Johnson & Johnson targets supply chain for health care sustainability

Eco-Leadership

Johnson & Johnson targets supply chain for health care sustainability

Sustainability looks poised to become more integrated into the business of healthcare.

Al Iannuzzi took a gamble when he decided to double down on the environmental and health impacts of his company's products.

But Ianuzzi, senior director of environment, health, safety & sustainability for Johnson & Johnson, believed in the need to embed sustainability into the company's supply chain enough to build a brand around the new process. His team launched Earthwards in 2009, and by our 2011 interview, Iannuzzi’s confidence in the growing product line had soared.

“We have 16 now,” he told me in a recent conversation. “Our goal is to produce 60 Earthwards products by 2015.”

Today, Iannuzzi’s team has surpassed its Healthy Future 2015 goal one year ahead of schedule, with 73 Johnson & Johnson products recognized for significant improvements in the impact areas of waste, water, energy, materials, packaging, innovation and social impact.

For a company that draws one-quarter of its global revenue from products introduced within the past five years, innovation is key. Collectively, these products represent 59 improvements in material selection, 55 in packaging materials and 39 in energy usage — and more than $8 billion in revenue.

For this achievement, Iannuzzi credited the Earthwards approach, a malleable process that is “as useful for marketing as it is relevant for R&D.”

Johnson & Johnson started developing Earthwards in anticipation of a bull market for sustainable healthcare products, and new evidence justifies those predictions. According to a Harris Poll study of global health care professionals commissioned by J&J, survey respondents from 80 percent of hospitals expect to incorporate sustainability into their decisions in the next two years. Among U.S. healthcare professionals, 52 percent say their hospitals already factor sustainability into purchasing decisions.

The study helps demonstrate why the company is so committed to sustainability. Here are some fresh insights from Iannuzzi on his program, its potential for driving greener product innovation and what other companies can do to replicate its success:

An elegant process

Anna Clark: Al, as you know, a lot of good ideas don’t translate into results, so I’m curious what makes this one so successful. Let’s go back to the start. Who planted the seed for Earthwards?

Al Iannuzzi: Back in late '90s, my team partnered with the University of Wisconsin to initiate a global design for the environment program. Over time, we gained experience and saw other companies touting the greener attributes of their programs. Knowing Johnson & Johnson has a marketing-oriented program, I decided we needed a branded process á la GE’s Ecomagination. SC Johnson’s Greenlist was also an inspiration.

From there we partnered with Five Winds International (now PE International) for benchmarking and hired a green marketing firm for the icons and messaging. In 2009, Earthwards came to life.

Clark: What did you do to cultivate the Earthwards process?

Iannuzzi: Well, a lot of sustainable product approaches become too complex. Simplicity is key. From an organizational perspective, we solicited the input of R&D and marketing early on. We created a good framework, which includes a four-step process and seven categories, and got Earthwards off the ground with a scorecard through which you could make your product more sustainable.

Al Iannuzzi

Johnson & Johnson Senior Director of Environment, Health, Safety & Sustainability Al Iannuzzi

Over time, it’s gotten more and more refined, and now involves two key aspects: 1) make a clear line of sight for a greener product for both R&D and marketing, and 2) develop scientifically-based marketing for customers. Different business segments use a single consistent framework, although they may use different tools for implementation.

The thing is, J&J is over $70 billion in sales with a bazillion initiatives. It can make your head spin. The more you can bundle things and make them high-impact, the better from a communication perspective. Now we use Earthwards across everything. This has absolutely helped people understand.

Clark: Clearly this framework has helped Johnson & Johnson communicate how to drive sustainable product development, but what about why? What are the most significant drivers for developing greener products?

Iannuzzi: Our products span three key areas: medical devices and diagnostics, pharmaceuticals and consumer businesses. Some of our medical devices are consumer facing, so when we saw retail customers started to ask for greener products, we started marketing it.

Market forces trump punitive pressures. The best thing that can happen is when market forces are asking for greener products and when marketing people recognize that. For example, all three of our business segments sell to Walmart, our biggest customer. We have to provide data to Walmart, and Earthwards helped our products achieve good scores with that data. In that way, Earthwards is a good enabler. It’s a communications tool to reach stakeholders.

More than a band-aid solution

Clark: We’ve covered a lot from the marketing perspective. Can you take me inside the product development process to better understand how R&D uses Earthwards?

Iannuzzi: We begin by looking at what is material to J&J and look at what thought leaders are saying, which is reflected in the seven categories of Earthwards. The second step is to understand the lifecycle profile of a product. Water, waste, energy — it all depends on the type of product. We have over 20 key categories of product profiles. Whether you’re an R&D or marketing person, you apply this to products.

Clark: Can you describe the process from the standpoint of a specific product?

Iannuzzi: Sure, let’s look at Band-Aids. We began by asking what are the biggest impacts, in this case raw materials usage and packaging. How can you minimize these? Try reducing the size of the box and minimizing waste in manufacturing.

Most are manufactured in Brazil, which is an emerging economy. There’s a lot of poverty in Brazil and people who live next to landfills. So, the team there helped form a recycling cooperative called Project Phoenix near the landfill to create a safe working environment for people harvesting from landfills and help develop a market for their materials as well.

Clark: So you’re not just slapping a Band-Aid on the problem, but closing the loop. What type of training do you give your teams to come up with these sorts of systemic solutions?

Iannuzzi: Earthwards helps with this, too. Earthwards Innovation has a process to help teams think outside the box with the lens of sustainability to make the products or process more sustainable, to prioritize and execute on improvements. In this case, the Brazil team is helping people have a safer, better way to make a living while also developing the market.

Clark: Regarding the social innovation aspect of Earthwards: can you tell me more about product innovation? How does R&D adapt the process to reach specific goals?

Iannuzzi: We know from our lifecycle screening studies that pharmaceutical manufacturing requires significant use of energy and large numbers of hazardous solvents. The chemistry development team at Janssen R&D in Beerse, Belgium was charged with applying the 12 principles of green chemistry to the production of Zytiga, a breakthrough prostate cancer drug.

The results were outstanding and included a 64 percent reduction in raw materials used, 78 percent less water and 87 percent less hazardous waste as compared with the original synthesis process.

Clark: What system do you have in place to maintain the integrity of this process as a tool for sustainable R&D?

Iannuzzi: Our board is the first stopgap. Also, we have our process audited every year by UL Environment, which helps keep our marketing people comfortable knowing there is a third party. We also hold an expert panel review every two years. We invite them to come in, kick the tires and help us continue to make it a leading process. One of the last panels we had involved a major retailer.

Also, we require three sustainable improvements for our products. Of any other greener product development, Earthwards has some of the most stringent requirements out there.

Clark: For companies that want to try something like this, can you share what has made Earthwards flourish?

Iannuzzi: If you look at the leading companies, there are some keys to success that others can apply. The two most important are to 1) have an approach like Earthwards to help your R&D department make products greener and 2) set targets and metrics.

For example, Earthwards set a goal in 2011 to have 60 Earthwards-recognized products by the end of 2015. Setting that target is what helped us go beyond it.

Clark: I just got back from CVS where I bought some Aveeno lotion, a J&J product. Why don’t I see anything about Earthwards on the bottle?

Iannuzzi: Good eye! Earthwards is our internal B2B program but we don’t necessarily use it on consumer products. Eco logos have a place, such as if it’s a third-party certification that helps consumers understand greener attributes, but it’s probably more important for a B2B customer.

There are only three eco-logos that 50 percent or more of the population recognizes: the recycling symbol, USDA organic and EPA Energy Star. However, for anyone interested, we do have a lot of sustainability information on our website.

Clark: You’ve got a point. I consider myself a very green consumer, and I still bought this lotion because my dermatologist told me to. Following your doctor’s advice is a pretty traditional thing to do.

Iannuzzi: That you bought it without the need for a green logo shows the power of having a brand people can believe in. We obviously care about meeting the expectations of consumers, but as I wrote in my book, no consumer products are truly "sustainable," at least not yet. We continue to strive for "greener" and "more sustainable" because it makes us a better company. Like others aiming for sustainability, we’re on the journey.

Check out more of Ianuzzi’s insights in this series of four exclusive excerpts from his book "Greener Products" on EarthPeople Media.