A Supply Chain Headache

McNeil, the respected Johnson & Johnson unit, has faced a product recall of stunning proportion over the past few weeks, with a wide range of liguid analgesics, notably Tylenol, involved.  This raises supply chain issues at a couple of levels.

One is how to handle products in the hands of consumers.  These, it should be obvious, can't be physically returned in a reverse logistics application at any reasonable level of cost or effort.  Accordingly, refunds are being issued, with instructions to get rid of any unused product, whether unopened or partially used.  Another is getting earlier shipments out of retail customers' stores and warehouses, where larger quantities might require physical movement.  I'm confident that J&J's supply chain partners value the speed and candor with which the situation has been handled, and would have expected nothing less.

There may be another level of interest, though, and I'm not quite sure how to approach it.  In supply chain education, we are fond of - in examining the linked components of integrated supply chains - distinguishing between the "old days" of a logistics perspective and a 21st-century view of supply chain management.  In the former, we were focused on what happened between the boxes in the diagram - physical movement and handling.  In the latter, we say we are vitally interested in what happens inside the boxes - how we plan and execute procurement or conversion (manufacturing), for example.

But, are we really?  Do we  - can we - have visibility and oversight when the preceding link in the supply chain is J&J?  Should we?  If the source were not a provider of the same scope and scale, would we insist on having that visibility?

Should we rely on the processes, controls, and track record of any manufacturer to detect and correct problems, and keep the entire supply chain out of trouble?  Or, do we not challenge behemoths, and hope for the best?

What are the ramifications of these questions on the quality of our business relationships?  Are the risks real?  Are they offset by longer-term benefits?

What do you think?