J&J Struggles to End Tampon Shortage as Prices Hit $99 a Box on eBay
The great o.b. tampon drought may be coming to an end as Johnson & Johnson (JNJ) has promised (with no specifics) that its "temporary supply interruption" is over and shipping has begun again. The shipments may take "weeks" to reach stores, however, which explains why o.b.s are currently going for $99 a box on eBay. o.b.'s "cult-like" loyalists are furious:
I know to some this issue may seem trivial but to me this is like taking my right to breathe," said Dawn Allyn, a 44-year-old sign language interpreter from College Station, Texas, who used to use Ultra o.b. tampons.
Even her ex-husband went from store to store and made phone calls trying to find them.*Much has been written about the damage J&J has done to its own brands with its repeated recalls of Tylenol, Benadryl and other over-the-counter medicines. (The company even cut its employee bonuses in part because its image has suffered). But it is the o.b. mystery that is has baffled consumers most. Tampons consist of cotton and rayon -- they aren't difficult to make. Yet:
... the shelves that normally hold o.b.'s, the no-applicator tampons, are yawningly empty. I tried CVS. I tried Walgreens. Nothing but gaps that remind me of the years I spent reporting in the old Soviet Union, with its unstocked food stores.
Do they contain a secret ingredient that is only available from Somalia? Anyway, I lodged a formal, semi-crazed PMS-induced protest with J&J. They are really pissing off the wrong group of women, don't you think?
The management lesson here is to do with built-in redundancy. Over the last few years, in an effort to goose margins, managers have axed excess capacity from their systems and relied on just-in-time delivery systems. That makes things cheaper, but when you're in the business of marketing a staple on which consumers are dependent it can be a false economy. o.b. generates just $38.7 million a year in revenue for J&J, barely a rounding error in its financial statements. But J&J's corporate image -- which is much more valuable to the company -- is traditionally like that of your mom, if your mom was a nurse: trustworthy and caring. Moms don't bail without explanation, and yet that is pretty much what J&J has done with o.b. The company has still not said why it ceased shipping sometime back in November, and thus tarnished its image to a much larger degree than $38.7 million. Would it really have killed J&J to have two locations at which this brand could have been made, just in case?Genzyme (GENZ) learned a similar lesson in 2009 when the factory that made drugs for rare genetic conditions like Fabry and Gaucher diseases was disabled by contamination. There was no alternative supplier of the products, and patients had to live without.
Some o.b. users have begun hoarding:
"Still no OB tampons in stores, so I just ordered many boxes from drugstore.com. This might get me through till menopause!" tweeted Barbara Rice, executive editor of Penthouse magazine.*What's wrong with this picture?
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