E-Capability Strategy August 2012

AGENDA

- Completed Actions to Date/Tasks- Scope Clarification - Review Updated Maturity Model - Capability Prioritization - Spider Web Model- 2012-2015-2018 System Flows - CLS Web Strategy- Next Steps Discussion

E-Capability Strategy – Next Steps

Define Business Architecture

Define Future State Priorities

Develop detailed roadmap Execute

Refine

• Innovation: Opportunity Assessment

Charter Created

• Identify Gaps / Pain Points

• Finalize RACI RACI Created

• Finalize global team membership

CLS Wide Business & IT Team Established

Working Team Established

• Initiate creation of metrics supporting design principles

Vision & Principles Created

Strategy Timeline Created

Maturity Model Created Multiple Gartner

Briefings Held to Understand Vendor Strategies

• Assess benefits, costs, risk, & organizational readiness for each initiative

• Sequence the initiatives into a roadmap based on the assessment

• Lay out baseline Roadmap current state & future state

• Establish go forward leadership structure & governance model

• Launch / continue with initiatives in execution plan

Q2 - 2012 Q3-2012Q4 2012 onwards

• Complete application inventory and identify application overlaps

Initial Inventory Created Desired Capabilities

Collected, Prioritized, & Ranked for 2013/2014

• Agreement on priorities from CLS Leadership

• JJ SC CLS Review

• Define the future state processes and organization

• For each prioritized capability(and associated processes) define the high-level future state solution architecture in terms of: application, data, integration, and infrastructure

Creation of System View Roadmaps started

4

eCapability CharterScope

• The scope of this project is customer-facing eCommerce, and spans all sectors and countries.

• The tactic will cover electronic data interchange (EDI), B2B portals like Gateway, industry exchanges like GHX, VMI , POU data capture systems (e.g., GHX Physician Preference Items), consigned inventory management, mobile solutions for orders/inventory management/etc., RFID, eIFU, electronic PI's, CSOS, etc.

• It will include B2C and social media where it is necessary to the delivery of J&J products to our end customers.

• eCommerce must be aligned with distribution network strategy and meet channel/geographic/commercial/etc.req's.

Level 1 - Basic Order Management Limited connection

with customers

Level 2 - External/Internal Information

Electronic connection with customers

Level 3 – Growth Platform

Moderate collaboration with customers

Level 4 –One with the Customer

Great collaboration with customers

May include some or all of the following:• Processing manual

orders via phone or fax

• Accepting cash payments

• Simple product catalog

• Basic order capability via portal

May include some or all of the following:• Internal integrations

(Shipment tracking)• Accepting electronic funds

transfers/online order taking• Online portals for self-service

transaction inquiries• Collaborative Planning

Forecasting and Replenishment (CPFR) teams

• Vendor Managed Inventory (VMI), Vendor Managed Replenishment (VMR) Processing Electronic Data Interchange (EDI) orders

May include some or all of the following:• Up-sell/Cross-sell• Video/Audio on Product

Info.• Track n Trace• Dedicated Customer

Focus Teams (CFTs)• In-depth data visibility• Access to customer’s

systems

May include some or all of the following:• Product training• One product catalog

across multiple division

• Strategic collaborative initiatives with customers and business plans

• Multilingual 5

Bridging Connectivity to Collaboration

What Level of Collaboration Do We Have with Our Customers?

CUSTOMERS’ PRACTICAL CO NSIDERATIO NS

6

Business Capability Gaps/Pain Points MDD PHARMA CONS

Contract Price File Avail Y X 5 X Y - Top 10ASN Y Y 4 X X - Can use itDisplay Images and rich content in Product Catalog Y Y 2 X E - Existing capabilityePayables = automation of cash apps and 820's Y 5 X 6 X n/a - not necessaryCredit card processing for all E channels X Y 2 XImplantable Device Supply Chain (PPI) GHX offering Y 3 Y 3 Y 2 2013 PriorityContracting Solutions ELOC and Notifications X Y 3 2014 priorityOrder Entry - Portal (Simple Order Entry Platform) E 1 Y 1 EScalable ePlatform Y Y 1 Y 1Scalable EDI replatforming option Y 6 N/A EeInvoicing E Y 2 Y 6E-IFU Y 2 X 7 N/AMobile solutions for Order Entry inventory and consignment mgmnt E/Y 4 X 8 YShipment tracking via portal (link to carrier for POD) X Y 1 X 5Cross Sell/Upsell X X YReporting - Purchase analysis, allocation qty and consumption, cut reporting X/E Y 4 X/E 7Tier/Pallet Recommendations EOQ economic order qtys X N/A Y 3Return Auth and OS&D w Link to DC Dispute X X 6 Y 4Online Support Live Chat Y X 10 YConsolidation of DTC/B2B to single platform E&N/A N/A Y E is for Vision CareCross Sector Businesses (ie McKesson) X X 8 YSuper intelligent truckload build - Substitution/Tier Pallet if their product is not there you recommend a smart substitute based on your COT or past buying habits N/A N/A Y

• Mobile Platforms• DTC integration • CC Payments• X-sector Orders• Save & Subscribe

Capability Roadmap – Web Portal Aug 2012

Orders Intake

Data & Analytics

Sales/ Order

Inquiry & Status

Invoice/ Payment

•Product Catalog• Basic order history reporting, Purchase analysis

• Cut Reporting•CPSIA – Compliance Reporting

•EDI (810, 820, 812) & eInvoice & ePayable CC (MD&D)

•Order Status (Batch) via Phone, Email and B2B Portal

•Shipment tracking linked to carrier• Real-time Status updates• Email status notification (push vs. pull)

•eInvoice•ePayable•Return Authorization linked to Dispute Mgmt.

• Strategic Customer Programs (loyalty programs)

• Tier/Pallet Order Recommendations

• Multi-lingual • Integrated Sales reporting

• On-line Chat

Strengthen Customer Trust: make it easy to do business with J&J and enhance the customer experience while ensuring a safe and secure

supply chain

• CC Acceptance (Cons)

• Debit Memo posting

• Mobile access using Internet• DTC leverage opportunities• Real time pricing (Bracket/ Promotions)

• International Affiliate Order

• B2B Portal (Gateway/ELMO, POL, ISA, VisionCare)

• Manual (Phone, Fax, email)• DTC (3rd party/CC)• Business on Behalf• List Price • International Trade Order

• Allocation qty & Consumption reporting

• Product Availability (ATP)

Now (2012 – 2013) Later (2014- 2016) Future (2017-2019)

•Link to approved images and rich content

• Up Sell & Cross Sell – New Item launch

• Customers of Distributor Access

• Linkage to internal brand sites

• Ratings/ Reviews

Messaging/Marketing

•Broadcast messaging

•X-sector Platform ? – GXS/GHX/Crossgate/SI

Capability Roadmap – EDI & GDSN Aug 2012

Orders

Invoice/ Payments

Order Status

•810 (Invoice)•820 (bank Payment)•812 (Credit/Debit memo)

•945, 947, 944, 940 – Internal WH Movements•852, 830 – DC to Customer DC and Customer Product movement

• Carrier (214, 204)• 870 • 856 (ASN)

•860 Automatic PO Change• 861 Reverse ASN (Receipt Discrepancy)

• Carrier status and ASN linked to B2B portal

• Debit Memo posting to B2B Portal

Strengthen Customer Trust: make it easy to do business with J&J and enhance the customer experience while ensuring a safe and secure

supply chain

• Eliminate redundant Data Warehousing of 852 & 830 Data across Functions

• Sterling/GHX/wM•EDI 850/855 – • 816 – Customer Locations•867 – Military rollup•879 - Pricing

• cLect off of Mainframe

•

Now (2012 – 2013) Later (2014- 2016) Future (2017-2019)

•Price Synchronization

Data Transfer

• VAN/AS2 Communication•GDSN via One Sync (product attributes)

• WERCS (manual)

Inventory Movements

• Improve Forecast technology – SNC?

•Cross Sector Customer Collaboration

Capability Roadmap – CPFR, VMR, VMI Aug 2012

VMR/VMI

CPFR

Data & Analytics

• Store Level Data from few customers

•Receipt of 830 & 852 into APO and ISIS

Brio, ISIS, BW

•Better tools to analyze POS data from Customer

• 830 integration to demand Planning

• Improve Forecast technology – SNC?

• Cross Sector Customer Collaboration

• Eliminate redundant Data Warehousing of 852 & 830 Data across Functions

Strengthen Customer Trust: make it easy to do business with J&J and enhance the customer experience while ensuring a safe and secure

supply chain

• Planning via Manugistics, Customer Systems,

• POS Data from Customer

Now (2012 – 2013) Later (2014- 2016) Future (2017-2019)

OrganizationS&OP & Demand Planning

eCapability Roadmap High-Level Overview

10

Point of Use

Hospital ERP

MobileCabinet

RFID

Alternative Devices

All MD&D Demand Globally

Pharma

Consumer

VMICPFR

ENGINE

Order TypeZORZDEL

US = GHXLA = VAN

GHX

3rd Party(Sterling)

3rd Party(Sterling)

EDI

Auto Fax

Web Portal

Manual Direct Orders

3rd PartyJ&J Portal

MicrositeMicrosite

E-IFU

Manual Converter

FaxEmailExcel

SAPBack to Basics

WMS TMS

CCI Xrds

MDM GS1

APO SFA

TPM CRM

852

QA Document Mgmt. Sys

2012 2018

Business Intel.

11

2018

HCS MD&DCustomer

Order

EDIWEBGFAX

MD&DSAP

VMI

DePuy Ortho GHX/EDI PRMS

2012

Mob

itor

GH

XMob

ile

2012

LFS Customer

GXS

GHXJDE

EDI

GFAX

GHX MemberEDI Outsource/GHX

GHX PortalGFAX

2015

Decision Point?

GHX Model

2015LFS

Back to BasicsSAP

MD&DBack to Basics

SAP

2012 2018

Order/Inventory Transactions

Consumer Cust EDI Order

Gen Tran Mainframe

Web MethodsELMO Order

JDA/VMR Orders

Consumer SAP

Consumer

EDI On Sterling SI ELMO on SAP PortalVMI/CPFR on JDA

B2C Archway integration w/SAP

ConsumerBack to Basics

SAP2018-2020??

Alt. DeviceMobileCabinet

RFID

12

13

CLS Web Strategy

Proposed Roadmap

• Adopt a strategy to migrate the highest risk functionality off the current technology platform first

• As functionality is migrate off current platform apply the most appropriate technology solution to maximize efficiency and lower future risks

15

Current State

16

Future State

17

Harmonized Customer

Experience

Best TechnologySolution –

allows flexibility

Short Term Proposal

18

Build this first3 Sector Core CapabilityAddresses highest risk

functionality

Johnson & Johnson Health Care Systems inc. Confidential & Proprietary InformationSubject to ongoing Legal and Regulatory review. For Internal Use Only. Not for Distribution.

Next Steps:

1. Is our scope clarified?

2. Are our capabilities prioritized?

3. Group the larger list of capabilities (some are technology focused) on slide 6 into larger groups

4. Continue to work on, and enhance, the Capability roadmaps

5. According to our milestones, we need to define the future state processes and organizations for these capabilities. How can we best achieve this?

6. Will these capabilities now address our current pain points, gaps, and customer experiences?