Supply Chain’s Next Big Challenge: Saving Lives and Businesses

January 5, 2021
4 Minute Read

Supply chains are helping distribute life-saving vaccines, but they’re also needed to help get the economy back to normal. We need to do both, but it won’t be easy.

As 2021 begins, news headlines have long been filled with COVID-19-related stories—from CDC and WHO updates on confirmed cases to more vaccines ready for distribution. They’re all worthy of our attention, but we may be looking at the current situation with blinders on—a narrow lens by which we can only see what is directly in front of us.

The real question is not necessarily, “What’s happening now?” The real question should instead be: “What can we expect in a post-COVID world?” In that same spirit, what impact will a targeted focus on COVID vaccine distribution have on distribution within other industries and sectors that rely on the same supply chains? Yes, we’re getting vaccines to people to save lives. But with capacity now dedicated to savings lives what does this mean for the rest of the economy?

Johns Hopkins Carey Business School professor Goker Aydin recently wrote about how COVID-19 has already disrupted global supply chains and what that means for business:

Private companies have playbooks for supply chain disruptions in their network. In supply chain management, it is crucial to diversify your source of supplies so that when one supplier is impacted, you can turn to the other. But what is happening now is beyond the means of any individual company to deal with.

Goker Aydin, Professor, Carey Business School

He also mentions that manufacturers and distributors were already working feverishly to sustain supply chain resilience to meet growing demand for consumer goods and that despite public perception, supply chains did not break.

But that was before the recent announcement that FedEx and UPS would start distributing the first round of COVID-19 vaccines here in the US.

For many retailers, distributors and logistics service providers the timing could not have been worse. They now find themselves knee-deep in the traditional peak holiday season surge, resulting in what may be a once-in-a-lifetime stress test for the nation’s supply chains, as both vaccines and regular goods need to get to their destinations.

Vaccine Distribution Isn’t So Simple

Yes, we’re rejoicing at the release of a vaccine arriving in local cities and neighborhoods. But transporting the vaccine is not without its challenges. For example, initial distribution will largely focus on high-density metropolitan cities. Without the right infrastructure, vaccines requiring temperature-controlled transportation and storage will be more difficult to deliver to rural markets.

Although states were directed by OWS (Operation Warp Speed)—an intergovernmental agency providing oversight of US vaccine distribution—to submit their own distribution plans, many were theoretical in nature, lacking specifics.

But those details matter. The challenge also becomes accounting for needles, gloves, vials and other items that must be distributed in unison. Add driver shortages, lack of assets, and infrastructure capacity constraints—plus environmental and political influences—to the mix, and vaccine distribution becomes far more complex and uncertain than initially realized.

What We Should Be Talking About Instead

While we’re seeing hope on the healthcare front, the health of the economy itself may be in question. While distributors in the US are facing increasing demand for consumer products, food and produce, and other packaged goods, businesses’ ability to physically get supply to market is facing numerous challenges—old and new.

One has been a perennial issue for the industry: not enough drivers. The latest statistics show a shortage of some 60,000 qualified drivers today alone. This trend was already well underway before COVID-19 hit, with many drivers entering retirement, few younger people replacing them, as well as others exiting the profession for better-paying jobs with benefits.

Another is a more recent challenge. Instead of drivers delivering the usual consumer packages, many are now increasingly gravitating to more lucrative jobs supporting vaccine and medical supply distribution, where they can earn higher wages plus incentives.

The result? Non-vaccine-related industry segments are currently scrambling to find resources to distribute their products domestically. In all honesty, the logistics and transportation industry has been robbing Peter to pay Paul for years. Competing logistics service providers have engaged in wage wars to attract and retain drivers. According to the American Transportation Research Institute (ATRI), the driver shortage was the “No. 1 issue for the trucking industry” for the fourth year in a row, with no evidence to suggest it will get any better during the pandemic.

“For a number of reasons, 2020 has been a tremendously challenging one for our industry and our country, but as ATRI’s survey lays out, there are a number of issues we must address in addition to the ones put in front of us by this pandemic,” said Randy Guillot, chairman of the American Trucking Associations and CEO of Southeastern Motor Freight and Triple G Express Inc.

All of this begs a number of questions. With new demands, has the supply of qualified drivers and trucks finally run short to a point of crisis? How will more traditional supply chains respond? In the months to come can we expect another crisis resulting in a shortage of consumable goods and leaving many shelves empty? Finally, how will rural and less densely populated areas of the country survive with potential resource shortages for final-mile delivery?

If we are to restore our economy—which is largely supported by healthy supply chains and the ability to move products in a timely way without disruption—then a real conversation needs to take place. We need to talk about what needs to be done beyond the immediate pressure to distribute the COVID vaccine. And learning from the lessons of this pandemic, manufacturers and distributors cannot afford to be non-responsive. They must be actively unearthing creative ways to leverage technologies and data to proactively plan for the future.

I’ll talk more about this in the coming weeks. In the meantime, as 2021 begins, not just lives are on the line—livelihoods are on the line, too. We need to save both.

Learn more about RGP’s supply chain and operational excellence solutions as well as healthcare capabilities for your business.

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Robert Olszak

VP, Supply Chain Optimization
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