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Another Product Recall and Another Set of Transformation Challenges for Johnson and Johnson

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On Friday, McNeil Consumer Healthcare division of Johnson and Johnson announced the voluntary recallof the entire U.S. supply of infants grape-flavored Tylenol which amounted to over 570,000 bottles. The product had just returned to retail outlets in November. This latest recall comes after a long series of past recalls involving Tylenol and other J&J branded medicines including Benadryl, Motrin and Zyrtec that date back to 2009 and have been attributed to previous cutbacks.  The reason for the latest voluntary recall was described as a design flaw involving the bottle cap and dose dispensing syringe.  The new cap was introduced last year in an effort to re-capture lost sales. J&J took the action after receiving a “small number of complaints” from consumers but stresses that to the company’s knowledge, no infants have been harmed, and that “the risk for a serious adverse medical event is remote”.

This recall could not have come at a worst time as J&J was struggling to rebuild consumer credibility in its OTC medicine brands, and must now face yet another challenge to rebuild consumer confidence.  Even though the recall involved a specific product area (one ounce oral suspension infant Tylenol) we speculate that the decision to take this action was not taken lightly and had to involve discussions at the senior most levels of the company.

According to a report published in the Wall Street Journal, total revenues for the McNeill division are down 55 percent from a peak year in 2008. The Tylenol brand itself has slipped from second in sales of over the counter pain medicines in 2009, to now rank eight.  In a released statement on Friday, J&J CEO William Weldon stated that this latest recall was “clearly disappointing after all the progress that McNeil has been making to ensure its products meet the highest level of quality and consumer satisfaction”. Readers may recall that it was only a couple weeks ago that J&J announced a re-shuffle of senior management concerning the McNeil unit which perhaps adds even more perspective to this latest development.

When an organization discovers significant systemic breakdowns in quality and accountability there is always a tendency for existing players to exhibit a rather cautious mentality, or perhaps a “bunker” mentality.  This often times requires senior management to set very clear direction, motivation and an emphasis for what needs to change vs. what tenets need to remain.  There is often a need for articulating an overall integrative framework of required transformation including what areas of operating practices, business metrics and people-related training skills must be changed.  Management must lead by example and be visibly active and participative in key transformation decision-making.

Sometimes however, change is only defined in a singular context, for instance a need to revamp a single production facility or change a few specific processes, without context and alignment to an overall end-state framework.  Sometimes, a particular function such as sales and marketing can still have a final say. In the case of McNeil and J&J only they and their management teams can readily conclude whether this has occurred.

Setting integrative goals is so very important.  In this latest situation involving infant Tylenol, we have to speculate why was a new packaging design introduced on an infant product area without extensive consumer involvement and testing, especially in light of the need for restoring consumer confidence? What about adequately addressing and testing the quality control measures of the packaging process?

Fundamental questions but yet, another challenge for J&J and its McNeil unit to once again overcome.

Bob Ferrari

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  1. Bob Ferrari says:

    Hello Everyone,

    We provide breaking news relative to our ongoing commentaries reflecting on supply chain related crisis and consequent executive realignments at Johnson & Johnson. In a previous Supply Chain Matters commentary, we speculated on the ongoing role of Alex Gorsky who was charged with overseeing J&J corporate-wide supply chain and manufacturing renewal initiatives.

    The Wall Street Journal is reporting breaking news this afternoon that Mr. Gorsky will take over responsibilities as the new CEO of J&J, replacing William Weldon. Web link is noted below:

    http://online.wsj.com/article/SB10001424052970204909104577237642041667180.html?mod=djemalertNEWS

    Similar to Apple, a senior executive well grounded in operations and supply chain will now take leadership of the company. This, in our view, is positive news and somewhat overdue.

    Bob Ferrari