Exel has signed a new, five-year contract with Johnson & Johnson Medical (Shanghai) Co. Ltd and Johnson & Johnson Medical (China) Co. Ltd. This is the first outsourcing project awarded by Johnson & Johnson Shanghai and China.
Exel will manage the storage and inventory of medical devices in its national distribution centre in Shanghai for Johnson & Johnson Medical Shanghai and China.
As part of the contract, Exel plans to establish a 1,100 m2 DC in Caolu, Shanghai by November 1st, 2004. This will include a temperature-controlled room of 2oC - 8oC and below -18oC. Exel will receive imported goods after customs clearance, manage the storage and rotation of inventory in accordance with customers' instructions, and update Johnson & Johnson Medical's JDE information system to ensure visibility across all processes.
Both Johnson & Johnson businesses import medical devices, mainly from the US and Europe, for distribution in China. Exel is currently providing both contract logistics and freight management services for Johnson & Johnson Medical's Ortho Clinical Diagnostics products within Europe.
Roland Chong, Exel's director for China said: “The healthcare sector in China is developing rapidly and will provide a number of opportunities for Exel. These opportunities will include domestic warehousing, imported goods warehouse management and domestic transportation.”
He added that Johnson & Johnson will give Exel an opportunity to develop in this rapidly growing sector at a relatively early stage and establish a market presence. “Given that Johnson & Johnson Medical's Good Manufacturing & Good Distribution Practices (GMP and GDP) are the benchmarks for the sector, the project will become a showcase for other healthcare customers in China.”
Both companies have put together strong project management teams for GMP and GDP, as well as Quality Assessment, Standard Operating Procedures, and recruitment. Exel has also set up a group including commercial, engineering, finance and operational people to ensure the project runs smoothly.
Chong concluded: “The Government in China is gradually easing restrictions on overseas companies in the healthcare and pharmaceutical distribution channel domestically, which will lead to a competitive marketplace. This means that response-time becomes a key success factor for gaining market share. The change in market rules and the fast expansion of franchised products means that companies must focus on building a more efficient and fast-reacting supply chain instead of delivering goods to the distributors' warehouses.”
