Recovery Strategies for Public Health Supply Chains Post-Black Swan Event - RECOVERY RESPONSE
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Recovery Strategies
for Public Health
Supply Chains Post-
Black Swan Event
Scenario Planning and
Recommendations
RECOVERY RESPONSETable of Contents
Acknowledgments .........................................3
Acronyms .............................................................3
Foreword ...............................................................4
Introduction ........................................................5
Scenario Mapping and Planning ................6
Demand Disruptions......................................8
Pre-Disruption Stage ....................................8
Black Swan Stage ..............................................8
Recovery Stage .............................................10
Supply Disruptions .....................................12
Pre-Disruption Stage .................................12
Black Swan Stage ...........................................12
Recovery Stage .............................................14
Demand and Supply Disruptions ...........18
Summary .............................................................20
ghsupplychain.org @ghsupplychain
December 10, 2020
The views expressed in this publication do not necessarily reflect the views of the
U.S. Agency for International Development or the U.S. Government.
PHOTO CREDIT (cover): USAID GHSC-PSM
PHOTO CREDIT (this page): Andi GultomAcknowledgements The USAID Global Health Supply Chain Program-Procurement and Supply Management (GHSC-PSM) project is funded under USAID Contract No. AID-OAA-I-15-0004. GHSC-PSM connects technical solutions and proven commercial processes to promote efficient and cost-effective health supply chains worldwide. Our goal is to ensure uninterrupted supplies of health commodities to save lives and create a healthier future for all. The project purchases and delivers health commodities, offers comprehensive technical assistance to strengthen national supply chain systems, and provides global supply chain leadership. GHSC-PSM is implemented by Chemonics International, in collaboration with Arbola Inc., Axios International Inc., IDA Foundation, IBM, IntraHealth International, Kuehne + Nagel Inc., McKinsey & Company, Panagora Group, Population Services International, SGS Nederland B.V., and University Research Co., LLC. To learn more, visit ghsupplychain.org Lead GHSC-PSM author: Joseph Shobe, Track and Trace Solution Architect, GHSC-PSM GHSC-PSM contributing authors: Jaya Chimnani, Barry Chovitz, Alan George, Andrew Inglis, Steven Thomas, Ralph Titus, and Ryan Triche Acronyms 3PLs Third-party logistics providers ESC Emergency supply chain GHSC-PSM Global Health Supply Chain Program-Procurement and Supply Management project HMIS Health management information system LMIC Low- and middle-income country LMIS Logistics management information system SDP Service delivery point USAID United States Agency for International Development
01.
PHOTO CREDIT: Chemonics/Light in Captivity
Foreword
As I write this foreword, I think back to a year ago — February 2020 — when the world was on the
cusp of a major life-altering pandemic. Having worked in public health supply chain management for
many years, I knew how important good supply chain practices were for ensuring a reliable supply of
essential health commodities to clients in need. But witnessing the events of the past year brought
to light how every facet of our lives was dependent on supply chains — from protective masks to
household paper towels. How could we have anticipated such an event? Is there a way to plan for the
unpredictable?
Such unpredictable events like the COVID-19 global pandemic, which would be
characterized as a “black swan” event because of its extreme rarity and severe impact, posed
new challenges to the global health supply chain community. Our community had already dealt
with Ebola and other zoonotic disease outbreaks, and supported the development of emergency
preparedness materials, including “playbooks” to help programs manage health supply chains during
times of crisis. But equally important is to also consider the recovery stage of supply chains. Yes, much
like the impact of a virus itself on its host, supply chains also need to recover! The Global Health Supply
Chain Program-Procurement and Supply Management (GHSC-PSM) project has created this strategy
guide to help field program managers define and manage disruptions to both supply and demand, and
to think through recovery strategies for public health supply chains. It is the intent that this guide will
assist stakeholders as they plan and strategize for the future — ultimately building more resilient supply
chains that can recover quickly after a black swan event.
We hope that this guide will be useful, and we welcome your comments and learnings as you
implement your recovery strategies.
SHARMILA RAJ
Deputy Division Chief,
USAID Commodity Security & Logistics Division02.
PHOTO CREDIT: USAID GHSC-PSM
Introduction
Dealing with Supply Chain Shocks Means
Aiming for a “New Normal”
Supply chain managers deal with normal constraints and delays as part of their
daily activities. But how do they react when an event beyond their control impacts
not only their local logistics environment but an entire region or the globe?
While some global public health officials These events have devastating One potential outcome of a weak supply
had warned of an impending pandemic, consequences for fragile public health chain is the “bullwhip effect,” also known
few saw the COVID-19 crisis spreading supply chains. as the Forrester effect.1, 2, 3, 4 This is when
with the speed it did beyond China’s demand information is distorted as it
borders. Everyone felt the effects. How Some recent examples of past regional travels up the supply chain. This can lead
would supply chain managers have reacted black swan events that have caused to overstock, poor product forecasts or
if they had advance warning? What steps disruptions in public health supply chains gaps in service delivery. A bullwhip effect
would they have taken to protect a once include earthquakes in Haiti and Nepal can occur for many reasons, including
healthy and functioning supply chain? in 2010 and 2015, respectively, and the inaccurate demand data, poor data visibility,
What would you do if a “black swan” event Ebola outbreak in West Africa from 2014- rationing and shortages; a black swan event
overwhelmed your operations? What steps 2016. Global black swan events cause dual can worsen the effect as demand patterns
will you take to recover? shocks to the world’s supply chain that change and supply availability fluctuates.
involve both origination and destination
A black swan event — named because of as both suppliers and patients are The aim, once these reactions are in play,
the rarity of black swans — is described as an impacted, sending everyone scrambling to is to limit disruption of programs and the
unpredictable and extremely rare episode leverage the same limited resources. supply chain and embark successfully on
with severe systematic consequences. what will be a “new normal”.
1
APICS Operations Management Body of Knowledge Framework, Third Edition. Found at: https://www.apics.org/apics-for-individuals/apics-magazine-home/resources/ombok/apics-
ombok-framework-table-of-contents/apics-ombok-framework-3.2.
2
Summer 2018 • CTL.CFx – MicroMaster Key Concepts • MITx MicroMasters in Supply Chain Management MIT Center for Transportation & Logistics • Cambridge, MA 02142
USA • scm_mm@mit.edu. This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
3
MIT Sloan. 1997. The Bullwhip Effect in Supply Chains. Found at: https://sloanreview.mit.edu/article/the-bullwhip-effect-in-supply-chains.
4
Ohio University. How the Bullwhip Effect Impacts the Supply Chain. Found at: https://onlinemasters.ohio.edu/blog/how-the-bullwhip-effect-impacts-the-supply-chain.03.
PHOTO CREDIT: USAID GHSC-PSM
Scenario Mapping & Planning
Systematic Planning and Readjusting as Needed
are Critical for Supply Chain Recovery
This guide uses scenario mapping — predicting what might happen in the Figure 1 includes three steps under
future and how your program/supply chain might operate — to help “Scenario Planning with Stakeholders” to
guide this process:
decision makers plan for recovery, weigh the information and advice
they have received and make informed decisions. — Determine the best path for recovery
by examining various scenarios with
stakeholders.
Helping decision makers think through by product, product group, geography or
the likely consequences of their decisions populations. In this first step, supply chain — Plan the actions for recovery for the
enables them to assess and determine stakeholders identify disruptions being selected path and identify actions to be
the actions needed that will lead to experienced and define product groups taken by whom in the supply chain.
recovery. Most importantly, more frequent and specific high-risk products for scenario — Evaluate the path for recovery and
planning to evaluate different recovery planning. They then set priorities for where discuss with stakeholders what a
scenarios is necessary to assess the rapidly recovery efforts will be most critical. successful recovery will look like and
changing conditions in the supply chain; what might be the potential risks.
stakeholders will need to frequently refine 2. Analyze Path to Recovery
their decisions, improving the supply chain’s Once stakeholders identify the disruptions The aim is to proactively think through
responsiveness and resiliency. across the product groups and establish the possible recovery strategies to identify
priorities, the next step is to determine a common purpose and differences and
The four main steps in this process are possible paths to recovery. agree on the best path forward based on
outlined in Figure 1. It’s important to note current conditions.
that previous expectations do not hold. For 3. Scenario Planning With Stakeholders
example, demand may decrease or increase This step aims to guide stakeholders 4. Execute Recovery Strategy
significantly and sporadically. This will affect through various recovery paths as they First, the role and actions of each
the recovery, thus the need to plan more identify both weaknesses and strengths at stakeholder must be defined, followed
frequently to change course as needed. different steps in the supply chain. They by setting up or continuing a process to
will do this by using data that provides an resolve issues affecting the recovery.
1. Define the Disruptions
opportunity to review recovery at the A timetable must be established and
The disruptions caused by a crisis can different stages of the supply chain. planned actions for recovery mapped out.
come in many forms and can be different7 | Scenario Mapping & Planning Recovery Strategies for Public Health Supply Chains Post-Black Swan Event Is the Recovery Strategy Working? When reviewing progress toward recovering Is supply lead-time becoming more reliable, This will proceed quicker because it builds on to the new normal, stakeholders must and is it possible to plan a sustainable and the past scenario planning.The new normal determine if the supply chain is heading in resilient supply chain strategy? If there provides the opportunity to adopt more the right direction. Is demand returning as are doubts, stakeholders can re-run the frequent reviews of demand and supply expected and becoming more predictable? scenario planning. balancing to achieve focus and alignment. FIGURE 1. SUPPLY CHAIN RECOVERY STRATEGY
04.
PHOTO CREDIT: USAID GHSC-PSM
Demand Disruptions
Supply Chain Shocks Rattle Demand Forecasting
Addressing demand-side disruptions is the first stage of supply chain client/patient reactions, such as hoarding
recovery. There are a number of components to demand disruption, or displacement/mobility. These demand
disruptions could mean a steep increase
each of which need to be addressed fully. or suppression in demand, both of which
could result in an overcorrection, which
Pre-Disruption Stage Black Swan Stage creates the bullwhip effect.
Health product quantification (demand During a black swan event, little can be done
and supply planning) is a multi-stakeholder to maintain operations as usual. Inaccurate COUNTRY EXAMPLE
process used in low- and middle-income demand signals could drive stock imbalances In May 2020, Pakistan reported
countries (LMIC). Often, demand forecasts such as overstock, causing expiries; or an almost 50% reduction in total family
are updated each year, covering 24-36 stockouts, causing service disruptions. planning and antenatal care clinic visits
months, while the resulting supply plans Demand pattern disruptions caused by black compared to pre-COVID-19 periods.
are monitored quarterly or monthly to swan events are difficult to quickly monitor
provide visibility into stock projections at the national level.The LMIS and/or HMIS
for the next 18-24 months. These routine are challenging to use as the main sources of A. Clients/Patients Not Accessing
projections usually include assumptions information during such an event due to the Health Services Due to Fear of
based on historic consumption or health inherent time lag in reporting. Additionally, Exposure to a Virus
service statistics data, disease morbidity weak monitoring and reporting in countries Fear of exposure and distrust in the health
data, seasonality, population characteristics may fail to get a complete or accurate system can deter people from seeking
and programmatic targets. Usually, all picture of demand. It could take several routine health services. This is likely to
these data are regularly collected and reporting periods to identify trends that increase incidence of HIV/AIDS, malaria
monitored through logistics management can impact demand. Hence, it is important and other diseases, and cause a surge in
information systems (LMIS) and/or health to understand the different ways these maternal mortality rates and child deaths
management information systems (HMIS). disruptive events can affect demand signals. from treatable illnesses, as was seen during
Demand planners use that data to model the Ebola epidemic in West Africa.
the increase or decrease of a product’s How Can a Black Swan Event
Affect Demand? B. Clients/Patients Not Accessing Health
consumption to contribute to a health
During a catastrophic event, demand Services Due to Government Policies
program’s clinical objectives. However,
these quantification exercises would not changes could be policy-driven, such as Emergency public policy measures imposed
consider how a black swan event would country lockdowns or updated treatment by governments to slow or mitigate
affect demand during and after the event. guidelines. Or they could be driven by the effects of a black swan event, such9 | Demand Disruptions Recovery Strategies for Public Health Supply Chains Post-Black Swan Event
FIGURES 2 AND 3. INJECTABLES FORECAST AND CONSUMPTION
as quarantines and restrictions on travel commodities. As a result, reduced demand client preference or due to policy shifts
and trade, result in demand disruptions for preventive interventions as noted above made by the national health program.
and a temporary breakdown of local and could trigger an increase in the diseases This substitution could diminish demand
international trade and logistics services. they are designed to prevent. Conversely, a for one product and increase demand for
spike in such cases would increase demand its substitute. This is especially true when
If local government policies shift resources for treatment commodities in the near to free movement to access health services
from traditional health services to focus mid-term. is a concern. A product which has a longer
on acute care, some services become duration of efficacy could be given to clients.
unavailable to clients. For example, the C. Increase in Mortality and/or For example, if the current preferred family
UN Population Fund (UNFPA) estimated Population Mobility Because of the planning method is the 30-day injectable
that lockdowns would prevent 13 to 51 Black Swan Event or the monthly oral contraceptive, a black
million women in LMIC from accessing A peak in deaths and/or mass population swan event could precipitate a decision by
modern contraceptives, leading to an movement due to the black swan event either party (client or health program) to
additional 325,000 to 15 million unintended could impact future demand for the long- choose a longer-term method, such as the
pregnancies, depending on the level of term. In the case of increased mortality, 90-day intra-muscular injectable (Figures 2
health service disruption. The effect could this impact would vary based on the effect and 3). This change would allow the client
be especially pronounced for methods of the event on different populations. to avoid unwanted pregnancies for a longer
that require the availability of trained For example, during a natural disaster, period with just one dose, thus reducing the
professionals, such as for intrauterine the impact could be felt symmetrically frequency of clinic visits.
devices or implants. The shortage of across population groups. However, a
providers could result in reduced demand. rapid onset disease outbreak could be E. Product Diversion From Its
felt asymmetrically in specific groups Regular Use
Certain commodity categories are more
and disproportionately affect the more A policy that would increase the amount
susceptible to these policy decisions. For
vulnerable.5, 6 An event that particularly of dose or number of doses prescribed at
example, amidst an infectious disease
affects one region could cause residents to one time would, in the short term, send
epidemic, local governments may decide
leave, shifting demand to other areas. a distorted demand signal that could be
to forego mass campaigns (i.e. those for
interpreted as an increase in consumption
voluntary medical male circumcision or D. Product Substitutions by Client in the near term. Or, increased use of rapid
distribution of long-lasting insecticidal Choice or Policy Change diagnostic tests for malaria used instead for
nets) to prevent risk of exposure. While Certain products could be substituted COVID-19-related fever, for example, would
this successfully reduces the spread of the with alternative options either due to give false impression of a rise in malaria.
epidemic, it will reduce consumption of
5
Morse, B., Grépin, K. A., Blair, R. A., & Tsai, L. (2016). Patterns of demand for non-Ebola health services during and after the Ebola outbreak: panel survey evidence from Monrovia,
Liberia. BMJ global health, 1(1), e000007. https://doi.org/10.1136/bmjgh-2015-000007.
6
Ibid.10 | Demand Disruptions Recovery Strategies for Public Health Supply Chains Post-Black Swan Event
Recovery Stage
Information is key to better predict the FIGURES 4 AND 5. DEMAND DISRUPTIONS AND ADJUST FORECASTS
effect of an event on demand.
A. Defining the Disruption(s)
Black swan events do not affect all public
health services equally. Conversations Categorize Demand Adjust Forecasts for
around demand disruptions should begin Disruptions Anticipated Duration
by identifying commodity categories and
• Unavailability of supply • Patients return when supplies restored
then the disruptions that apply to each
commodity group. Planners can model how • Inability to visit facilities • Patients return post-black swan
the decisions of patients and policymakers • Reallocation of health workers • Patients return when services restored
could affect demand for the different health • Population displacement • Patients relocate due to shifting
commodity categories by estimating an demands
• Discouraged or fearful
increase or decrease on the forecasted
population • Patients return after awareness campaign
consumption for a determined period of time.
Demand disruptions should be categorized
to help in estimating the impact and duration Demand disruptions can be identified B. Analyze Path to Recovery
of the impact (Figure 4). For example, if the in phases: Based on the demand disruptions, the
disruption is due to unavailability of supply,
team, including demand planners, will
a return to normal demand patterns should — Immediate: The black swan event
analyze and plot potential paths to health
occur when stocks are replenished; but if causes disruptions.
service delivery recovery and model how
demand has been impacted by population
— Near-term: Stakeholders characterize particular paths might affect demand.
displacement, you may have multiple locations
demand patterns during the recovery Several paths should be considered,
where adjustments are needed to reflect both
stage. including one where demand returns to
decreasing and increasing demands.
— Long-term: Stakeholders estimate what it was before the event, and one
Table 1 shows how segmenting by demand post recovery and into the where it does not.
commodities could help identify the specific new normal. During the recovery period, managers
commodity disruption.
should anticipate that demand will have
shifted from what was planned before
TABLE 1.0 the black swan event and that some or
Demand Disruption Examples per Health Commodity Type all of the shift may be permanent (Figure 5).
A return to normal demand patterns
COMMODITY DISRUPTION EXAMPLES could take considerable time, or not
Demand for 90-day injectable trends up rapidly as users of 30- and/or 60-day return at all. As recovery begins, studies
90-Day Injectable
injectables prefer longer coverage to minimize risks during a black swan event. indicate that demand for routine health
The higher demand could lead to stockouts.This uptick during a pandemic could
also be indicative of sustained demand in the future (if preferences change).
services rebounds quickly.7 Thus, the
paths to recovery must account for this
Maternal/Newborn
Black swan events trigger higher fatality rates among women and children, and consider community outreach and
thus decreasing the total population that would need these commodities, or
Commodities
deprioritizing these services altogether can severely impact demand.
government trust as likely influences in
demand rebound.
Demand could reduce during a pandemic as people decrease their visits to
HIV Rapid Test Kits health facilities. Testing targets for the year might not be met. This could lead C. Scenario Planning With
to overstock of screening/confirmatory tests and possible expiries. Stakeholders
Black swan events disrupt the planned mass distribution of long-lasting insecticidal Once the paths to recovery are identified,
Malaria Pharma nets and other preventive interventions. As a result, malaria caseload increases and demand planners can advise stakeholders
therefore demand for malaria drugs spikes, leading to potential stockouts of drugs. on the feasibility of implementing these
7
Morse, B., Grépin, K. A., Blair, R. A., & Tsai, L. (2016). Patterns of demand for non-Ebola health services during and after the Ebola outbreak: panel survey evidence from Monrovia,
Liberia. BMJ global health, 1(1), e000007. https://doi.org/10.1136/bmjgh-2015-000007.11 | Demand Disruptions Recovery Strategies for Public Health Supply Chains Post-Black Swan Event
FIGURES 6. RE-PLANNING THE SUPPLY CHAIN
Categorize Demand Adjust Forecasts for Re-Plan the
Disruptions Anticipated Duration Supply Chain
• Unavailability of supply • Patients return when supplies restored • Assess time to sustain and recover
• Inability to visit facilities • Patients return post-black swan • Redistribute to balance supply/shifting
• Reallocation of health workers • Patients return when services restored demand
• Population displacement • Patients relocate due to shifting • Monitor process to eliminate bottlenecks
• Discouraged or fearful demands • Monitor supply impacts/ change demand
population • Patients return after awareness assumption
campaign • Develop public-private partnerships for
a resilient supply chain
paths based on how each scenario would — Immediate: Anecdotal/observed Figure 7 shows some actions that
impact stock status projections for each changes in patient behavior can planners can take to contextualize data
product or each health program, through be collected via simple surveys of reported during a black swan event
the lens of multiple supply plan versions. healthcare workers. Behavior changes to inform how demand has been affected
When presenting alternative paths of can include patients being turned away during and post-recovery stage.
recovery to stakeholders from a demand from or not visiting health facilities,
perspective, it is important to identify moving away or complaining about lack
where demand shaping can occur to FIGURE 7. CONTEXTUALIZING
of a product.
DEMAND DATA
minimize the number of patients not
— Near-term: Early activity reporting
receiving care (Figure 6). For example,
if moving to a substitute product could
(LMIS/HMIS) could show reductions in Compare
demand, validating survey results. actual consumption data reported
reach more patients, explore the feasibility
with a previous forecast or with
of promoting this move, and review the — Long-term: Changes to treatment consumption data prior to the
assumptions and risks this path introduces. options or migration to different parts black swan event.
of the country indicate potentially long-
D. Executing the Recovery Strategy term shifts in demand. Identify
Demand planners can play a key role in external factors affecting
the recovery strategy by closely monitoring In the mid- to long term, when estimating demand, such as population
consumption patterns and being involved future demand utilizing actual LMIS or shifts, mortality rates, possible
HMIS consumption or service data, alternative sources being used.
in the process to resolve recovery
challenges. Consumption data should planners should understand that statistics
be regularly collected and monitored to might be skewed in either direction due Verify
inform whether the strategies are being to various factors that could have affected if some of the post-black swan
demand. Planners should estimate policies will be kept, or if client/
implemented successfully or if they need patient preferences shifted
to be adapted. Updated forecasts and how significant the skew is. because of changed policies
supply plans could be informed by:05.
PHOTO CREDIT: USAID GHSC-PSM
Supply Disruptions
Supply Disruptions Result in Stockouts, Delays, and Bottlenecks
Supply-side shocks impact both the manufacturing and distribution levels were cancelled. In April, over 80% were
of the supply chain. This extends to ground, sea, and air transportation. cancelled.9 As roughly half of air cargo
is transported in passenger jets, freight
rates increased as routes continued to
Pre-Disruption Stage How Can Black Swan Events be cut. Reduced flights initially created
Normal, day-to-day operations in the Affect Supply? a bottleneck of delayed shipments. In
supply chain are important to fully These events impact the supply side at both response, some freight forwarders began
understand the impact of black swan a manufacturing and distribution level. Initially, running more cargo-only flights rather
events. On the supply side, pre-event suppliers may struggle to distribute their than hybrid passenger-cargo flights, but this
normal means that international, domestic goods due to these events wreaking havoc still resulted in price increases and further
and local suppliers and manufacturers on distribution channels globally. As the crisis delays. As flight routes were extremely
respond to orders and requests, fulfill prolongs and buffer and safety stock of raw limited, to ensure pharmaceutical
them according to schedule and demands, materials are depleted, the manufacturers availability, some supply chains were
and achieve the “Six Rights – Right themselves struggle to maintain order fill rates; forced to charter private jets as an interim
Product, Right Quantity, Right Condition, supplies of finished products dwindle across solution at a high cost.
Right Place, Right Time and Right Cost”.8 the global supply chain until raw material
delivery can resume. Difficulty in finding
Black Swan Stage alternate sources and suppliers generally PRE-DISRUPTION
Risk mitigation is crucial for any successful correlates to the duration of the event as well, CHARACTERISTICS
supply chain. However, black swan events and as sources diminish, lead times increase as
themselves often uncover previously suppliers scramble for alternatives. •O
rders fulfilled at acceptable and
invisible risks or risks that were perceived expected rates
A. Transportation Reductions/ •C
arrier pickups scheduled
as a low probability or low impact. On the
Restrictions Can Cause a Distribution according to routine lead times
supply side, this could mean abrupt halts
Shock and Lead to Delays and Stockouts •L
ocal carriers available for last-
to transportation lanes or air service, or
export restrictions. Some of the biggest One of the initial supply-side disruptions in mile distribution
supply-side impacts felt during a black swan the current black swan event (COVID-19 •W
arehouses equipped to hold
event include initial stockouts and delays pandemic) was the severe impact to air sufficient stock and buffer stock
and ensuing supply-side bottlenecks. These travel and the ensuing freight logjams. • Emergency orders are rare
will be discussed below. By early March 2020, 10% of all flights
8
https://www.who.int/immunization/programmes_systems/supply_chain/en/
9
https://www.aislelabs.com/blog/2020/03/27/how-airports-globally-are-responding-to-coronavirus-updated-frequently13 | Supply Disruptions Recovery Strategies for Public Health Supply Chains Post-Black Swan Event
Even in-country, black swan events can delay event consuming resources intended for
GHSC-PSM LESSONS LEARNED or reduce transportation from the central- current healthcare supplies and distribution
level down to individual service delivery infrastructure, allocation of available funds
COVID-19 did demonstrate that some of points (SDPs) or health clinics. During the must be prioritized until additional funding
the best practices we were using are earthquake in Haiti (details below), ports can be secured.
adaptable in the context of pandemics.
were clogged and backlogged. At central-
Reducing the size of shipments and C. Uncoordinated Efforts Can
level warehouses and distribution centers
using ocean freight were two of the best Exacerbate Bottlenecks
commodities clogged picking lanes and
practices that helped keep goods moving The 2010 Haiti earthquake is an example
shelves, which delayed outbound orders to
and minimized disruptions to the supply
facilities. During the Ebola outbreak, some of a regional black swan event in which
chain. In the end, our work incorporating
logistics companies had an increased load transportation became a bottleneck due
better practices to streamline the global
of shipments, while nearly 50% of drivers to an over-supply and lack of coordinated
supply chain passed the test of a pandemic.
refused to show up to work due to safety shipping and customs clearance.
concerns.12 Further, the supply of drivers, Immediately following the earthquake,
Similarly, shipping lanes were also impacted fuel and warehouse space can impact in- shipping lanes became clogged. Resources
as demand for luxury goods fell, and country distribution. and labor were diverted to sorting through
quarantines and health considerations (e.g., goods and coordinating new logistics
the safety of ship crews and the potential B. Government Policies and operations, reducing capacity of individuals
for them to transmit illness from one Restrictions Can Further Exacerbate to assist elsewhere. The capital, Port-au-
country to another) caused delays. Due to International Supply Chains Prince, subsequently became clogged with
uncertainty of shipments, freight companies Stay-at-home orders and other in-country in-bound goods with no planned end
changed scheduling patterns.10 When travel restrictions can prevent supplies from destination. The President’s Emergency Plan
shipping previously scheduled orders, ships reaching the last mile within countries. National for AIDS Relief (PEPFAR) supply chain was
were sailing with reduced volume, leading governments may enact export restrictions able to recover relatively quickly in Haiti
to higher costs, since the costs to operate on certain goods they deem essential. because of the coordinated effort of seven
a ship are only marginally affected by the Initially, these policies can be an attempt to international and national organizations.
amount of cargo. Eventually, many freight mitigate risk of supply chain shortages for Within four weeks, the program resumed
companies kept ships from sailing until they their own populations. However, these supply almost normal operations.
were full, causing long delays. It then became constraints can force importing countries
almost impossible to accurately forecast to seek alternative suppliers with alternate The 2015 Nepal earthquake saw a marked
arrival dates to final port destination. This active pharmaceutical ingredient sources, improvement in the transportation
then delayed customs clearance, caused many of whom may have limited capacity. response, in-part due to prior disaster risk-
bottlenecks at the port and increased fees. reduction planning efforts, which included
A fundamental restriction may be available establishing a humanitarian staging area in
Black swan events can also impact ground financial resources. With the black swan
transportation. During the 2015 Nepal
earthquake, landslides blocked major
roads and isolated villages. At the height LIMITED TRANSPORTATION
of the 2014 Ebola outbreak, overland IN NIGERIA FROM COVID-19
trucks in West Africa were often stuck
at borders, which were intermittently • By late March, airports were closed, and increased shipments by sea extended
closed throughout the epidemic.11 In the the lead times, further exacerbated by port closures.
COVID-19 pandemic, Zambia has been
• Securing approval for the release of family planning commodities from the
impacted by neighboring South Africa’s
central warehouse was delayed.
restrictions. Some overland border posts
were restricted, and drivers were asked • 3PL (third party logistics) operators’ – essentially private courier, warehousing
and distribution providers – movements were also restricted.
to quarantine.
10
https://www.joc.com/maritime-news/container-lines/coronavirus-creating-unprecedented-container-shipping-disruption_20200221.html
11
https://www.bsigroup.com/globalassets/localfiles/aaa/Whitepaper%20Ebola_10.14_7.pdf
12
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC715012514 | Supply Disruptions Recovery Strategies for Public Health Supply Chains Post-Black Swan Event
Kathmandu to assist and coordinate a UN A. Defining the Disruption(s)
logistics cluster.13 IMPACT ON Understanding the type of supply disruption
FAMILY PLANNING is vital, as these disruptions can vary impacts
In the early stages of the COVID-19 crisis,
COVID-19 and the impact on along the supply chain (Figure 8). For example,
when international travel lanes were starting
international procurement of if there is a logistical bottleneck along a route,
to shut down, the USAID Global Health
Supply Chain Program-Procurement and
contraceptives is estimated to have finding alternate suppliers would do little to
Supply Management (GHSC-PSM) project
reduced the amount of couple years resolve the situation. As supply disruptions
recommended that countries prepare for of protection from 2019 to 2020 can be different across products, it is helpful
from 12.6 million to just 2.3 million. to categorize into product groups, or critical
both international and in-country shut-
products within a group, to better view
downs by moving most products out of
the problems and solutions. It is important
warehouses and redistributing stock to SDPs
to protectionist and inward-looking practices. for supply chain managers to pinpoint the
at the last mile in geographic areas most in
As COVID-19 reached pandemic status, disruption along the supply side so they can
need, even if this meant short-term over-
some exporting countries began restricting fully understand the shocks. Often, more
stocking SDPs, since products in warehouses
exports of personal protective equipment, than one type may apply; however, supply
cannot serve patient needs. However, if
respiratory-related pharmaceuticals, chain managers must prioritize the issues and
demand has also been disrupted, then this
sanitation products and even foodstuffs. respond accordingly, resolving each disruption
response can result in unwarranted resupply
Over 80 countries introduced export until stability is restored.
quantities, distributed, potentially, to the
restrictions between January and May
wrong geographic areas. Where there is no Working groups and committees set up to
2020.15 Improved global coordination can
supply disruption, demand disruptions are define the disruption and possible paths to
reduce these reactionary restrictions, but
more easily identified (inventory is growing/ recovery should pay attention to where
ultimately restrictions will not go away
not reducing), but when supply is also exactly the shocks are felt the most.
entirely until a state feels secure enough to
disrupted, other measures will be needed to
reopen its own economy.
identify if demand is disrupted.
FIGURE 8. SUPPLY DISRUPTIONS
D. Engaging in Single-Source Supplier
Where there is no supply Relationships Can Increase Risk and Costs
disruption, demand disruptions Many supply chains currently focus
are more easily identified (inventory is on reducing suppliers due to strategic
growing/not reducing), but when supply partnerships and other incentives which
Categorize Supply
is also disrupted, other identification can result in lower costs.16 However, black
Disruptions
measures will be needed if demand swan events show that these cost savings
is disrupted. often erode during periods of restricted • Pre-Supplier Level
supply, and pitfalls of a reduced number of – Raw material shortage
GHSC-PSM also recommended re- suppliers become apparent. If the lack of
alternative suppliers is an issue, supply-side • Supplier Level
organizing storerooms to prepare for any
influx of emergency aid, including potential disruptions will be felt almost immediately. – Demand spikes
use of shipping containers (and reefers, – Labor shortage
Recovery Stage
or refrigerated shipping containers, that – Plant closure
require external power) as short-term To determine outlets for black swan supply
storage to preserve product quality.14 chain recovery, we analyzed the largest • Delivery and Distribution Level
factors of the above supply-side black swan
– Policy-driven
A procurement manager’s ability to find effects. In finding common variables, we
products can also be affected by the can better propose recovery options and – Bottlenecks
procurement regulations of exporting mitigation for future events for all supply – Transportation shortage
countries.They may restrict exports, reverting and distribution planners.
13
Cook, Alistair & Shrestha, Maxim & Htet, Zin. (2016). International Response to 2015 Nepal Earthquake: Lessons and Observations. 10.13140/RG.2.2.35305.90722.
14
For more information, see https://www.ghsupplychain.org/sites/default/files/2020-06/COVID_guidance_Preparing_for_whats_next.pdf and https://www.ghsupplychain.org/sites/
default/files/2020-04/Tips_for_optimizing_storage.pdf.
15
https://crsreports.congress.gov/product/pdf/IF/IF11551#:~:text=As%20of%20May%201%2C%20at,products%2C%20and%20other%20medical%20goods.
16
http://teme2.junis.ni.ac.rs/index.php/TEME/article/viewFile/1011/400.15 | Supply Disruptions Recovery Strategies for Public Health Supply Chains Post-Black Swan Event
these experiences and understand
FIGURE 9. SUPPLY RECOVERY how to plot the best recovery path.
By product group, the planning team
guides the stakeholders through the
top recommended paths to recovery,
including the means to evaluate the
impacts of each option.
Categorize Demand Adjust Forecasts for
Disruptions Anticipated Duration For example, to re-stock warehouses in
• Pre-Supplier Level • Alternate Suppliers the short-term, supply chain managers
may need to re-balance supplies
– Raw material shortage • Alternative Products across warehouses and SDPs, with a
• Supplier Level longer-term option to add additional
• Public-Private Partnerships
procurement options, such as building
– Demand spikes – Available products a partnership with a private-sector
– Labor shortage firm.They should provide methods for
– Trusted suppliers
– Plant closure comparing alternatives, such as cost to
– Distribution channels
implement, consumption of fixed or non-
• Delivery and Distribution Level
replenishable resources (warehousing,
– Policy-driven service delivery, cold storage), and patient
– Bottlenecks service-levels expected.
– Transportation shortage
— Plan Recovery Actions
With Stakeholders
Stakeholders are presented the
If at ports of entry, this could be a logistics planners must be aware that national and
recommended path(s) to recovery
and transportation scenario. If shocks are international decisions will impact supply. It
to evaluate the impact on the overall
felt during the ordering process, it is likely a is important to analyze not only the paths
supply chain and how supplies can meet
manufacturing or supplier sourcing situation. themselves, but the potential regulatory
the expected demands. Where there
and political variables at play when supply
B. Analyze Path to Recovery are shortfalls in service levels to patients,
expands/contracts during a black swan
stakeholders will want to understand
Supply chain stakeholders need to be aware event. Equally important is an assessment of
if there were better alternatives.
that supply-side shocks during black swan available funds, as a funding constraint will
Perhaps an option was dismissed that
events often follow demand or policy-level mandate prioritization of all recovery options.
delivered better patient service levels,
impacts. Analyzing the paths to recovery
C. Scenario Planning With Stakeholders but an additional cost to procure
and resiliency depends on being able to
After analyzing recovery paths, supply from the private sector was too steep.
successfully pinpoint where along the
and distribution planners, managers, Stakeholders could be presented a cost/
supply chain these impacts affect supply the
procurement specialists and, ideally, benefit analysis where options were
greatest. Any analysis must include demand
policymakers and other stakeholders must dismissed only to find they can commit
planners and policy experts, as demand and
come together to define and detail various to finding additional funds, making it a
policy areas will inevitably impact supply.
recovery scenarios. viable path to recovery.
Supply chain managers must truly understand Once this team selects an appropriate
their suppliers and capabilities when analyzing — Role-Play the Best Paths
path, it should identify the actions that
recovery paths (Figure 9). For example, an for Recovery
must be taken to implement the path
increase in suppliers or substitute products Based on the prior analysis of recovery
to recovery. The actions are broken
will likely need to be retracted once the options, supply chain managers should
into specific tasks that can be tracked
black swan event dissipates. Actions must have an idea of the largest factors
to completion, and the results can be
be flexible and adaptable for a potential impacting the supply side during black
evaluated using the same criteria that
return to normal. Recovery is not complete swan events. Informed by past events,
was used to evaluate the path: cost to
if the proposed solution creates over- recommendations and recovery plans
implement, use of resources and service
supply following the event. Policy decisions from similar settings, supply chain
levels delivered to patients.
can impact the supply side, and recovery planners and managers can apply16 | Supply Disruptions Recovery Strategies for Public Health Supply Chains Post-Black Swan Event
can readily compare demand with supply to
better understand supply chain imbalances.
When root causes are identified, the recovery
strategy should identify the actions that can be
taken to mitigate the disruption (Figure 10).
Next Steps: What Recovery Efforts
Can Pose Enduring Solutions?
While these solutions cannot solve
supply chain issues in the middle of
a crisis instantaneously, they serve as
recommendations for distribution planners
and supply chain managers in the future to
create a more resilient structure (Figure 11).
These recommendations are:
— Create and maintain communication
Cyclone Idai devastated Mozambique and significantly disrupted public health supply chains and deliveries of
health commodities. PHOTO CREDIT: USAID GHSC-PSM channels upstream through suppliers
which can be further expanded during
disruptions.
— Evaluate, Discuss, and Identify Risks
The expected impacts to the supply chain NEW NORMAL AFTER — Have multiple suppliers to minimize
can range anywhere from least negative COVID-19 supply risks — this should not be viewed
impact to full recovery. Regardless of the Some long-lasting effects following purely as a standalone expense.
expected impact, stakeholders should COVID-19 recovery measures — Increasing supply speed reduces risks
identify the risks associated with the may include increased registration to inventory by stemming supply
recovery path and how these can be processing, especially with essential disruptions and reducing overall volume
anticipated and mitigated. For example, if health commodities. of inventory at risk. This requires greater
the recovery path is an initial redistribution
coordination by the supply chain team.
to areas most in need, followed by a
monthly or quarterly may not be sufficient
planned resupply from a private-sector
to determine if the recovery is progressing
partnership, risks of transportation
as planned. FIGURE 10. CONTEXTUALIZING
availability, available funding or even change SUPPLY DATA
in government policy could impact the To effectively monitor the progress of the
effectiveness of the planned recovery path. supply recovery, gather real-time supply
It’s important to identify all potential risks, Compare
chain data wherever available, and use this
and then prepare to track the planned supply and stock data with the
as a first measure of how the recovery current state of distribution
actions and associated risks to monitor the path is progressing. If real-time supply channels prior to the crisis to
recovery path. and demand data is only available from pinpoint trends.
central stores, planning these locations
D. Execute the Recovery Strategy
independently can provide immediate Identify
Stakeholders have agreed on the most insight into how supplies are changing. potential shocks to the
appropriate path to recovery and have Planning the entire supply chain is the ideal, distribution channels, such as
established the actions and tasks, the risks but at the least, prepare to monitor the reduced supply channels, as
and the expected outcomes. Mobilizing well as export restrictions.
critical product groups and key products.
the supply chain to execute the recovery For each recovery strategy, ensure that all
strategy likely involves multiple parties that planned actions can be reported in near-
Verify
need to collaborate and share priorities so real time, and then monitor these to identify and signal supply responses,
that all actions can be taken and consistently such as seeking product
missed targets and potential risk-triggers. substitutes or alternative suppliers
measured for expected outcomes. Most to promote coordination across
critical is the measure of patient-level service. Once again, it becomes imperative to the supply chain network.
Measuring available supply and actual demand contextualize the data so that stakeholders17 | Supply Disruptions Recovery Strategies for Public Health Supply Chains Post-Black Swan Event
FIGURE 11. RE-PLANNING THE SUPPLY CHAIN
PRE-SUPPLIER
COMMUNICATION
BENCHMARK
SUPPLIER RECOVERY,
LOOK FOR
INCREASED INCREASE SIGNALS
DELIVERY AND VELOCITY SUPPLIERS
DISTRIBUTION
SUPPLY LEVEL WHAT ADDRESSES RECOVERY
DISRUPTIONS THE DISRUPTIONS? PATH
For example, during the black swan (e.g., 5-10% of need) from a higher cost and are easier to move from ocean to air if
event, you may have found alternative but faster supplier as a way of maintaining a required. By reducing inventory cycles and
suppliers that offer a similar or higher secondary supplier if the primary supplier increasing ordering points, you are reducing
quality product that may have only a small experiences a delay or disruption. At the the overall volumes of commodities at risk.
additional cost, but who may be able to very least, procurement managers should
deliver with a shorter lead time. It may maintain a list of suppliers that they can call Overall, procurement managers should
make sense to procure a small percentage when their primary supply fails. pay careful attention to the demand
signals and the possibility of a new normal
Finally, over the long-term, smaller and avoid placing orders and distributing
shipments help protect against a future products that will result in the bullwhip
NEW NORMAL AFTER black swan event — for those large effect. Regardless of what steps and paths
COVID-19 shipments that were not received before are followed, the true ability to recover
In Nigeria, health commodity supply transportation is cut off as happened and lead the way to the new normal is
planning moved from quarterly to during COVID-19, stockouts were more communication, visibility and forward
monthly to guard against future likely than if small amounts were continuing thinking both upstream and downstream
interruptions. to enter. Smaller shipments are also easier of the suppliers.
to schedule and obtain cargo space for06.
PHOTO CREDIT: USAID GHSC-PSM
Demand & Supply
Disruptions
Demand and Supply Disruptions Require
a Stepped-Up Approach to Recovery
When both demand and supply are disrupted, a layered approach to Preparedness and Response resource
the problem uses demand recovery strategies to drive appropriate page for more information). The general
process is what appears below.
resupply strategies.
Supply disruptions have an immediate
and visible impact on the supply chain;
The fundamental steps are those swan events. Conduct scenario mapping
however, it is critical to understand
described for mapping scenarios: during the business as usual stage and
if there is both demand and supply
think through both the response to a
1. Define the Disruption disruption for a given product or product
disruption and recovery options, not just
family. Annual quantification may have
2. Analyze the Path to Recovery reacting to the immediate disruption.
been sufficient during the pre-disruption
3. Plan Scenarios With Stakeholders stage, but the demand disruption requires
More frequent planning is an updated demand forecast to better
4. Execute the Recovery Strategy needed to balance demand and align available supplies to where they are
Then monitor the planned execution supply, particularly when demands most needed. More frequent planning is
and re-plan, as needed, to remain aligned are changing, and supplies must be needed to balance demand and supply,
with changing conditions as the supply continuously reprioritized. particularly when demands are changing,
chain progresses to the new normal. For and supplies must be continuously
situations where both demand and supply Advance planning for post-event recovery reprioritized (Figure 12).
are disrupted, it becomes even more is key to creating resilient health systems
Following the four steps of mapping
important to adjust demand and calculate which can weather black swan events.17
scenarios, defining the disruption will
new supply requirements together. The Emergency Supply Chain (ESC)
identify those situations where both
playbook process was established through
A General Approach to Both demand and supply have been disrupted,
the Global Health Security Agenda to
Supply-Side and Demand-Side and drive the rest of the process.
help countries plan, during the business
Disruptions as usual stage, for how they will react 1. Define the Disruption
Procurement and supply chain planning in the short term by mapping specific, Determine the stakeholders and
managers at all levels should consider most-likely scenarios involving black swan donors whose products are disrupted,
disruptions up to and including black events. (See the Emergency Supply Chain which products are affected and where.
17
Nuzzoet al. BMC Public Health (2019) 19:1310 https://doi.org/10.1186/s12889-019-7707-z.19 | Demand & Supply Disruptions Recovery Strategies for Public Health Supply Chains Post-Black Swan Event
FIGURES 12. RE-PLANNING THE SUPPLY CHAIN
Categorize Demand Adjust Forecasts for Re-Plan the
Disruptions Anticipated Duration Supply Chain
• Unavailability of supply • Patients return when supplies restored • Assess time to sustain and recover
• Inability to visit facilities • Patients return post-black swan • Redistribute to balance supply/shifting
• Reallocation of health workers • Patients return when services restored demand
• Population displacement • Patients relocate due to shifting • Monitor process to eliminate bottlenecks
• Discouraged or fearful demands • Monitor supply impacts/ change demand
population • Patients return after awareness assumption
campaign • Develop public-private partnerships for
a resilient supply chain
Supply disruptions are evident, but 3. P
lan Scenarios corrected. Spikes or troughs in demand
the demand disruption requires Work with stakeholders to evaluate signals will level out to the new normal
intervention by the planner to adjust the trade-offs for different response demand picture once supplies are stabilized,
the forecast for the area and products options. There may be opportunity for or other factors affecting demands are
affected. Review any past or similar redistribution of available supplies, or addressed, such as regaining access to health
circumstances and any successful solutions to expedite existing resupply orders, facilities and healthcare providers.
that were chosen at the time. Define the or procure new supplies from new
scope of resources, especially the budget, sources. Added costs associated with the Frequent planning is critical in the
needed to address the disruption. recovery strategy should be assessed, and recovery from a black swan event. The
priorities established between different annual quantification process is essential
2. Analyze the Choices commodities and product families that also for budgeting and calculating long-term
Examine the impacts of the adjusted forecast require intervention. requirements, but the responsiveness and
and where and when existing supplies run flexibility needed to maintain demand
out. Make sure that any resupply orders that 4. E
xecute the Plan and supply balance requires continuous
cannot be filled due to the supply disruption Select the appropriate recovery strategy adjustments. The best practices in supply
reflect accurate/updated delivery schedules with stakeholders. Begin executing the chain planning include a monthly demand
so that the time to recover is accurately plan, including any redistribution planning cycle, at least, with a rolling
reflected in the supply plan. Consider efforts, sourcing new supplies, or even 12-month forecast that reflects changing
the alternatives of redistribution and partnering with the private sector. conditions. Measuring forecast demand to
prioritize where resupply orders should Settling on the appropriate recovery actual demand is central to planning the
be distributed when available. It may strategy is based on current conditions, appropriate stocking levels throughout the
make sense to collect a limited amount of so frequently revisiting both demand and supply chain to meet the likely demand.
data about stocks on hand, available funding supply conditions is critical. As conditions Countries that follow this guideline to
(including emergency funding) and supplier change, repeat steps in the planning cycle as frequently plan will be better prepared
and in-country lead times. If this is not needed to adjust for the new conditions. for sudden changes in supply chain
possible, a proxy for some information may conditions and will have the right
be needed to develop a forecast of demand Repeat this process throughout the black tools in place to tackle future black
and a supply plan to meet the need from swan event, with adjustments to demand swan events.
existing stock and future shipments. and supply as needed, until the disruption isYou can also read
