A look at the world's supply chain in light of the Covid-19 pandemic and how resilience can be built into the medical supply chain.
It’s not hard to see why a respiratory pandemic might put stress on the world’s supply of vaccines, PPE and ventilators – but why are toys getting more expensive, and why can’t anyone buy computer chips? It’s almost two years since the spread of Covid-19 began and the world’s supply chains are still stretched. Isabel Ellis asks Rob Handfield, the executive director of the Supply Chain Resource Cooperative at North Carolina State University, Mark Treshock, IBM’s global solution leader for blockchain in healthcare and life sciences, and Shawn Muma, technology research leader for the Digital Supply Chain Institute, how the medical sector and the societies that depend on it can build resilience into the supply chain.
For much of the 20th century, human mastery of land, sky and sea was enough to make the world seem small. By the end of the Cold War, the liberal, globalised system championed by the US was set to deliver peace, prosperity and an ever-expanding array of products by ocean, road, rail and air for the rest of time.
Two decades into the 21st century, with its trade wars, rising waters, resurgent nationalism and, of course, the ongoing pandemic, that system is showing some strain.
Covid-19 has ruthlessly exposed flaws in the medical device supply chain. Rob Handfield, the executive director of the Supply Chain Resource Cooperative at North Carolina State University, was similarly blunt in summarising the problem at the Congressional Hearing on the PPE Supply Shortage over the summer.
“American exceptionalism became American hubris,” he said. “No one knew where products were coming from, whether they were being sent and who was receiving them. The response was too little too late.”
As exemplified by Senator Gary Peters’ opening remarks at the hearing, this problem has largely been attributed to the overreliance of the US and other nations “on foreign sources and manufacturers for medical supplies”.
That’s a contributing factor, but any country that believes it can supply a functional healthcare system without relying on imports could also be accused of hubris – and for all the political rhetoric and pressure, Covid-19 has not resulted in significant reshoring.
Handfield wasn’t arguing that the global sprawl of current supply chains is the problem. Multinational enterprises exist because of the ease of moving goods through seas and skies – and, blocked canals notwithstanding, they aren’t about to forget that fact. The global system worked so well for so long because companies were happy to share the same roads, rails, flightpaths and shipping lanes.
More than that, it still works: European ports, which use open data-sharing platforms for planning and visibility purposes, are not experiencing the same backlogs as their fragmented US counterparts, which the Washington Post recently compared with independent “fiefdoms”.
By scrambling for complete ownership of their own supply chains, protectionist countries risk worsening the problem. Rather than ramping up the trade wars and closing off supply chains, Handfield wants stakeholders to commit to making them more visible.
Both he and Mark Treshock, IBM’s global solution leader for blockchain in healthcare and life sciences, believe building back better after Covid-19 means expanding what constitutes a public utility.
Sharing is data is a utility
For Handfield, the utilities are the vaccines and PPE stocks themselves. At the Covid-19 vaccine manufacturing summit hosted by the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) and Chatham House in March 2021, he proposed building a global visibility system that could provide all the key information on supply and demand to a third-party adjudicator or control tower like the WTO, which would then act as a “traffic cop”, directing flows of materials to and from different parts of the world depending on their requirements and manufacturing capacities.
“The point that I’m making is that people have to think more holistically,” he explains. “The vaccine should be a utility. It’s not a matter of competitive advantage anymore or intellectual property. This vaccine is going to be here to stay and, unless we are able to get it out to every country in the world quickly, we’re going to continue to get variants and we’re going to continue to have shortfalls in the global economy. If we don’t think of it this way, it’s going to be lights out for everybody.”
On the other side, a global visibility system would help companies avoid the overproduction issues that have left some PPE and ventilator suppliers with mountains of excess stock. Even so, Handfield fears that private companies are unlikely to share information on their inventory, production capacity and actual production, much less give a third party the authority to manage where and how they ship their products.
Enter Treshock. Through its work on FDA blockchain pilots, which were based on its Food Trust platform, IBM believes it has developed an understanding of how to make track and trace technologies work at scale across the healthcare supply chain: by adapting to its structure.
Unlike the food industry, which is anchored by major retailers, the pharmaceutical and medical device industries are a balance of manufacturers, distributors, users and dispensers, none of which have quite the sway Walmart or Carrefour does on the movement of foodstuffs.
“Simply having Merck join wouldn’t bring CVS to the table,” says Treshock. “And having Walmart Pharmacy involved wouldn’t get Pfizer to join.” So IBM stepped back, reconsidered, and turned their track and trace technology into an open-source utility.
“There was great concern that the industry would [have to] turn over the keys to its data, or its responsibility, to a third-party vendor,” explains Treshock. “At the end of the day, nobody is really willing to give any one technology company the ability to do it all.”
With pharmaceutical knowledge from Merck and open-source expertise from the Linux Foundation, IBM has been working with the US on a top-secret project to track its vaccine supply, as well as the public-facing Health Pass blockchain for recording vaccinations.
“The ability to share this data, to interoperate across the global supply chain, should be a utility, very much like an interstate highway or the global airport system.” Treshock continues. “Federal Express and UPS compete against each other vehemently, but they both use the same roads. The alternative is that they’d each build their own roads, which sounds absurd – but it’s what we’re doing in the data world in general and specifically in life sciences.
We rely on these point-to-point connections that we’ve reached our ability to scale. With this road network operating as a not-for-profit entity that doesn’t itself seek rents beyond what it needs to maintain itself, then participants, potentially competitors, could utilise it without fear of enriching each other.”
The pandemic has already gone a long way to breaking the binary opposition of competition and collaboration. Speaking at the IPFMA media briefing on Covid-19 vaccine manufacturing on 23 April 2021, Roger Connor, president for global vaccines at GlaxoSmithKline and the vaccine CEO representative for Covax, highlighted the work of the Covax Manufacturing Task Force in supporting the free flow of raw materials and ensuring that any constrictions in the global supply chain are addressed as quickly as possible.
As he put it, vaccine manufacturers are now “look[ing] for collaboration, ensuring the free flow of goods, and getting ahead of bottlenecks – monitoring supply and demand and looking to see where the next one is coming [so we can] act on it now, rather than reacting to it.”
By way of example, Connor noted GSK’s willingness to make excess stock of glass vials available to any manufacturer facing shortages. Moreover, when the company’s own vaccine development hit roadblocks, its manufacturing arm offered its services to the companies that had beaten GSK to market. It’s not the pharmaceutical industry of 2019 anymore.
“If there’s an opportunity for one company to make their capacity available to another, we will do exactly that,” Connor said. “That behaviour is the sort of thing that we’re seeing across the world and we need to continue to do.” For the most part, these are still point-to-point connections between companies, so their efficiency is limited, but the willingness to share is unprecedented.
Make the pandemic work for the supply chain
Vaccines aren’t like most products, but, according to Shawn Muma, technology research leader for the Digital Supply Chain Institute, companies everywhere are making a mantra of the words “don’t waste a good pandemic”.
Boston Scientific, for instance, has begun using an IBM Cloud solution built on open-source Hyperledger blockchain technology to provide real-time information to stakeholders across its medical device network. While piloting the technology in Colombia in 2020 – at the height of Covid-19, no less – the company reduced average order fulfilment times down from nearly a week to 36 hours, as reported by IBM.
That’s a positive first step, but the acute shortage of semiconductors and silicon chips – the hardware required to set up and use blockchains, along with almost everything else – is now complicating things. Every sector of the economy is scrambling for stock. Two-thirds of medical device companies that contributed to a recent study by Deloitte and Advamed reported that they use semiconductors in more than half of their products.
Half of the companies surveyed also noted that connected devices make up almost 50% of their entire portfolio. For the most part, these developers use the same second and third-generation chips as the reeling automotive, industrial, and consumer industries, and, accordingly, every single respondent reported disruption to their chip supply chain.
Clearly, the question of digitalisation is already tied up in the challenge of building more resilient supply chains. With previously distinct industries now competing for the same components, monitoring and sharing information about the entire supply chain is more important than ever.
Prior to Covid-19, Muma recalls companies gesturing towards using digitalisation to achieve full supply chain visibility at some point in the future. Now, however, “enterprise walls are coming down and businesses are looking horizontally across the entire supply chain, versus vertically, as they did in the past”.
The best model Handfield’s seen for this is Californian company Flex’s ‘Pulse’ global visibility system, which makes it possible for the business to monitor inventory across all its global supply chains instantaneously.
The technology itself, a set of modules that take, extract and standardise specific data feeds from the company’s enterprise systems so they can be viewed on a single global dashboard, is simple; cleaning and preparing those data feeds to provide useful, legible information isn’t.
That said, the attention the Flex system requires companies to devote to assessing their data could help them to realise how much of it is suited for wider publication. In Muma’s experience, most businesses are yet to develop a set of data standards, let alone establish a process for identifying and approving what they’re willing to share.
He breaks the solution down into three general categories: “the data that gives you a competitive advantage that you’d be unwilling to share; what’s beneficial to share, though it might be in a grey area; and the stuff that should be in the open domain because other people can use it to make you more efficient”.
“Over time,” he adds “people realise that a lot of the stuff they put in the protected bucket can in fact be shared without a lot of risk and that in fact they can generate ROI by doing so.”
A lot more than ROI is at stake as vaccines are distributed, or when PPE runs low – not to mention in the future model of personalised healthcare, where connected devices and diagnostics constantly feed data to health professionals and suppliers, and the raw materials for therapies are sourced from patients themselves.
“In that world,” says Treshock, “we become our own supply chain. Today it’s all about scale, and in that model, companies typically create moats around themselves using information to support their competitive advantage.
“For personalised medicine, it will be necessary to fluidly share information because these samples need to be temperature controlled both ways, and if there’s a mix up in the final treatment, the consequences will be grievous: possibly or probably death.”
Before long, there could be millions of those critical shipments travelling on literal and virtual roads. Personalised healthcare shows just what individualism can achieve, but it will take a community to make it work.
This article first appeared in Medical Device Developments Vol. 2 2021. The full publication can be viewed online here.