COVID-19 drives home need for supply chain resilience - here's what is working
COVID-19 has spotlighted the importance of supply chain - especially accentuating the need for more resilience in the chain. You'd be hard-pressed to hear many people in the general population talking about supply chain until these past few months.
Everything we use daily has a supply chain, but we often are not aware of it until it’s interrupted. The viral pandemic has brought that home loud and clear.
Typically, supply chain is considered a network of entities that provide a product or service to a consumer. In today’s global economy, supply chains rely on partners around the world to supply materials, components, products, human resources, technology, or services to satisfy customer demand. All the activities in the supply chain create jobs and drive the economy.
The health care system itself is a complex supply chain. For example, every day, hospitals monitor new COVID-19 cases and project when demand for their ICUs may exceed capacity. In addition to providing needed medical supplies and equipment, managing patient flow, ICU bed capacity and proper staffing becomes challenging if the number of patients grows exponentially as the virus spreads.
The health care supply chain can become overloaded with patients, and potentially collapse in two ways. One way is if there are too many patients in a short period, such that there are not enough supplies and capacities (space, providers, etc.) to care for people on time. Secondly, the exhaustion or illness of doctors and nurses due to their long hours of service and lack of protective gear can further reduce the “supply” side of the health system. Without properly managing the “demand” side — patients — the health care system eventually will fail.
That’s where resilience comes in. Resilience is the ability to recover from shocks, such as natural disasters, conflicts, pandemics and cyberattacks. In 2017, Hurricane Maria devastated Puerto Rico, challenging the ability of the supply chain to support humanitarian operations in the area. Damage from the storm also shut down significant pharmaceutical production lines for IV bags and medications, causing shortages in U.S. hospitals months after the storm.
To make a supply chain more resilient, we need redundancy and flexibility in the supply chain design. One approach is to diversify sourcing, so the materials or services are not limited to one provider or providers from a single geographic region; another option is to have alternative materials/services that satisfy the same needs. Flexibility is the ability to rapidly modify the service and products to fill gaps in the supply chain. For example, to respond to COVID-19, brewing companies shifted their production lines from spirits to hand sanitizers, and automakers like Tesla, GM and Ford adapted auto parts to make ventilators and mask supplies.