Over the pandemic, there has been chaos caused by the availability of PPE, or lack thereof. The opaque nature of parts of the medical supply chain exacerbated the already numerous issues.
Both the US and UK witnessed PPE supply chain failures during the crisis as demand could not be met, for several reasons, but underlying all of them is the lack of transparency. The quantity of required PPE was not known because of vast disparities in the forecasting of infection and hospitalisation rates. The highly fragmented demand side of procurement led to competition strategies and the highest bidder won, which led to unfair practices resulting in less wealthy nations being deprived. The location of manufacturing played a huge part, China is the main manufacturing centre of PPE, but as the country shut down early in the year, before much of the western world, exports fell considerably; face masks, for instance, dropped by 24% between January and February 2020. This led to shortages, tying in with transportation and distribution issues; PPE is normally moved by sea due to the relatively low price per unit. However, as the virus spread in the west, movement shifted to air due to low global inventory levels and the exponential and urgent increase in demand. The collapse of the air freight market and belly-hold capacity led to military aircraft and chartered flights being used to import PPE from various countries. The rightfully stringent regulations around PPE added further complications to the exporting and importing of these products.
After all of these failings and numerous, and sadly, still rising deaths, it is imperative that the supply chain is assessed and improved. Guidance or help could be sought from an unlikely sector – fashion.
It could be said that transparency is the main feature missing and could have prevented some of the issues faced during the crisis and is the answer to the future supply chain model.
In the US, many PPE procurers, whether hospitals or the general public, are not aware of where the products are made, this is often the case in the fashion industry too. An online article published by The Conversation reported that PPE manufacturers do not state much more information than the location of their facilities. In most cases consumers communicate with tier 1 suppliers who also don’t know where products were manufactured, thus removing another layer of transparency. This has been highlighted as a huge problem as PPE shortages increased across the world and sourcing supplies became difficult and sometimes impossible.
The fashion industry has faced scrutiny over the last decade regarding the working conditions of factory workers, which were highlighted by catastrophic events such as the 2012 fire at a textiles factory in Karachi, Pakistan and the Rana Plaza collapse in 2013 in Dhaka, Bangladesh. This drove the need for transparency. Before fashion companies could not be held accountable as many brands did not actually know where their garments were being produced, due to the nature of the industry and subcontracting networks. Although this is a different set of circumstances entirely, it shows how crises can create room for opportunities and solutions.
The industry’s response was to create the Fashion Transparency Index. It reviews and ranks 250 global fashion and apparel brands and retailers measuring them against how much information they disclose about their suppliers, supply chain policies and practices, and social and environmental impact. By adding transparency to the medical supply chain, it would be easier to identify potential problem hot spots and allow modification before (or in case) shortages occur, as they have in this crisis. While an exact transfer of that solution might not be possible for medical supply chains, it will have to create room for a similar response in order to find itself in a better position next time it comes under scrutiny.
The black swan event that is the COVID-19 pandemic, should be the catalyst of change as the disasters were for the fashion industry. Whilst the last few decades have been dedicated to supply chain optimisation and efficiency, it is clear that this has added to the fragility of the supply chain, unable to respond to events such as these. Unexpected events should be accounted for, war, strikes or changes in regulations could all cause disruption. Although they may be infrequent, it is vital a supply chain, such as the healthcare and pharmaceutical one, is as robust as it can be to cope with and endure, but most importantly, competently serve and deliver.
Source: Transport Intelligence, August 13, 2020
Author: Holly Stewart
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)