In this Supply Chain Matters posting we address the reappearance of critical shortages of medical treatment PPE supplies as COVID-19 virus occurrences continue to spike among certain U.S. States. We advocate that the U.S. must consider a national supply network strategy for deemed critical healthcare delivery support needs.

As our United States readers are prominently aware, COVID-19 coronavirus cases are dramatically spiking in the States of Arizona, California, Georgia, Florida, Georgia, Oklahoma and Texas, now exceeding daily rates of infected populations experienced in February and March. The week, the daily rate of positive virus infection occurrence exceeded 63,000 cases.

Covid-19 Coronavirus

As respective hospitals, healthcare services and emergency responder teams are now totally engaged with the effects of critically ill patients, there is once again the existence of a shortage of N95 grade protective masks, and personal protective equipment.

The Washington Post reported earlier this week that healthcare workers are encountering shortages of surgical grade masks, face shields, gowns and gloves. Workers in many areas are now being asked to extend usage for multiple days. Similar to the earlier outbreak among multiple states in the U.S. Northeast, State officials are once again scrambling to secure added supplies from either U.S. and global-based suppliers in order to meet the ongoing need. Concern levels are once again rising, as expectations of an increase in critically ill infected patients are evident.

The report cites the president of a California nurses labor union as questioning why the U.S. Federal government has not addressed the supply need. The report further indicates that White House officials have indicated that PPE shortages are overblown, and that U.S. manufacturing and inventory levels have improved dramatically.

The designated federal government official responsible for virus response supplies indicated to the publication: “I have not found a hospital system that is in threat of running out….I don’t have the sense that there are severe shortages.” He further attributed the ongoing demand levels as an indication of stockpiling.

Meanwhile, the pleads for added help in needed supplies continues.


PPE Supply- Demand Imbalance and Supply Network Challenges

The WP report dives into the obvious symptoms;  global demand and corresponding lack of supply for critical PPE needs, the existence of exploding price levels for needed masks and supplies, and the usual finger-pointing as to whom is responsible.

There are the signs of creditability issues. U.S. FEMA officials indicate that the U.S. national stockpile of N95 masks has been replenished to 36 million, with expectations of having 154 million by September, yet local and State officials are all seeking added masks on the open market. Prices for N95 protective masks and other PPE continue to skyrocket because of demand from multiple buyers all competing for limited available supply.

The notions of existing U.S. manufacturers, academic institutions and services providers assisting with needs for immediate supplies by converting their own operations are likely constrained by the ongoing realities of having to manage their own supply chain challenges along with growing needs to control costs and maintain cash liquidity.

Efforts to boost U.S. domestic manufacturing of protective masks continue.

In late June, global contract manufacturing services provider Jabil announced that the CMS will utilize existing space among three current U.S. production facilities in order to produce at a rate of 1.6 million masks per day, sometime by the Fall. Similarly, global manufacturer 3M has taken on an augmented N95 mask supply contract from the U.S. federal government for added supplies by the Fall as well.

There is the remaining obvious reality that production sourcing of critical medical PPE needs remains too critically dependent on certain lower-cost global production centers such as China, Malaysia and other regions.  Fixing this problem is an obvious work-in-process.

The problem is beyond PPE in that there are other reports indicating shortages of needed pharmaceutical drugs and medicines, while the U>s. government attempts to stockpile the most critical of these drugs in supporting coronavirus treatment needs.



As many supply chain planning and customer fulfillment teams know all too well, when product demand revolves around critical life-saving products, there is little tolerance for explanations as to why needed supply are not available. Instead, the dialogue turns what needs to be done to secure such supplies immediately. That invariable leads to drive-up of market prices as multiple buyers bid for limited supply. This is a market condition where market opportunists and speculators play, regardless of morality implications.

From our Supply Chain Matters lens, decisions to reopen individual state-level economies indeed should have been predicated on availability of adequate virus testing, contract tracing, and hospital readiness levels. A further consideration was, by our view, in an overall assessment of the supply-demand aspects of needed PPE materials, if virus occurrence levels were to suddenly increase. In supply chain management, that is referred to either the availability of existing safety stocks locally, regionally or at the federal level, along with an assessment as to how global supply chains would be able to respond to a sudden demand spike.

Once again, the lessons of February and March were not carried forth, especially at the federal government level. The reality remains that moving away from single-source or global-based supply sourcing often does not occur in weeks, but rather in months or years. Add in consideration for critical life-saving drugs where safety and regulation play a critical factor, and the timeline and other aspects require a longer-term transition.

In the U.S., the notions of a national supply chain strategy had negative political consequence. The feeling was often that natural market and individual industry dynamics should be the market determinant. An existing politically charged discourse of finger-pointing does not add to clear assessment, debate or concerted action. We add that this should not be the realm of industry lobbyists but rather medical administrators and professionals.

We submit that in the specific case of medical PPE and deemed critical life-saving drugs, there is need for such a national strategy. With today’s advanced digital based additive design and manufacturing technologies, there is an opportunity to produce for domestic healthcare needs as globally competitive price points. There is opportunity to identify certain manufacturers as a contingency source in conditions of a national health emergency where augmented supply is required. This occurred in March with a formal declaration of national emergency. Rather than ad-doc, a plan could be outlined as to which local manufacturers’ are certified and equipped to produce when deemed necessary.  The further challenge is addressing domestic supply of essential raw materials required for normal and peak emergency demand, which can further be addressed.

We trust and hope that voters in the upcoming U.S. elections in November will chose their political leaders who comprehend and understand that for responsive and world-class healthcare delivery, certain products require a U.S. or North American based supply network, as well as consideration for a national supply network strategy for deemed products addressing the health of the population in either new normal or pandemic occurrences.



Bob Ferrari

© Copyright 2020, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.