It’s “Respond”, not “React”

A few days ago, Tom Redding … sent me this prediction:

It’s coming…

Someone in leadership will make an edict, “We need to stockpile 60 days of supply. I do not care how you do it, but get it done”. Teams will create plans to secure and store 60 days of supply at the hospital. Quickly, they will realize that there is no space on the existing campus to store 50 to 300 pallets of PPE. The team will start to secure space for warehousing the materials. This may be in an existing warehouse, leased or owned, or new space. Rack plans will be developed, the warehouse layout finalized and the team will have a plan. Project complete, supply chain secure…Until someone asks a simple question “what are we going to do about the product shelf life and expiration”. The team now has to create a logistics tactical plan to rotate this inventory into the daily usage. This option will be burdened with significant ongoing logistical inefficiencies. The redundant approach will not be a long-term solution.

A resilient supply chain is the solution.

Is the statement provocative, predictive, sarcastic, cynical or prescient? Or is it just a bad joke?

If history is a reliable predictor of the future, I would say that it could be all of the above and that the bad joke is on everyone working in the supply chain.

Depending on an organization’s experience in the current pandemic, there is a very good chance that someone in senior leadership somewhere will mandate a 60-day stockpiling of key supplies such as PPE, nasal swabs and other commodity items associated with the pandemic. Worse yet, that same leadership may mandate its hospital(s) to buy 25-50 new ventilators- pricey items that will expend scarce resources and gather dust until the “next time.”

And, given the obedient nature of many supply chain leaders fearing continued employment in a critical time, it is not unlikely that many will spring into action, do as senior leadership dictates and suffer all the other consequences outlined in the remainder of the paragraph. Clearly, at least one element of a good approach to a post-crisis response is out of sequence, as the development of a logistical tactical plan becomes necessary after the organization realizes the consequences of reacting capriciously to difficulties experienced in a previous crisis.

Make no mistake- the Coronavirus pandemic has revealed many flaws, weaknesses and vulnerabilities in the healthcare system, in its supply chain, as well as in local, state and the federal governments’ ability to respond quickly and effectively to the challenges presented. Among other things, we have learned that:

  • The key to a successful response- early discovery of the challenge and early isolation was not achieved due to many reasons and the loss of two months’ time greatly increased the number of cases and fatalities. Early detection is essential.
  • There is no overarching “plan” in place that integrates and interconnects individual, local, statewide and national response in a manner that optimizes all of the resources needed to address the sudden and explosive need for “Space, Staff and Stuff” that arise when a pandemic hits home. Plans need to coordinate with others’ plans.
  • Healthcare systems, already operating on wafer-thin or negative operating margins, find their entire financial models threatened when elective procedures- the heart of their revenue streams- have to be discontinued to provide space for the victims of the pandemic. Plans need to be well thought out and take into consideration financial impact as well as health impact.
  • Healthcare supply chains have found themselves engaged in intense competition with each other to obtain needed supplies such as PPE, often paying rapacious prices for otherwise commodity items. Most systems have struggled to keep up with demand. Plans must respect scarce resources and not put other organizations unnecessarily at risk.
  • In the future, changes must be made in order to avoid a re-enactment of the current shortcomings. An exhaustive review of lessons learned must be conducted and incorporated into future plans.

These and other situations must be successfully addressed as the country attempts to recover from the devastation of the COVID pandemic and move forward toward the establishment of a “new normal.”

But before we go any further, we must address the last sentence in my friend’s comment: “A resilient supply chain is the solution.” For the record, just what is a “resilient supply chain” and why is it “the solution?”

The MIT supply chain professor of Supply Chain Strategy, Dr. Yossi Sheffi is the Elisha Gray II Professor of Engineering Systems at the Massachusetts Institute of Technology. He founded or co-founded five companies, is frequently quoted in the press, has authored numerous scientific publications and five books. He wrote:

Threats to your supply chain, and therefore to your company, abound—natural disasters, accidents, and intentional disruptions—their likelihood and consequences heightened by long, global supply chains, ever-shrinking product lifecycles, and volatile and unpredictable markets.

No sure way exists for overcoming all such risks, especially high-impact/low-probability events such as an outbreak of SARS or foot-and-mouth disease, or a major terrorist attack, because the absence of historical data excludes the use of predictive statistical tools to help ensure containment of those risks.

But some organizations cope far better than others with both the prospect and the manifestation of unquantifiable risk. They don’t have in common a secret formula or even many of the same processes for dealing with risk, but they share a critical trait: resilience.

The notion of organizational resilience is not new: the ability of an organization to successfully confront the unforeseen has always been a core element of success. But because the numbers and types of threats that can undermine a supply chain are now greater than ever, resilience has taken on even more significance in supply chain management. As a result, leaders in the discipline have worked to better understand what makes a particular enterprise resilient, and thus there is a burgeoning body of knowledge from which other companies stand to benefit.

Supply chain resilience no longer implies merely the ability to manage risk. It now assumes that the ability to manage risk means being better positioned than competitors to deal with—and even gain advantage from—disruptions.

Resilience means that an organization can take an unexpected hit to its operations, react to that hit, survive, learn from the experience, incorporate lessons learned and develop a flexible, fluent plan that allows it to respond the next time it faces a similar challenge. Organizations with resilient supply chains are far more prepared to deal with uncertainty than those who don’t. Resilience- learning from past events, adapting, writing new plans and continuing to learn- gives your organization an opportunity to survive and thrive in a situation where others will be hurt or fail.

In our next article, we will begin to carve out the elements of a successful pandemic plan. In doing this, we will keep in mind three essential elements:

  • Advanced intelligence- the importance of getting credible information as early as possible.
  • Coordinated planning. Plans need to be present at (1) the institutional level, (2) the local level, (3) the state level, (4) the national level and (4) the international level. All plans must be able to fold into each other in order to optimize resources.
  • There is no static normal. Everything is fluid. All plans must be continuously reviewed and revised when new information becomes available.