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December 27, 2021
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We thought the national PPE stockpile could stand up to COVID-19. It didn’t. Here’s how we can prepare for the next unexpected disruption.
Forecasting charts. Projected earnings. Predictive analytics. In today’s rapidly shifting landscape, society is constantly trying to plan for the future. However, when it comes to getting ahead of major disruptions on a scale like the pandemic, the truth is, no one has the answers.
Looking back to late 2019, few could have anticipated the impact that COVID-19 would have not only on public health but also on the larger global economy. As supply chains came to a screeching halt, nations hurried to assess their disaster relief stockpiles to determine how much personal protective equipment (PPE) they had on hand to outfit their relief workers and care for the sick. Only then did many realize they hadn’t planned accordingly.
Certainly, this was the case in the United States, where in a matter of days following the CDC’s pandemic pronouncement, New York City and nearby states became the epicenter for the novel coronavirus. Although it would seem that America’s Strategic National Stockpile (SNS), a series of federally managed storage facilities tasked with overseeing the nation’s medical equipment and other emergency supplies, would put us a step ahead, the reality was different. We simply weren’t prepared for the sheer scale of the pandemic and did not have enough PPE. Further, a lack of proper maintenance meant much of the equipment had already expired.
When the SNS failed, the United States looked outward. It became clear that nations like China — which had already been dominating the global PPE market through immense scale (and therefore cost advantages), government subsidies and its global supply chain position — would not be able to provide relief. Without any immediate solution in sight, entire industries shifted their focus to providing aid, be it small businesses churning out face masks and face shields, auto manufacturers building respirators, or restaurants providing free meals.
Now, we’re seeing the impact of businesses returning to a pre-pandemic status quo: Small businesses that pivoted during the pandemic to manufacture various PPE items are being forced to let go of staff they brought on during the height of the pandemic. Hospitals are once again sourcing their PPE from overseas — the reason being it is cheaper and there isn’t enough production capacity for many PPE items in the United States.
Familiar themes of panic and apathy course through the scenario. When disaster strikes, we promise to be better prepared for the next incident. Once the initial impact wears off and the dust settles, we often go back to business as usual until the next incident occurs and we’re left scrambling all over again.
Incredibly valuable, and painful, lessons were learned during the pandemic around supply chain issues, the need for leadership in times of crisis and the importance of collaboration. Undoubtedly, there will be future disruptions. While it’s difficult to know what they may be, it’s entirely possible to be better prepared. Here are three areas where we can start.
Manufacturing PPE Closer to Home
The value of either onshoring or nearshoring PPE production cannot be overstated. Domestic or nearshore PPE manufacturing would not only shrink the size of the supply chain, but it would also create new jobs and opportunities for everyone along the value chain. What’s more, it would mitigate the need to rely on foreign nations like China to provide critical PPE. Manufacturing, distributing and selling locally would offer a massive boon to the economy and also enable greater flexibility.
The challenges at the moment are largely around cost. Other nations have had decades to build up their scale of production and can thus provide goods at a relatively lower price. However, at a time when the cost of ocean freight has skyrocketed, having the ability to manage a smaller, more fluid inventory would be ideal. This would help the SNS more effectively maintain its stock and reduce the costs of both storing and transporting PPE. What’s more, it mitigates the risk of once again needing to rely on another nation for essential goods.
Providing Federal Leadership and Subsidies
At the onset of the pandemic, the director-general of the World Health Organization (WHO) made it clear that it was up to the leaders of the world to act swiftly if they wanted to curb the pandemic. And while some heeded the WHO’s warnings and acted with urgency, others were quicker to try and cover up news of the spreading disease. Months later, the lack of federal leadership in the United States led to multiple instances where states were bidding against one another to procure some of the nation’s scarce supply of PPE.
It’s hard to say whether the government could have successfully allocated resources accordingly had the SNS been fully stocked with functional PPE. However, it’s apparent that the United States’ overreliance on foreign sources — primarily China — presents an issue.
If PPE were to be produced domestically, government-backed subsidies would allow it to be sold at the same price it was being purchased at pre-pandemic, alleviating the cost of production while also encouraging public-private partnerships. This could lead to greater value further down the line. For instance, distributors could not only play a role in transporting PPE from the manufacturers to the hospitals but could also hold onto a small amount of inventory themselves. The result would be a more flexible, adaptable supply chain that circulates PPE at a discounted rate the closer it gets to expiration.
Reexamining the SNS
It’s important to recognize that the failing of the SNS was more or less a product of poor supply chain management. While it would have been nearly impossible to predict the pandemic, there could have been more diligent procedures in place that ensured PPE was being used before it expired by working more closely with local hospitals. Given the fact that the SNS is still operating out of leased storage space, there’s never been a better time to invest in creating more dedicated spaces for the preservation and storage of PPE.
Innovative technologies will play a major role in reimagining the SNS. Whether it’s using RFID tags to keep an eye on products in real time, adopting cloud-based interfaces to make data insights more easily accessible or even simulating future scenarios using digital twins, there are several technologies that can be deployed. Again, this is an opportunity for greater, more meaningful public-private partnerships.
We don’t know when and where the next great disruption will come from. The caveat of precedents is that they only account for what has already happened. In the meantime, the best thing we can do is stay true to our promises and ensure we’re ready for whatever the future holds.
© Copyright 2021. The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.
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December 27, 2021
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