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Thursday
Mar182010

The Slingshot Effect: H1N1 Vaccine

In the late summer and early fall of 2009, seemingly everyone was worried about the H1N1 virus.  Of course, why wouldn’t they be? The pundits through the media painted a relative scary scenario.  It was an exciting story that had nothing to do with the economic malaise or health care reform.  People were interested, paid attention, and as a result became concerned.  There were only a few things people could really do.  We could and should wash our hands a lot more.  We could station dispensers of hand sanitizing gel at the turn of every corner.  Lastly, we could get vaccinated against the coming viral scourge.

As a result, there was instant demand for the H1N1 Vaccine and the demand was high.  There was a slight problem.  The problem was that the vaccine was in short supply.  It was in such short supply that ‘they’ decided that only the most at risk part of the population should get the vaccine:  the old, the infirm, the pregnant, etc.   This created more media interest, OK frenzy, which in turn created more demand.  A lot of people were concerned and felt they had to get the vaccine.  There were news story of a new shipment of dosages at this hospital or that pharmacy.  The first 100, 200, or N would get vaccinated.  So, people lined up.  This attracted media coverage of long lines for short supply which in turn created more demand.

The company or companies that made the vaccine did what any company would do.  They began making the vaccine.  Presumably, they made as much as they possibly could.  But, there was a lag, it took time to fill the pipeline.  The supply took time, a few weeks or a month or two, to be produced, tested, and distributed.

According to the New York Times (http://www.nytimes.com/info/swine-flu-h1n1-vaccine/  (oK a little research was involved here), there was enough vaccine available that whoever wanted, could have gotten a dose.  There was a combination of factors, but the demand dried up.  Maybe everyone was really good at washing their hands?  Maybe the holidays were more on the minds of the masses?  Maybe the news coverage died out?  Maybe people lost interest simply because there was very few cases of the flu… no pandemic?  The bottom line is the demand evaporated.  By February, the New York Times was reporting:

Feb. 9, 2010 A poll finds that most Americans do not intend to get the H1N1 vaccine, assume the pandemic is over and think that the threat was overblown. — NYT


This phenomenon is what we are calling the Supply Chain Slingshot Effect.  We perceive a tremendous demand, a dramatic increase in demand.  We get excited and want to meet the demand.  We rev up the factories and suppliers and produce, pedal to the metal, and often end up with way more supply than anyone needs.  This is because either the demand dried up, was not real, or no one could have predicted how high, or low, the maximum demand would be.  It is like a slingshot, the demand is exciting, we pull back on the elastic and let it go… completely overshooting the target.

There are many examples of this from Cabbage Patch Kids dolls back in the 1980s to video games more recently.

More to follow on this…

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