We Need Supply Chain Immunity, not Resiliency: A Position Paper

In today’s post I am sharing insights from a position paper that my colleague Dan Finkenstadt, PhD, myself, and other academic and government officers are working on.  The paper is an attempt to create some logic in the fact of the chaotic healthcare supply chain events currently underway.

Resilience is often one of the first things to emerge in any debate on how we arrived at the point we are today in the COVID-19 pandemic, especially as it applies to supply chain management. Supply chain resilience generally means the ability to manage risk and be best positioned to respond and even gain advantage from disruptions (Sheffi, 2007). [1] It also means minimizing damage and the time taken to return to a normal state of operations (Sheffi and Rice, 2005).[2]   However, is resilience really the right context here?  After all, supply chain management is about getting things moving, and that applies not only to roads, airports, and ships, but to how we think about getting things to people.  To create a supply chain capable of withstanding something as powerful as a global pandemic, our society and infrastructure needs to be able to not only leverage what is already in place, but ask ourselves the question of what we would do if we could design an optimum supply chain from scratch?  For example, companies like Amazon are constructing massive distribution centers outside of major hubs like Atlanta, Raleigh, and Chicago, and are building them with direct access to on-ramps that go onto interstate highways built in the 1950s.  So how do we make sure that in a post-Covid world, we continue to not just optimize and design our supply chains based on lowest cost, but ones that do the least damage and have an ability to flex under pressure?  Just like major hurricanes causes some trees to snap in two, while others are able to flex and only lose a few leaves, we need our supply chains to be able to bend and withstand the storms of major pandemics and financial system implosions.  Although many experts talk about creating supply chain resilience[3], our position is that resilience is the equivalent of putting concrete around the trees and steel poles into their trunks to make sure they don’t break before a hurricane!  Resilience is the easy way out – it involves carrying a lot of inventory and redundancies in the supply chain that are wasteful.  There is a better way – one that is determined through the laws of medicine applied to create supply chain immunity.

Supply chain immunity is similar to the idea of your body’s recognizing invaders through its immune system.  One’s body has an “innate” immune system[4] that it is born with, and which is active the moment you are born.  The system recognizes an invader, and goes into action immediately, and the cells surround and engulf the invader, and kill him.  These cells are phagocytes.  There is also another immune system called the acquired immune system which produces cells (antibodies to protect your body from a specific invader.  These antibodies are developed by cells called B lymphocytes after the body has been exposed to the invader.  After the first exposure, the immune system will recognize the invader and defend against it.  This may often involve a period of illness, fever, extensive sleep, breathing difficulties, as the immune system harnesses all of the body’s forces to defend and respond to the harmful invasive virus.  This is what immunization does:  train your immune system to make antibodies to protect you from harmful diseases.  We have to establish supply chains with demand sensing capabilities, that drive the people within them into action, to prepare and fight against the invader.  And we need to train our national supply chain system on how to prepare for this response.  How to do this?

Supply chain immunity, in the case of massive disruptions of life-saving products and services, means the ability to survive, plain and simple. It is important, but many of us in the fight have noticed that the concept itself is not enough. We need the ‘how’, not just the ‘what’ in times of how to act in emergencies. We need to know how to prevent recent supply chain failures from reoccurring, should there be another pandemic or global event that affects all global supply chains. What we need is a plan for ongoing and persistent immunity.

In March, a group of us in academia and government began working with the various national supply chain task forces responding to COVID-19. We were quickly met with the overwhelming realization that our country was not prepared to respond to needs being imposed on our healthcare supply chains. Not only were we not prepared, but our previous strategies had left us crippled by overseas supply chain dependencies, often accrued through the pursuit of low cost procurement. Furthermore, perceived scarcities in critical supplies, medical and otherwise, have resulted in a new tragedy of the commons. One in which the pasture being grazed is covered in human lives.

Our country has rallied and responded to the need, make no mistake, but this is a product of sheer American willpower and an interventionist approach, not the product of an agile supply chain healthcare system. There are relief efforts underway in all sectors: public, private, and non-profit. In all our experiences the overwhelming theme has been a lack of central governance to orchestrate the disparate relief efforts towards a common goal of optimized sourcing and distribution for rapid recovery and long-term resilience. A new governance paradigm is needed for national supply chain contingencies. Our small group is banding together to draft an initial framework for public policymakers to consider and will be submitted for review this summer. In the process we are noting interesting concepts that we hope to post to this webpage to ensure that the ideas actually beat the publication process to the intended end-user.

So, what are some key concepts that we need to consider besides the all-important, overarching immunity theme? What are some ‘how’s’ in the ‘what’ we keep seeing? We offer the following:

1. Supply chain governance for contingency response
2. An orbital regime for market intelligence to understand shifting conditions
3. Prioritization of relief efforts based on intelligence and agile response

In this article we review the first, and address the second in detail. Prioritization will be addressed in a future piece of work.  We address these three components here briefly.

Governance:

We have experienced a wide array of micro-governances in response to the pandemic. Each federal agency (CDC, FDA, FEMA, HHS, GSA, DoD, etc.) creates their own set of priorities and bring their various capabilities to respond. We see that some of the agencies best positioned to survey the market for required supplies and services are not the same agencies entrusted with the relief mission and the budget authority that comes with that mission. Communication, command, and control are in disarray. Watching the agencies compete for responsibility is reminiscent of  Abbott and Costello’s “Who’s on First” episode. But this is not their fault. This is no single agency or administrator’s fault. This is the byproduct of years of complacency, neglect, and a lack of central planning. Central planning is not an idea that we adore for most things, but force majeure incidents such as national pandemics fit the bill. There are a lot of ways that we can govern the current crisis and that sausage is being made in real time.

However, an ideal world would achieve supply chain immunity through a concerted governance imposed over a longer horizon. Our team is calling for a governance structure authorized and funded for persistent and proactive supply chain awareness, rapid response and recovery. We are detailing this concept in our upcoming paper. In summary, we believe there is a need for national-level supply chain contingency cell structure to function as a persistent presence in the fight against national emergency threats to our country’s health. Such a structure must be able to clearly articulate the communication, command and control for response, and deliver a transparent site picture through metrics to execute precision targeted relief and recovery.

An Orbital Regime of Market Intelligence:

As we observe the need for supply chain immunity to stave off the next wave of COVID-19 or to better position us for future emergencies, we observed a few events and decisions that exposed the dire lack of market intelligence, and market research. “Supply market intelligence can be defined as a process for creating competitive advantage and reducing risk through increased knowledge of supply market dynamics and supply base composition.” (Handfield, 2010, p. 43)[5]. The author uses the term “supply” in his definition and construct label, but this idea applies directly to services as well (i.e., you can gain knowledge about the dynamics and composition of available service providers.). Market research, in a public context, is the collecting and analyzing of information about capabilities within the market to satisfy agency needs (Federal Acquisition Regulation, Subpart 2). This can consist of surveillance and investigation techniques. Surveillance is a continuous awareness process whereas investigation consists of targeted, comprehensive analysis for a direct need. We note that supply chains and markets can be viewed as having informational attributes that can be viewed in the aggregate or at discrete, finite levels. We can ‘zoom in’ or ‘zoom out’. It can also be viewed along a temporal dimensional attribute. Any future governance framework should consider these attributes and look for useful, analogous frameworks from which to learn.

One such framework that we can leverage, given our teams’ previous experience in space development, is the concept of Space-based Persistent Surveillance taken from Activity-based Intelligence Principles and Applications (Biltgen & Ryan, 2016)[6]. This concept recognizes that there are bodies of observation that can be so vast that a single point of view could never adequately surveil the entire surface and provide targeted details at the same time. In such cases, teams rely on a suite of sensors deployed at various orbital regimes in order to maximize intelligence collection and optimize the use of finite exploratory resources. In the case of space, that body of observation is the entire earth’s surface. In a global supply chain that body of observation is also the entire earth’s surface and the supply chain networks contained therein. That is an informative analogy for our national supply chain contingency issues today and especially as we move out into the future of persistent supply chain awareness. There are four primary orbits considered in space-based persistent surveillance: 1) low Earth orbit (LEO), 2) medium Earth orbit (MEO), 3) geostationary Earth orbit (GEO), and a specialized type known as highly elliptical orbit (HEO).

Figure 1: Summary of different orbital regimes for persistent surveillance platforms taken from Biltgen and Ryan, 2016, p. 181.

The higher the orbit the longer the dwell time and the greater the surface region that can be observed. However, this dwell and breadth comes at a cost of detail and depth perception. Therefore, a constellation or portfolio of orbits at various levels must be managed to gain a full understanding of the intelligence. With little imagination one can see the clear parallels between space-based persistence and supply chain persistent surveillance. We imagine that a governance framework for future supply chain resilience must also be persistent and that such persistence can be gained by following a parallel construct:

Table 1: Market Orbital Regimes for Persistent Supply Chain Immunity

Conclusion: Towards an Orbit Oriented Supply Chain Governance

As we think through an optimal governance structure for national supply chain contingencies in the face of pandemics and other emergencies, the concept of supply chain immunity is an important concept to consider.  An immune supply chain system is one that is prepared to do battle with an invasive force, that mimics in many respects the body’s immunity to viruses and infectious diseases.  First amount these is the ability to detect when an invasive virus has entered the body, implying in our metaphor that a supply chain system cannot be maintained with a single sensor or vantage point. We will need a suite of sensors that can be managed by a strong central governing body, that is prepared to act based on different vantage points, cross-referencing data, and driving execution among the different agencies for response and recovery. We cannot organize optimal global supply chain networks in a linear fashion, as global opportunities and risks need to be managed with a constellation of intelligence assets. The first step is to identify the orbital and temporal regimes that these assets should monitor.  We offer the above regime concept as a sound starting point from which to develop a robust and persistent governance framework for national supply chain resilience. There is much more work to be done, but an orbital supply chain architecture can help us avoid or at least mitigate the tragedy of the commons at all levels.

The ideas and opinions in this article are those of the authors and do not represent the official position of the USAF, DoD or federal government.

[1] Sheffi, Y (2005). Building a Resilient Supply Chain. Retrieved from: https://hbr.org/2007/08/building-a-resilient-supply-ch May 11, 2020.

[2] Sheffi, Y., & Rice Jr, J. B. (2005). A supply chain view of the resilient enterprise. MIT Sloan

management review, 47(1), 41.

[3] https://sheffi.mit.edu/book/power-resilience

[4] https://www.hopkinsmedicine.org/health/conditions-and-diseases/the-immune-system

[5] Handfield, R. (2010). SUPPLY MARKET INTELLIGENCE: Think Differently, Gain an Edge. Supply Chain Management Review, 14(6), pp. 42-44, 46-49.

[6] Biltgen, P. and Ryan, S. (2016). Activity-Based Intelligence: Principles and Applications. Artech House