Supply Chain Immunity: Overcoming our Nation’s Sourcing Sickness in a Post-COVID World PDF
Preview Supply Chain Immunity: Overcoming our Nation’s Sourcing Sickness in a Post-COVID World
Synthesis Lectures on Operations Research and Applications Robert Handfield · Daniel J. Finkenstadt Supply Chain Immunity Overcoming our Nation’s Sourcing Sickness in a Post-COVID World Synthesis Lectures on Operations Research and Applications This series focuses on the use of advanced analytics in both industry and scientific research to advance the quality of decisions and processes. Written by international experts, modern applications and methodologies are utilized to help researchers and students alike to improve their use of analytics. Classical and cutting-edge topics are pre- sented and explored with a focus on utilization and application across a range in practical situations. Robert Handfield · Daniel J. Finkenstadt Supply Chain Immunity Overcoming our Nation’s Sourcing Sickness in a Post-COVID World Robert Handfield Daniel J. Finkenstadt North Carolina State University Naval Postgraduate School Raleigh, NC, USA Monterey, CA, USA ISSN 2770-6303 ISSN 2770-6311 (electronic) Synthesis Lectures on Operations Research and Applications ISBN 978-3-031-17183-3 ISBN 978-3-031-19344-6 (eBook) https://doi.org/10.1007/978-3-031-19344-6 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. The views and opinions expressed in this book are those of the authors and do not represent the official position of the US Government, Department of Defense or United States Air Force. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland To my best friend and my lifelong partner, Sandi. I am so lucky to be able to live this life with you by my side. And to the tireless work of our public sector workers, first responders, and healthcare workers, as well as defense, federal and state agencies. Your silent work did not go unnoticed. Robert Handfield I dedicate this first book to my childhood sweetheart, Amy. You make all things possible. Also, to my late grandma Peak who instilled in me a desire to learn. Finally, to the men and women who worked so diligently to respond to the unprecedented demand of 2020. Many will never fully understand what you have done. Thank you. Daniel J. Finkenstadt Prologue: How We Got Involved One of the first signs of COVID-19 is a distinct and overwhelming loss of smell. The patient loses all ability to distinguish between familiar smells, fails to pick up on strong or pungent odors, and in many cases also completely loses their sense of taste. In 2020 COVID-19 hit the world full force. Sadly, the world had either lost its ability to smell (e.g., detect) that a global pandemic was coming and could not taste what was coming and prepare for it. We didn’t pick up on the signals broadcast in public health intelligence sources, the reports in medical social media, or rumors of disruptions in the manufacturing and supply chains abroad. We left open critical airline corridors into major cities such as Chicago, LA, New York, and Atlanta that allowed the disease to spread like wildfire once infected passengers disembarked into these population centers. This was followed by geopolitical ideological and economic opportunism; at the same time countries were shutting borders and halting shipments of critical medical supplies. Indeed, it seemed as if no one was in charge, and chaos reigned. Command and control government actions were completely inadequate, and the general populace was left in the dark, wondering what was happening at every level. Irrational demand and supply behaviors exacerbated an already untenable situation of social distancing, lockdowns, and crushing medical system overloads, as patients streamed into ICUs and death rates climbed. This set of authors had a front-row seat during the national pandemic response, includ- ing government, health care, supply chain, and manufacturing at all levels from local municipalities to federal and global efforts. Unfortunately, it wasn’t pretty. We were priv- ileged to work alongside a multi-functional team of experts and professionals trying to manage an overwhelming threat on the fly. Many times it was simply a coalition of the willing taking on roles of massive importance for the health of the world. We are eter- nally grateful to the men and women who supported this response, and we feel the need to write a book which seeks to pass on critical lessons learned (and we believe there are) and hopefully to be better prepared for this type of disaster to ever happen again. vii viii Prologue:HowWe Got Involved COVID-19 is expected to cost the world in excess of $12 trillion through 2024 based on international monetary fund estimates.1 As of this writing the pandemic has already cost the USA alone nearly $3.6 trillion.2 More importantly, it has cost over 5.7 million lives to date.3 We are not claiming that this book could have prevented any monetary or health impacts from COVID-19. But we remain hopeful that the lessons learned and insights conveyed within these pages can mitigate (or perhaps even attenuate) this level of impact in the future for the next global catastrophe. And there will be one. Many of the issues that have occurred with COVID-19, especially within supply chains, are not the result of “black swan” events as much as they are from previous “ostrich”-based strategies.4 That is to say, they are not “one in a million years” events any more, but can be determined on a much more probabilistic basis and with better preparedness by making supply chain risk management an on-going part of business strategy and planning. A caveat is we don’t know what disruptions will occur; but we know there will be more disruptions because of the world we live in. It is important that we qualify our ability to speak on these topics before we get too far along in our observations, studies, opinions, and advice. The lead author, Dr. Rob Handfield, is a global expert in supply chains and has worked for several decades study- ing healthcare supply chains. He has over 30 years of experience studying many of the areas production and logistics that are discussed in this book, which is one of the main reasons we asked him to join the various federal task forces advising the initial supply chain and acquisition response in 2020. Dr. Dan Finkenstadt is a life-long defense pro- curement expert with over 18 years of experience sourcing supplies and services all over the world from Texas to Afghanistan and a professor of enterprise sourcing and category management within the DoD. Pete Guinto who supported the two co-authors is also a defense procurement expert with degrees and practice in healthcare law and respiratory therapy. Pete was assigned as the market intelligence lead for the Air Force and on DoD and federal-level supply chain task forces from February to July of 2020. He engaged Dr. Finkenstadt and Dr. Handfield as advisory experts to aid in the response. During this period the authors participated in hundreds of meetings and interviews with federal agen- cies, state agencies, local officials, non-profit organizations, manufacturing organizations, defense suppliers, healthcare suppliers, hospitals, healthcare workers, logistics personnel and firms, data experts, journalists, legislative staffs, and others. The authors kept rigorous notes of these events and interviews and have published extensively on these experiences 1 https://www.reuters.com/business/imf-sees-cost-covid-pandemic-rising-beyond-125-trillion-est imate-2022-01-20/#:~:text=WASHINGTON%2C%20Jan%2020%20(Reuters),global%20lender% 20said%20on%20Thursday. 2 https://www.usaspending.gov/. 3 https://covid19.who.int/. 4 Steenkamp, J.B.E.M. (2020) Time to Lead: Lessons for Today’s Leaders from Bold Decisions that Changed History. Fast Company Press. Prologue:HowWe Got Involved ix in peer-reviewed journals and professional outlets. This book summarizes those experi- ences and lessons (some published to date and some not) in an easy to read, consolidated book for everyday citizens, practitioners, students, and managers. We hope it can shed some light on these unprecedented events and ways to better manage them in the future. This book is divided into three major parts: (1) The Disease, (2) Symptoms and Treatments, and finally, (3) Immunity. We found it both interesting and appropriate to align the sections of this book with the stages of the pandemic—as you will see, the metaphors are completely aligned with the events that happened to this nation and others around the world. In Part I—The Disease, we discuss the specific attributes of the COVID-19 virus that made it so difficult to contain and manage and introduce another metaphor—the “commons”—which captures the public health system designed to control a pandemic. Unfortunately, the government did not manage the commons well, resulting in many irrational behaviors when it came to healthcare supplies and services (e.g., hoarding and obfuscation), which further inhibited the ability to respond to the deadly spread of the virus. In Part II—Symptoms and Treatments , we expand on the woeful national response that we observed, including gaps in data availability, communications, and overall governance of the event. We discuss the original design of the Strategic National Stockpile, based on the original intent of its creators, and discuss the massive supply visibility problems we observed, using personal protective equipment (PPE) as a representative case. Also in Part II we discuss specific recommendations derived from our observations, focusing on improved preparation and response to massive supply chain disruptions in the future using five major areas of supply chain immunity concern we developed during our experiences with the COVID-19 response. Finally, in Part III—Immunity, we highlight example cases of supply chain disruptions since 2020 to demonstrate that the principles in this book do not just apply to the pandemic. Finally, we provide a new model for decision-making in uncertain, data saturated environments for use in concert with principles discussed in Part II to bolster supply chain immunity. But before we get into the solution, let’s describe the problem and review the timeline of events surrounding COVID-19 in 2020. Contents Part I The Disease 1 COVID-19, A Rapidly Evolving Disaster in 2020 ........................ 3 2 Tragedy of the New Commons ......................................... 15 Part II Symptoms and Treatments 3 Slow Response ....................................................... 29 3.1 Vaccine Hesitancy ................................................ 29 3.2 Testing: The Missing Link to Stop the Spread of COVID .............. 32 3.3 The Need for a Testing Strategy .................................... 37 3.4 The Strategic National Stockpile (SNS) ............................. 39 3.4.1 Current Capabilities ........................................ 43 3.4.2 Missing Capabilities ....................................... 44 3.5 Requirements for a Government Response ........................... 45 4 Traceability and Transparency ........................................ 49 4.1 Transparency and Traceability ..................................... 50 4.1.1 Current State .............................................. 50 4.1.2 Future State ............................................... 51 4.1.3 A Supply Chain Spectrum for PPE ........................... 52 4.1.4 Improving Our Vision ...................................... 54 4.1.5 Conclusion ................................................ 56 5 Flexibility and Global Independence ................................... 57 5.1 Flexibility Through Improved Contracting ........................... 57 5.2 Global Independence ............................................. 61 5.2.1 Current State .............................................. 61 5.2.2 Future State ............................................... 62 6 Persistent Market Intelligence ......................................... 65 6.1 Medical Intelligence Signals ....................................... 66 xi
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