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2016

There is a perception that Millennials aren’t brand loyal. A new survey conducted globally by supply chain management firm GT Nexus with research company YouGov seemingly confirm this lack of brand loyalty among 18 to 34 year olds. The survey’s results show that 61 percent of all respondents don’t consider themselves to be brand loyal, and in the U.S. and France, the numbers were even higher—67 percent and 72 percent respectively.

 

What does come as a surprise, though, are the factors which cause Millennials to switch brands. People often associate Millennials with “cool, edgy and flashy” things, a GT Nexus blog notes. Despite this stereotype, however, all the major disloyalty factors Millennials identified in the survey fall into the “behind-the-scenes” domains of operations, logistics and supply chain management, GT Nexus reports. Contrary to popular belief, consumer-facing marketing factors, such as a brand’s social media presence or mobile apps don’t seem to have a big impact on Millennials’ brand loyalty, the blog explains.

 

“It’s no surprise to see a high percent of this demographic shifting brand loyalty frequently,” says Guy Courtin, vice president of Industry and Solutions Strategy at GT Nexus. “But when we think of Millennials, we think of their attention being drawn to flash and sizzle such as apps and a website. These survey results paint a different picture. They describe a demographic that’s more concerned with what goes on behind-the-scenes of a brand: how they produce goods or operate.”

 

U.S. Millennials in particular place a premium on product quality and availability. Survey respondents cite quality problems (49 percent) and issues with product availability (44 percent) as the two biggest reasons for switching from one of their favorite brands to another.

 

“A number of recent high-profile product recalls have shown us how quickly quality issues can damage the reputation of a brand, but it’s alarming to see how readily Millennials turn on their favorite brands if the product isn’t on the shelf or available for delivery,” Courtin says. “This shows that the brand loyalty of Millennials lies heavily on the shoulders of the logistics and supply chain departments.”

 

U.S. Millennials also care about the ethical aspects of how their favorite brands are produced. For example, 32 percent of respondents said they would turn on a brand if it doesn’t treat or pay its workers fairly, and 27 percent said they would switch brands if the product isn’t environmentally friendly.

 

“Millennials are sending a very clear message to their favorite brands. If you don’t respect the workers creating your goods—either inside your organization or in your supply chains—they will turn on you. Same goes for the environment,” Courtin says. “Manufacturers and retailers should heed this warning and strive for fair, transparent and environmentally friendly supply chains. The apparel and footwear industry has met some challenges in this area and should be extra vigilant because it also happens to be a category in which Millennials are most likely to switch their favorite brands—47 percent according to the survey.”

 

Finally, Millennials are often perceived as digitally focused, but, according to the study, social media presence, mobile apps and websites have comparatively little impact on Millennials’ brand loyalty. The lack of a strong social media presence was cited by nine percent of the respondents, a lack of a mobile app was only cited by seven percent of the respondents, and the lack of a cool website was only listed by seven percent of the respondents as reasons for switching brands.

 

“In recent years, manufacturers and retailers have paid a lot of attention to consumer-facing marketing factors such as websites, apps and social media to attract and keep Millennials loyal to their brands,” says Courtin. “This research instead suggests that actions which occur in operations, production and supply chain—that directly impact product availability, quality, ethics and the environment—are much more important factors when it comes to influencing the brand loyalty of Millennials.”

 

What are your thoughts on the survey results? Do they mirror what you see?

It’s been said there’s no place like home for the holidays. And it’s also been said that “There’s a happy feeling nothing in the world can buy, when they pass around the coffee and the pumpkin pie.” While that may be true, this year, there might not be any ready-made aerosol whipped cream for that pumpkin pie--or any other pie or baking needs. It’s what some people have termed a “Whippocalypse.”

 

Actually, the issue is a supply chain disruption. Last August, there was an explosion with a fatality at a Florida chemical plant belonging to Airgas, which says it’s North America’s largest nitrous oxide producer. Two gas tankers, as well as a nitrous oxide holding tank, exploded at a loading dock, which dramatically cut nitrous oxide production. Interestingly, nitrous oxide—more commonly called “laughing gas” and used as an inhalation anesthetic to relax people and ease pain during dental procedures—acts as a propellant to get whipped cream out of the can and also as a preservative to keep it from going rancid.

 

“The timing is really unfortunate,” Stephanie McVaugh, vice president of Natural Dairy Products Corp., the maker of Natural by Nature whipped cream, says in a Reuters article. Demand usually picks up in November as the holidays approach, she said, but the company produced its first run of whipped cream only last week after having none for a “couple of months.”

 

The shortage effects all brands. Lanie Friedman, a spokeswoman for ConAgra, the food manufacturer that makes Reddi-wip, said the company is “doing the best we can to make it [Reddi-wip] available to as many people as possible.” A full supply should be on-hand by February, she said. Reddi-wip is the leading aerosol whipped topping, according to sales data from market research firm IRI.

 

Airgas, which distributes gas for industrial and medical purposes, said in a statement it’s making “all possible efforts to remedy the situation as quickly as possible.” The company added, however, that when it comes to supplying the gas, its medical contracts take priority over its food manufacturing contracts until supplies have stabilized.

 

As an article in The Washington Post points out, the whipped cream shortage casts a focus on one of the industrial food system’s core weaknesses. That is, an increasing concentration of power among a few companies, in a few areas. What’s more, it often involves only a few plants.

 

“It’s very concerning how vulnerable we’re making our food system to weather, fuel shortages, accidents, strikes and foodborne illnesses,” Philip Howard, a sociologist at Michigan State University who studies consolidation in the food system, says in The Post article. “There are many variables that make it possible that the food on our grocery shelves this week won’t be there the week after.”

 

In the meantime, some wags on food websites have noted that “It’s only a whipped cream shortage if you don’t eat real whipped cream.” Indeed, whipped cream is relatively easy to make. It may not be as convenient, but making whipped cream at home does solve the shortage problem.

 

What are your thoughts? Have you noticed a whipped cream shortage? More importantly, what are your thoughts on possible disruptions to food manufacturing supply chains?

Supplier relationship management seems—at first blush, anyway—to be straightforward: Define what you want and need from suppliers, and then manage the company-to-company interactions to ensure your organization receives the goods and services it needs. The problem, however, is that with global supply chains, there can be thousands of suppliers, potentially making supplier management cumbersome.

 

“Studies show that when procurement teams successfully align with key suppliers, the result is improved innovation, quality and reliability, as well as cost/price reductions and better risk reduction agility,” says Mickey North Rizza, a vice president at analyst firm IDC.

 

Writing recently in Inside Supply Management magazine from the Institute for Supply Management, she offered several suggestions to help improve SRM. The first is to remember that the relationship is the focus. Indeed, earning your suppliers’ trust with honest communication, listening to concerns and involving them in your processes ultimately makes them a vested partner in your business, Rizza writes. The problem, she adds, is that too many organizations subscribe to the “do as I say” approach when working with their suppliers, and continuously ask for more without engaging the supplier’s own viewpoints. That naturally leads to relationship challenges, she explains.

 

The second principle is to remember a relationship should be mutually beneficial. Key to SRM success is making sure there is alignment between buyer and seller, Rizza writes. That includes working to ensure suppliers have the same definition of performance that you do; reconciling data used by a buyer and a supplier; and making sure suppliers support your business drivers, she explains.

 

It’s also important to remember that trust is critical for relationship success. That means the buyer and supplier should share ideas without being compromised, and mutually work toward the betterment of the relationship, Rizza notes. Trust is earned over a period of time, across multiple individuals and departments, and it must be constantly nurtured, she explains.

 

It’s also vital to make transparency and openness key characteristics. The openness must work so that both parties benefit from the relationship, Rizza says. “Opening up about the vulnerable portions of your respective businesses allows the flow of communication to evolve from simply solving problems to designing and enhancing partnerships to deliver great value,” she observes.

 

Another key principle to remember is that compatibility delivers the greatest opportunities. Of course, not all buyer-seller relationships will really be highly compatible—and some relationships are destined to flounder or even fail, Rizza writes.

 

“Compatibility needs a common ground, typically found in each partner’s corporate objectives, ethics, mission statements and governance models,” Rizza writes. “Working hard to find that compatibility can yield big benefits for both parties.”

 

Finally, keep in mind that spend management is only half the technology equation. The technology needed to support SRM is more than the standard procurement software for spend analysis, sourcing, contract management, procurement and performance management, Rizza writes. The other half of the technology equation involves tools that make it easy to view and analyze suppliers.

 

“It’s about risk management and mitigating delivery, compliance or financial issues, as well as managing critical pathways to a successful partnership,” Rizza writes, adding that procurement related technology vendors are finally starting to invest in these SRM capabilities.

 

“Managing a great relationship is the art of maintaining a successful supplier relationship through the supplier’s full life cycle with your business,” Rizza concludes. “Remember: Suppliers can’t grow their own businesses without successful clients.”

 

What are your thoughts on supplier relationship management? What do you see as the biggest challenge?

Autonomous cars offer significant promise, ranging from fewer accidents and less traffic congestion to increased mobility for the elderly, people with disabilities and low-income citizens, as well as increased ridesharing and ride hailing opportunities. Then again, although it sometimes seems as if there is near-daily news about the cars or necessary technology are in the immediate future, considerable concern remains about how—exactly—such a future would come to pass.

 

For example, Michigan Gov. Rick Snyder signed legislation last week which allows operation of autonomous vehicles on Michigan roads. The bill will allow for automated vehicle platoons (“numerous vehicles traveling together on the highway at electronically coordinated speeds”) and authorizes on-demand autonomous vehicle networks.

 

General Motors followed that news by announcing it will immediately begin testing autonomous vehicles on public roads. GM is already testing autonomous cars on its Technical Center campus in Warren, Mich. In the next few months, however, its testing will expand to metro Detroit, which will become GM’s main location for development of autonomous technology in winter climates.

 

“Revolutionizing transportation for our customers while improving safety on roads is the goal of our autonomous vehicle technology, and today’s announcement gets us one step closer to making this vision a reality,” GM Chairman and CEO Mary Barra said. “Our autonomous technology will be reliable and safe, as customers have come to expect from any of our vehicles.”

 

The flip side of the coin is that while consumers are assured—some might say, relentlessly—that autonomous cars will save lives, reduce accidents, ease congestion, lessen energy consumption and lower harmful emissions, proving those claims is difficult. Consider, for instance, the potential safety benefits of self-driving cars, which may include avoiding tens of thousands of highway deaths each year. Jamie Lincoln Kitman, an attorney and the New York bureau chief for Automobile Magazine, recently wrote a New York Times op-ed noting that no one knows for sure how many lives could be saved by driverless cars because data on the role of human error in crashes is incomplete and misleading, relying heavily on self-reporting. The types of accidents society would face if autonomous cars ran in close proximity at high speed, may be fewer, but they’ll be new, different, unpredictable and, “on occasion, larger and more grisly than the ones we know today,” Kitman writes.

 

Infrastructure is another question. Significant investments in new infrastructure are necessary, but significant investments in old infrastructure will likewise be needed. Many autonomous cars require smooth roads, with clearly painted lines, to safely position themselves, Kitman notes. Potholes, worn paint and other irregularities—standard fare on too many roads—will potentially become even greater safety hazards than they are now, Kitman continues. This clearly begs the question: Where will the resources to maintain and repair roads and bridges, an effort already underfunded by more than a trillion dollars, come from?

 

Finally, consumers have significant security concerns about autonomous cars. According to research earlier this year, 42 percent of the surveyed Americans support efforts to make cars even more connected, but 62 percent of the respondents said they fear cars in the future will be easily hacked. Senator Edward J. Markey, D., Mass, attempted to address automobile security issues at congressional hearings—proposing rules governing consumer privacy and antihacking requirements—but as Kitman points out in the op-ed piece, the invited companies balked at regulation.

 

When it comes to the practical direction of technology, the government, Kitman writes, too often defers to industry. Shouldn’t society have a say in what amounts to a public works project larger than the Interstate System of highways, essentially run by and for private industry, but underwritten by taxpayers, Kitman questions.

 

What are your thoughts? Are driverless cars the way of the future? If so, who should foot the bill?

U.S. President-elect Donald Trump faced strident opposition from some Silicon Valley leaders during the election campaign. Many in the tech industry are still quite concerned that Trump will work to curb innovation, stop the hiring of computer-savvy immigrants and infringe on consumers’ digital privacy—among other worries. Earlier this week, however, Trump met with many of those executives and others to smooth over the past and talk about future plans. The meeting was expected to center on economic issues and focus on shared priorities, sources said.

 

“There’s nobody like the people in this room, and we want you to keep going with the incredible innovation. Anything we can do to help this go along, we’re going to do that for you,” Trump told the executives. “You call my people, you call me, it doesn’t make any difference. We have no formal chain of command.”

 

The CEOs at the table in the conference room included Apple’s Tim Cook, Alphabet’s Larry Page, Google’s Eric Schmidt, Microsoft’s Satya Nadella, Amazon’s Jeff Bezos, Tesla’s Elon Musk, IBM’s Ginni Rometty, Oracle’s Safra Catz and Cisco Systems’ Chuck Robbins. Facebook’s chief operating officer, Sheryl Sandberg, attended instead of its CEO, Mark Zuckerberg. The CEOs of Airbnb and Uber were invited but did not attend the meeting. Uber’s Travis Kalanick is traveling in India all week, according to a person familiar with his plans.

 

Trump and tech leaders openly, and repeatedly, clashed during the presidential campaign. Indeed, in an open letter published in July, more than 140 technology executives, entrepreneurs and venture capitalists called Trump a “disaster for innovation.” Trump’s disparagement of Mexicans, his pledge to deport millions of immigrants now living in the U.S. illegally and his vulgar remarks about women were widely seen as racist, authoritarian and sexist by an industry that prides itself on its tolerance. Industry leaders are also worried because Trump has been a vocal opponent of the Obama administration’s “net neutrality” rules barring Internet service providers from obstructing or slowing consumer access to web content, and there are industry fears Trump will try to undermine the regulation.

 

For his part, Trump has been open and vocal in his disdain for tech executives. He has, for example, been a harsh critic of Bezos—who is also owner of The Washington Post—for the Post’s election campaign coverage, and he repeatedly suggested that Amazon could face antitrust scrutiny after his election. Trump also on the campaign trail urged his supporters to boycott Apple products over the company’s refusal to help the FBI unlock an iPhone associated with last year’s San Bernardino, California, shootings.

 

Be all that as it may, and despite any reservations, most corporate executives would seize an opportunity to discuss their agendas with the new leader of the world’s largest economy. After all, there are areas of common ground. For one thing, as a Bloomberg article points out, the largest U.S. technology companies hold hundreds of billions of dollars overseas and executives would like to bring that money back at a favorable tax rate. Trump has called for tax reform to allow such repatriation and has said revenue from the move could fund improvements to U.S. infrastructure.

 

Gary Shapiro, president of the Consumer Technology Association, notes that much of the disagreement between Trump and the tech industry has been over social issues rather than business.

 

“Trump is in a transition from running for office to serving in office,” Shapiro said before the meeting. “He will want Apple and other major tech companies to succeed.”

 

It’s difficult to know what transpired in the meeting since reporters were allowed to witness only the first moments, and executives who attended the meeting generally aren’t talking. However, Vice President-elect Mike Pence did tweet that the summit was “productive,” and focused on job creation and innovation.

 

What are your thoughts on the summit? Do you think that now that the election is over, Trump and tech executives can work together and focus on job creation and innovation?

According to recent research from McKinsey & Co. and LeanIn.org, 46 percent of entry level professionals are women, yet only 29 percent of vice presidents and 19 percent of C-suite executives are women. What’s more, in S&P 500 companies, women account for 14.2 percent of top executive positions and only 24 CEO positions, CNNMoney reports.

 

With this disparity in mind, a group of current and former CEOs and business leaders have launched the Paradigm for Parity coalition, an organization committed to achieving gender parity across all levels of corporate leadership. Urged by female leaders including Ellen Kullman, former chairman and chief executive officer of Dupont Inc., and Jewelle Bickford, partner at Evercore Wealth Management, the CEOs of Accenture, American Electric Power Co., Coca-Cola Co., AstraZeneca and 23 more large global companies have pledged to boost the number of women in their top ranks to parity with men by 2030. To assist in those efforts, the coalition has developed a toolkit of practical actions a company may take, with a focus on better understanding the baseline, improving intake and managing with a diversity mindset.

 

“We are thrilled to announce the beginning of a movement focused on achieving a new norm in corporate leadership positions: one in which women and men have equal power, status and opportunity,” says Kullman, who also is co-chair of the coalition. “Powerful evidence links gender-balanced leadership with financial and stock market outperformance, and we are proud to partner with 27 major corporations to take definitive action to create the gender balance that will generate those tangible benefits.”

 

While many organizations support gender equality and call for enhanced diversity in the workplace, the Paradigm for Parity coalition is unique in that it outlines a specific set of concurrent actions a company may take to achieve gender parity, says Bickford, who also is co-chair of the Paradigm for Parity coalition. The coalition’s founders have spent the last 18 months developing the Paradigm for Parity 5-Point Action Plan, a comprehensive roadmap for increasing the number of women in leadership positions, and look forward to working with corporate executives to implement it across their organizations, she explains.

 

“We support this initiative not only because it’s the right thing to do, but because we know we can’t reach our full potential as a business unless we recruit, hire, develop and retain women leaders as part of a diverse leadership team that represents the markets we serve,” says Muhtar Kent, chairman and CEO, The Coca-Cola Company. “While we’ve made good progress in recent years, we’re committed to pressing toward parity, and believe the learnings we gain through this network will help us scale our work even faster.”

 

The steps in the Paradigm for Parity 5-Point Action Plan to catalyze change and enable substantial progress toward gender parity by 2030 are:

 

  • Eliminate or minimize unconscious bias in the workplace;
  • Significantly increase the number of women in senior operating roles, with the near-term goal of at least 30 percent representation in all leadership groups within the next five years;
  • Measure targets and maintain accountability by providing regular progress reports;
  • Base career progress on business results and performance, rather than physical presence in the office; and
  • Provide sponsors, not just mentors, to women well positioned for long-term success.

 

To date, the CEOs of the companies that have committed to achieve gender parity in corporate leadership positions by 2030 and follow the Paradigm for Parity Action Plan are: Accenture, Adecco, American Electric Power, APCO Worldwide, AstraZeneca, Bank of America, Cargill, The Coca-Cola Company, DSC Logistics, Edison International, Egon Zehnder, Farient Advisors, Frontier Communications, HealthHelp, Huffington Post, Linkage, LinkedIn, McKinsey & Company, MetricStream, NeoGenomics Laboratories, Inc., Newmont Mining, Nordstrom, SAP, Spencer Stuart, TDIndustries, VF Corporation and Voya Financial.

 

What are your thoughts on the Paradigm for Parity coalition and its goals? Secondly, do you see gender parity in your organization’s supply chain?

Many U.S. bicycle manufacturers began to offshore production in the late 1980’s. Now, however, from hand-crafted boutique brands to high-volume manufacturing and assembly, some U.S. bicycle makers have begun to reshore bike production to the U.S. Harry Moser, founder/president of Reshoring Initiative, says a confluence of factors including rising offshore costs, the benefits of a “local for local” business strategy, growing popularity of bikes in expanding urban areas and patriotism are behind the reshoring efforts.

 

The move to offshore bicycle production began with industry leader Schwinn shifting manufacturing to Asia in the 1980s. To take advantage of low wages, other large bicycle manufacturers, such as Huffy and Trek, also began to offshore some production. By 2014, more than 99 percent, or 17.8 million bicycles, were imported into the U.S. each year, according to the National Bicycle Dealers Association.

 

Manufacturers of all types have begun to reshore. Government incentives, ecosystems/localization, proximity to customers and skilled workforce are all contributing factors, says Moser. At the same time, companies cited lower quality, supply interruption, high freight costs and delivery as leading problems with offshore production. Indeed, driven by rising offshore costs, the cost savings of automation and innovative processes, and the benefit of “Made in USA” branding, bicycle manufacturers in particular have begun to rethink their offshore manufacturing and sourcing decisions because reshoring bike manufacturing and assembly—in many cases—now makes good economic sense, Moser continues.

 

Consider the case, for example, of Bicycle Corporation of America (BCA), a division of Kent International. in 1991, BCA closed its New Jersey bicycle plant, which had been producing 30 percent of its bicycles, and moved all production offshore, Moser wrote in a recent blog. In recent years though, facing an annual employee turnover rate of 120 percent at its Shanghai factory and labor costs rising 10 percent to 15 percent annually, Arnold Kamler, chairman and CEO of Kent International, began to consider reshoring some bike manufacturing to the U.S., Moser reports.

 

In March 2013, at the U.S. Manufacturing Suppliers Summit for Walmart’s ‘Made in America’ initiative, Kamler met with South Carolina Governor Nikki Haley and began discussing the possibility of Kent opening a factory in South Carolina. A guarantee from Haley that Kent’s energy needs and training requirements would be filled sealed the deal, Moser reports.

 

The company did reshore to South Carolina, and Kamler says Kent—a high-volume, mass-market bike supplier to Walmart, Toys “R” Us, Target and other retailers—expects to roll out approximately 350,000 bikes produced in the Manning, S.C. factory this year, Moser reports. The plant operates with 115 employees assembling bikes at a rate that would require twice as many workers offshore. Kamler expects the company to produce about 500,000 bikes in the U.S. by 2017, add an additional 30 workers and has set a target to ramp up to more than one million bicycles by 2020, Moser writes. Kent will also import 2.7 million bikes to the U.S. in addition to their domestic production.

 

Interestingly, at least seven bicycle makers have chosen Detroit metro area locations to manufacture or assemble bikes in recent years. As Moser reports, some are high-end start-up shops with handcrafted, upscale bikes, such as the Detroit Bicycle Co., while others, like Slingshot Bicycle, have reshored production from overseas. 313 Bicycle Works was founded by Detroit firefighter Mike Sheppard and named after the Detroit area code. Shinola, best known for its watches and other products, assembles bicycles in its Detroit location using forks and frames made by Wisconsin-based Waterford Precision Cycles. The largest Detroit bike maker is Detroit Bikes, which is set to produce 10,000 bikes this year and has plans to produce as many as 50,000 bikes a year, Moser writes.

 

What are your thoughts on bike manufacturers reshoring production? Secondly, research shows that a growing number of consumers are willing to pay a higher price for products made in the U.S. Are you willing to pay slightly more for a bicycle made in the U.S.?

A federal jury in Dallas has ordered Johnson & Johnson—and its subsidiary, DePuy Orthopaedics—to pay more than $30 million in actual damages for six plaintiffs and more than $1 billion in punitive damages to patients who claim the company hid design flaws in its Pinnacle artificial hips. The plaintiffs allege their DePuy hips leached cobalt and chromium material into their bloodstreams, leading to the device failures and surgical removal. Jurors ruled that officials of DePuy were negligent in designing the implant; failed to warn physicians and patients about concerns regarding the product; failed to recall it; and intentionally misrepresented the product's effectiveness to patients and their doctors.

 

This isn’t the first Pinnacle implant litigation. Indeed, this is the third bellwether—or test—trial of thousands of similar lawsuits filed against the companies. In the first trial, in 2014, a jury ruled in favor of the medical companies. However, in March, a Dallas jury awarded more than $500 million to a group of plaintiffs who suffered similar complications from the hip implants. The judge in that case, U.S. District Court Judge Edward Kinkeade, who also presided over last week’s ruling, later reduced the amount of awarded damages to $154 million, citing Texas law.

 

“The jury is telling J&J that they better settle these cases soon,” says Mark Lanier, who represented the group of six hip patients who sued J&J and DePuy, Bloomberg reports. “All they are doing by trying more of these cases is driving up their costs and driving the company’s reputation into the mud.”

 

On the other hand, J&J executives believe the companies have strong grounds for appeal and remain committed to the long-term defense of the lawsuit allegations. J&J’s DePuy unit acted appropriately in designing and testing the product, DePuy spokeswoman Mindy Tinsley said in a statement.

 

“We have no greater responsibility than to the patients who use our products, and our goal is to create medical innovations that help people live more active and comfortable lives,” Tinsley said, CNN reports. “DePuy acted appropriately and responsibly in the design and testing of ULTAMET Metal-on-Metal, and the product is backed by a strong track record of clinical data showing reduced pain and restored mobility for patients suffering from chronic hip pain.”

 

J&J said it will ask Kinkeade to reduce or throw out the jury award before appealing to the 5th U.S. Circuit Court of Appeals in New Orleans, Reuters reports today. The company contends the multi-plaintiff format created an unfavorable advantage by parading a series of victims in front of the jury and exaggerating the number of complaints about the implant.

 

In the meantime, J&J still faces almost 9,000 lawsuits over Pinnacle hip failures, according to a May filing with the U.S. Securities and Exchange Commission. A fourth bellwether trial is scheduled for September 2017.

 

Despite its pledge to appeal the latest verdict, J&J shouldn’t wait for an outcome to approach hip patients with settlement offers, says Erik Gordon, a University of Michigan law professor, who teaches classes about how drugs and medical devices are developed and regulated.

 

“They may think they have good defenses to these claims, but they don’t seem to be working with juries,” Gordon says in a CNN report. “There’s no easy way out of these cases now that they have a billion-dollar verdict against them. They better start thinking of how they can settle these claims before the price goes up any more.”

 

It should be pointed out that week’s verdict has had little impact on J&J stock. As Les Funtleyder, a portfolio manager with ESquared Asset Management, says in today’s Reuter’s article, investors assume large health products companies will occasionally be sued and lose, and that the costs are ultimately manageable. A question to be asked, however, is whether consumers and their doctors think the same way or if there is now a reputational cost for J&J and DePuy?