The supply chain for medical needs during the pandemic has highlighted the weaknesses of modern global supply chain management.
In lean operations, demand management, procurement management, and fulfillment management are integrally interrelated. The removal of redundancies in the supply chain, the reliance on offshoring, and the lack of a larger safety cushion are part of the just-in-time global supply chain design.
During this pandemic, the just-in-time system has backfired, causing critical healthcare supplies to be insufficient in both quantity and location.
- Pharma supply chains threatened by virus (Mar 23, 2020, Newsy)
- Coronavirus Leaves 3M Scrambling To Cover A Face Mask Shortage (Apr 1, 2020, CNBC)
This post is based on The Hill article, Supply chain management is a vital weapon in the war against coronavirus, by Ricardo Ernst and Jerry Haar, April 15, 2020, and the YouTube videos in the Spotlight. Image source: McGraw-Hill Education/Sandra Mesrine
1. The article notes that 95% of surgical masks and 70% of tighter-fitting respirators such as the N95 mask are made overseas, mainly in China. How does this negatively impact the supply chain in getting masks to hospitals in the United States?
Guidance: Students should note that shipping from China to the United States takes on average about 30 days under normal conditions. During the pandemic, the lead time increases, causing fulfillment problems everywhere. The usage rate of masks in the United States has skyrocketed, so demand planning has been caught off guard. Procurement of masks is another concern, given that all countries need masks, thereby driving up acquisition costs.
2. Do you think just-in-time will need to be abandoned by industries in the future?
Guidance: Students should recognize that there are differences between medical or food supplies versus a video game console for instance. Just-in-time will likely continue to be implemented for many items in the supply chain after the pandemic. The key here is to recognize that perhaps there are limitations to being too lean for some items like some food supplies and medical equipment.
Ask students to recommend options to alleviate the issues caused by the current medical supply chain for masks. Recommendations might include reshoring some mask production to the United States or purchasing a safety stock on masks based on demand planning from this pandemic.