Centralized management. (logistics management by Johnson & Johnson)(Cover Story)

Johnson & Johnson resists the trend to outsource logistics services to third-party providers.

As a longtime leader in the global field of health-care products, Johnson & Johnson is not inclined to jump onto every logistics fad that comes along.

J&J is known for consumer products such as Band-Aids and Tylenol and its wide variety of disease-fighting drugs and medical supplies used by hospitals and doctors.

With so many facilities and product lines, the company has been focusing on global supply chain management longer than many other large shippers today. That experience allows it to take a longer view.

And while Johnson & Johnson continuously updates its supply chain management, the company's logisticians believe some traditional processes are not worth changing for the trend of the moment.

For example, J&J has resisted the current rage to outsource logistics services to third-party providers. J&J executives say they still can handle many logistics functions better than a third party.

Axel O. Velden, director of J&J's export division, has been involved in distribution since he was hired by the company in 1961. When he started with the company, consumer and professional products drove the business.

During the last 15 years, J&J's fastest growth has been in the pharmaceutical business, mostly through acquisitions of companies such as McNeil Pharmaceutical in the U.S., Janssen Pharmaceutica in Belgium and Cilag in Switzerland.

Centralized Logistics. As its business has become more global, J&J has moved to centralized management of its distribution of raw materials and finished products.

J&J's subsidiary companies used to handle their own distribution. This practice changed about 15 years ago, after customers complained of difficulty controlling shipments from multiple J&J plants.

"It was advantageous to have all the orders come to one place so we could consolidate them into one shipment for the customer," Velden said. "By combining volumes, we generated substantial savings in freight rates," he said.

Velden has a logistics staff of 46, which manages international customer service and transportation as well as accounting and information systems. His group is part of Johnson & Johnson Health …