This Supply Chain Matters blog serves as a reference sidebar to our ongoing coverage of the COVID-19 coronavirus pandemic’s impact on industry and global supply chains.
History is often prevailing in providing a reference to past events either with similar characteristics, or in conditions that were prevalent long before the current disruption.
We cite for our readers, two examples, one dealing with global-wide supply chain management at a time of significant economic shock, the other a history of an industry supply chain with conflicting stakeholder interests and areas of inventory management exposure affecting lifesaving outcomes.
Global Wide Supply Chain Activity Contraction
In a just published blog commentary, we highlighted the impact of this global pandemic on global manufacturing and supply chain activity thru evidence of various regional and global PMI (purchasing and manufacturing) index reports. The context of the recent quarter’s PMI activity headlines was the contrast to the rapid severe and sudden downturn to the 2008-2009 global recession, when similar steep contractions occurred after the initial meltdown of financial markets. Our reader takeaway was that Q1-2020 is likely just the beginning of what will be continued and swift contraction over the coming months as global regions try to regain some sense of post COVID-19 semblance of a new normal, however that is defined.
In mid-March, we published a commentary on how prevalent just-in-time inventory methodology may be of little help during and after the COVID-19 outbreak without modification. That commentary explained how today’s predominant JIT inventory management strategies have exposed the inherent risks of globally extended supply networks, with little buffer for responding to unplanned events.
This Editor recalled a blog penned way back in December 2008 which was titled: The Great 2008 Backflush in Global Supply Chains. The context was the start of the implications of the global financial meltdown, and the term backflush was the use of a just-in-time inventory management practice that implied the flushing of all replenishment inventories when a major disruption occurs.
A takeaway statement from this 2008 commentary was, in-part:
‘There have been two different sides to the rapid adoption of lean, pull-oriented, or demand-driven supply chain processes. On the one hand, they have led to more customer responsive fulfillment, less total inventory, and far more cost-efficient supply chains. On the other hand, when product demand dramatically decelerates as is happening, all tiers within that supply chain quickly feel the effects at just about the same time. Add the fact that advanced supply chain technology has enabled broader, more-timely visibility and control across the extended supply chain. Shake and stir, and perhaps what’s unfolding are an unprecedented set of events that are now cascading across many industry supply chains.’
Likely, 2020 will be referenced by supply chain management academics as the newest reference in the backflush of global supply chains, but more importantly exposing the flaws in globally extended supply networks attempting to be managed by lean inventory management principles. Networks overwhelm themselves rather quickly, and when the disruption is compounded by both significant product demand and supply shocks, the effect is more far reaching.
Healthcare and PPE Focused Supply Chain Networks
Earlier this month, we featured an industry specific editorial: Healthcare Supply Chains the Critical Link in COVID-19 Containment and Treatment- What Have We Learned and a Call to Action.
Among the reader takeaways of our commentary was the following:
‘As many industry supply chain experts will attest, today’s healthcare supply networks are managed by predominantly sequential based planning and fulfillment processes, inhibited by data silos and coupled to Just-In-Time inventory practices that cannot be expected to respond to global emergency and sustain life saving needs. That obviously must change.’
One of our blog readers called to our attention a blog published three years ago in February 2017 titled: Hospital Supply Chain Survey Points to Needs for Broader Education and Alignment Across Healthcare Delivery Support Supply Chains.
The report highlighted a published hospital survey that exposed the need for broader stakeholder alignment across healthcare delivery supply chains. The survey, conducted in late October 2016 included responses from slightly over 400 doctors, nurses, service line leaders or supply chain administrators. What especially caught our interest were the findings indicating that 57 percent of physicians did not have the right products needed during a planned procedure, that one in four hospital staff have observed or heard of an expired product being used on a patient and 18 percent had observed or heard of a patient being harmed due to a lack of necessary supplies at the right time. The responses further indicated that nearly 20 percent of front-line caregiver time was consumed by supply chain management expediting or follow-up which then amplifies further to service line and other administrators.
That was four years ago, and then this global pandemic occurred, laying bare all of the flaws, risks and over dependencies of this industry’s supply chain.
Among the takeaways of this 2017 commentary was that healthcare professionals should not have to be constantly concerned about supply chain related shortages of materials, drugs and needed medicines.
Specific statements we included stated in-part:
‘Then again, from our lens, it is yet another indicator of the current stakeholder misalignments across healthcare supply chains. While most care givers, those on the front lines for delivering quality patient care and managing healthcare delivery costs, believe that the seamless operation of the supply chain is critically important, the other supply chain participants seemed aligned to other conflicting interests.”
Two examples where history can often provide a prevailing reference.
The question is what industry and supply network management professionals and respective business and industry executives can do to finally turn past repeating history into revised thinking and learning.
Globally extended supply chains, while sometimes cost efficient, provide inherent supply risk with over dependency or singular sourcing. Likewise, supply chain agility and resiliency is predicated on moving beyond sequential planning and customer fulfillment processes and more toward concurrency in active contingency planning, continual end-to-end product demand and supply network visibility.
The one constant remains that of continuous change, and on events not seen in traditional planning practices. The notion of a Black Swan event has been made bare by actual events. Response management are now the table stakes for business and industry continuity.
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