Is the Medical Supply Chain a Risk to National Security?

Is the Medical Supply Chain a Risk to National Security?

March 24, 2018

Previous OM in the News posts have looked at the IV bag shortage in the medical supply chain, and many other shortages of medications and supplies. The causes of the shortages are many, including quality issues at production facilities, and Hurricane Maria’s damage to production facilities on Puerto Rico.

Shortages in this particular supply chain can have deadly consequences, and the risks need to be addressed.

Over the years, the supply chain for medical products and medicines has become very lean, and many items are manufactured off-shore.  The last penicillin production in the US was in 2004.  Only 10% of the generic drugs used in the U.S. are made onshore, and eighty percent of the active ingredients in medications are produced overseas, mainly India and China.

Considering the length of the supply chain, combined with ongoing shortages, does a lean medical supply chain present a threat to national security?

This post is based on the Wired article, Medicine’s Long, Thin Supply Chain, by Maryn McKenna, March 5, 2018. Image source: Douglas Sacha/Getty Images.

Discussion Questions

1. Should the United States Government develop policies to insure that critical medial products and medicine are produced Continue reading

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Supply Chain Failure: KFC’s Chicken Shortage

Supply Chain Failure: KFC’s Chicken Shortage

March 19, 2018

It seems hard to imagine that KFC would run out of chicken.  That’s their main menu item! How can they operate without chicken?

Turns out, they can’t. The majority of KFC’s UK restaurants were forced to close due to a chicken shortage.  Approximately 650 of the 900 KFCs closed in February 2018, while many of those that remained open, operated with a reduced menu.

The origins of the shortage: KFC decided to switch suppliers from Bidvest to DHL and QSL (a food distributor) in October 2017. They promised to “revolutionize the UK foodservice distribution market.”  Part of the promise included reducing logistics emissions to net zero over the life of the contract.

The change in distributors affected Bidvest and DHL.  Bidvest laid off 255 employees after it lost the contract, while DHL and QSL opened a new distribution center, and hired approximately 300 new employees.

Although improved performance was promised, not everyone saw such a rosy future.  GMB, the UK trade union for the displaced Bidvest employees, warned KFC of potential problems with the switch to DHL.  Mick Rix, the GMB’s national officer said:

“We warned them a few months Continue reading

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Overseas Demand is Brewing for US Craft Beers

Overseas Demand is Brewing for US Craft Beers

US craft beers have become increasingly popular abroad. Unfortunately, exports have not been able to match the growing demand.

High transportation costs and the risks of transporting a perishable product over long distances have deterred some brewers from exporting. Although some brewers have partnered with overseas beer makers and bottlers to expand rapidly, others have preferred to take a slower, careful approach to market share growth.

This post is based on the PRI.org article, Europeans are embracing American craft beer. So, why are exports trailing off?, by J. Margolis, February 15, 2018. Image source: nuamoid / 123RF.

Discussion Questions

1. Price, delivery reliability, delivery speed, quality, and flexibility can be order winners or qualifiers. For New Belgium, which characteristics are order winners and qualifiers? Why?

Guidance: Superior quality is definitely an order winner because overseas beer drinkers like the hoppy taste of US craft brews. Price is a qualifier; the high cost of shipping the beer overseas makes it difficult to beat the local competition on the basis of price. Delivery reliability is a qualifier; customers will cease to do business with suppliers who cannot deliver on time. Flexibility is a qualifier; brewers must provide the variety Continue reading

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