's health and wound care products; Pharmaceutical, which relates to the
development and marketing of prescription medications and treatments, spanning a range of medical fields; and Medical
Devices, which relates to the development and marketing of specialist medical products, targeted at the oncology,
neuroscience, and cardiovascular fields, among others.
There are several network models that can be considered. They are hybrid, centralized, decentralized and direct-to-
customer models. The products are also available to consumers through online retailers and merchants. The products are
also readily available through physical retail outlets, drugstore chains and pharmacies.

Our analysis shows that the Hybrid Network Model is best for Johnson & Johnson.
Q3. Recommend best E2E model for the network to optimize cost & agility for identified service levels.
J&J operates across a variety of sectors and industries, from consumer healthcare goods to medical devices. Regulations
and needs may differ between different entities. A hybrid model would enable J&J to decentralize some services (such as
marketing and sales) in order to cater to regional tastes while centralizing others (such as regulatory compliance and
research and development).

Therefore, Johnson & Johnson would seem to benefit most from a hybrid network model that balances centralized and
decentralized decision-making. This would enable the business to uphold the consistency and quality of its goods while
also adjusting to the various demands and preferences of various markets and industries within its portfolio.

Q4. Define inventory parameters across nodes for the suggested multi-echelon model
For the multi-product multi-echelon model, we consider various factors for setting safety stock levels. Those factors
are ordering cost, holding cost, transportation cost, shortage cost, demand variability, lead time variability and
desired service levels among others. Economic Order Quantity model is one of the most efficient algorithms to
calculate optimal inventory levels for each node in the given network.
Q5. Identify factors to be monitored at a periodic frequency to recommend if/when the model should
be revisited/modified.
The review period for frequency monitoring should be based on factors like lead time, the demand variability, the
inventory holding cost, and the ordering cost. Other factors to be considered are customer feedback, technology and
data flow, supplier performance and market changes.
The first step is to decide how often to review the inventory based upon the above factors.
The second step is to determine how much to order at each review.
The third step is to keep track of the inventory levels and demand patterns and accordingly adjust to the system.
The fourth step should be to leverage technology and automate the system for better optimization.