The Ontario province in Canada tried that. They allocated funding for the purchase of millions of masks for a provincial stockpile but not the funding for the management of that stockpile. U.S. Customers and Border Protection did the same thing. They found 1.5 million masks in their stockpile that had expired. Thanks to an exception from the CDC allowing the use of expired masks, they were able to distribute them to TSA. Unless you rotate your inventory during the time they're not required for an emergency, there is that expiration potential. Rotating millions of masks during normal demand is a daunting task that requires considerable management resources.
Exponential increases in demand are not something that can be served with the snap of a finger, contrary to Bernie Sanders's expectation (if only that capacity were nationalized). 3M learned from SARS. They created and then mothballed capacity (extra manufacturing lines), making it available for spikes in demand that may arise from a myriad of emergencies. Some of that capacity was used in 2018 to meet high demand during the California wildfires. That's how Apple and Tesla and Facebook ended up with all that inventory they just released - suspiciously, in the view of the media, as though they had access to secret sources that were hoarding the masks in underground vaults. In actuality, FEMA had required that they carry these inventories on-site in the event that their employees would be threatened by smoke from future wildfires. Even at that, the total sum of the masks released to the healthcare community wouldn't feed demand just in New York for even a week.
Recently, there was an article (see box right) where Mark Cuban claimed that 3M was not doing enough to control pricing in the channel. I wondered how someone with such a reputation in business could come to that conclusion. The Robinson-Patman Act of 1936 prohibits manufacturers from imposing consumer pricing on distributors and dealers. That's why the statements from 3M point out that their manufacturer pricing has not changed and that 3M cannot dictate to distributors and dealers what prices they charge in the marketplace. Didn't Mark come across Robinson-Patman in his business experience?Well, in fact, my reaction - based on direct experience in wrestling channel pricing conflict back when, especially during the rise of Amazon in the industrial market - is dated and flawed. The Federal Government, based on a Supreme Court case in 2007, now uses the "rule of reason" approach in evaluating vertical price competition anti-trust issues. This presumably gives manufacturers more latitude to establish minimum/maximum price policies to both protect distributors who provide services with their products from discounters who do not, and/or to protect consumers from price gouging. In my day, 3M was very conservative in following anti-trust regulations and guidelines and pretty much left the market unto its own when it came to pricing. I'm guessing they're still doing that. It might be time to catch up with the times, 3M, and become a little more assertive. Especially for times like these, when hoarding for potential profit by intermediaries might call for a more aggressive approach. Mark Cuban might not be far off.
It illustrates how these kinds of global events and their after-effects will require better data, deeper understanding, critical thinking, and flexibility on the part of ALL of us to accommodate the new challenges and consequences. Hopefully, that will allow us to work together to come up with some dramatic and impactful solutions.
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