American Scientific Resources (ASFX)

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Johnson & Johnson’s consumer companies take a new approach to broad-scale external manufacturing that transforms buyers and sellers into true partners.


Procter & Gamble, Unilever, Colgate-Palmolive, Prestige Brands. They’re all big players in the personal care products game, and they all use contract manufacturers to some degree. But none focuses more on closing the gap between external and internal operations than the Skillman, N.J.-based Johnson & Johnson consumer companies.

According to regional director of external manufacturing Bill Babuschak, who oversees external manufacturing of Johnson & Johnson products sold in the U.S. and Canada, the occasional need to outsource larger volumes has driven the need to innovate new supplier-management strategies. But the scale of its outsourcing program is not the most important distinction between Johnson & Johnson and its peers in the personal care arena. The real difference is how the company manages the thousands of SKUs in the Consumer Products division and approaches external manufacturing.

In the past, says Babuschak, Johnson & Johnson used external manufacturers primarily for new product launches that, if successful, were often eventually brought in-house. “Historically,” he explains, “it’s been our bias to make our own products in-house.” He continues, “Quality is the benchmark of Johnson & Johnson. It’s why consumers pick up our products vs. others. And, traditionally, manufacturing internally has given corporations the feeling they could more closely monitor product quality.” But the increasingly dynamic nature of the health-and-beauty care marketplace combined with the growing capability of contract manufacturers to turn out high-quality, competitively priced products prompted the company to begin outsourcing some of its higher-volume SKUs.