Logistics Management Group News Editor Jeff Berman recently spoke with Jonathan Foster, principal consultant, at Proxima Group, a strategic team of procurement specialists with more than 25 years of consultation and supply chain experience. Berman and Foster talked about various topics, including the many moving logistics parts of the ongoing distribution of the COVID-19 vaccine, supply chain disruption, and the cold chain, among other topics. Their conversation follows below.
LM: How can supply chain stamina be impacted by vaccine distribution and billions of doses manufactured?
Foster: People want to label 2020 as the year of COVID-19, but I want to call it the year of disruption, whether it be natural disasters or COVID-related business openings or closings, or mail-in ballots, or any other of these disruptive events. If you look at the growth of e-commerce, too, it was a mass amount of disruption. When you look at it on a macro level, or a higher level, what you are doing is you are inserting an absolute pressure on a supply chain infrastructure that on a macro level is already stretched and full of disruption. The good news is that the vaccine represents hope and positivity…but it is stretching what was already stretched.
LM: How will continued demand affect alternative raw material suppliers covering key components of the vaccine distribution such as dry ice, refrigeration, glass, PPE etc.?
Foster: I think you almost need to delineate it and break it up by vaccine type. Pfizer requires its vaccine to be stored between minus 60 and minus 80 Celsius, with Moderna between 36 and 48 Celsius. My understanding regarding the raw materials challenges is if Moderna followed the same path…it would have put further constraint, because the infrastructure, particularly in rural America, is not as robust, meaning there are not places to keep a vaccine stored at a very cold temperature, like the Pfizer vaccine, and it is tougher to get it out and dispersed. Beyond that, infrastructure for storing the Moderna vaccine is already there. When you talk about raw materials to disperse, it takes the pressure off of the valve, with the country pretty well spread between rural and metro America. If you think about that from a raw materials perspective, if you take 50% of the pressure off of that equation, that takes a finite type of resource and infrastructure and relieves the pressure. In talking with some people in the pharmaceutical sector, I learned that the glass for vaccine test tubes historically don’t get recycled much. But if you think about the vaccine being administered in a single shot, we need to be recycling those test tubes and take pressure off so that there are enough vials. Theoretically and practically, recycling could help with that. You have the precedence with raw materials in that this is a once in a generation event…if you can do something in wartime, you can do it in a once in a generation pandemic, in terms of putting precedence where glass is. The raw materials by the way the divergent paths the two vaccines came out—and the physical requirements to handle them—took pressure off of the valve, in terms of the raw materials and the practical application of deploying it.
LM: The World Health Organization estimates that 50% of vaccines may be wasted in the world every year, because of shipping, logistics and temperature control challenges. Given the last-mile delivery challenges and disruptions in the cold-chain, what can distributors prepare for to cope and adjust to this?
Foster: That is probably the most difficult piece of this, in terms of the cold chain and the number of eyes and attention around things like track and trace and temperature integrity, infrastructure, and other things, too. This is a life-depending situation, and the amount of finger pointing around that is likely to be very high if something goes wrong. And in logistics it is not if something goes wrong, it is how often. It has become a lot about predictive success. Storms and delays happen, so how do you build the biggest predictive success so you have the minimal amount of waste and fast and fluid and traceable deployment as possible? That is the challenge.
LM: Looking ahead to the future, when the vaccine distribution efforts are complete and hopefully successful, what do you think some of the eventual lessons learned will be?
Foster: As a practitioner, I think the first thing is the importance of supply chain and logistics at the table. I believe my fellow logistics and supply chain professionals will shine. It is an underappreciated aspect of corporate America that people just assume “happens.” That is the pinch point, or the tip of the tail, that most people never want to think about. But if you can develop a vaccine and have it ready and produced and you cannot deliver it, then it is catastrophic. But I don’t believe that is going to happen. When we look back in six months—and I am taking pride in our industry in this regard— I think we are going to see how our industry and our carriers and our networks and infrastructures shined at an unprecedented level in an unprecedented time. I think that this is what we are going to see. On a separate note, I think one of the lasting impressions—and separate from the vaccine—I think we will never see traditional retail go back to what it was in the past. I think people have gotten accustomed to getting groceries delivered to their front door or ordering online and pulling up and getting them loaded into their car. When we look back, that change is permanent. Some people will miss it, and it may soften at some point. But there will be a large percentage of the population that don’t want to go back in and risk the chance of being exposed. The year of Covid and disruption will leave longstanding impressions on peoples buying behavior, and you can point directly to logistics and e-commerce fulfillment as a part of what we do. The Great Depression, for example, changed buying patterns for life, and what is happening now will leave a fingerprint on peoples buying habits past a vaccine and going forward. It is going to leave that impression, and you can see that with some estimates indicating the amount of parcel shipments are going to double over the next five years.
LM: Looking at parcel, what kind of complications were you anticipating with holiday shopping constraints in mind leading up to the holidays?
Foster: I think our industry should be proud. With the number of constraints, change, and disruption there was, I think it responded very well. It evolved at a pace that was truly historic and unprecedented. In the last recession, we saw value-based retailers change, with options they were developing for in-store order pickup. Even in an elongated supply chain, you were looking at things that evolved fast. From a practical perspective, early in the pandemic, you could only get groceries at Walmart for in-store pickup, but at Target you could do everything. We saw that evolve with the nation’s largest retailer. It is broader than just parcel. For a consumer to be order to click to order groceries on Amazon and have them delivered that evening, that is amazing and not going away. The industry has gotten a seat at the table, and it is not going away.
LM: With the outbreak still raging, what vaccine distribution challenges could still lay ahead?
Foster: If you look at Moderna, and how it is being tasked for rural America, it is about penetration. There is more geography, which makes it different than going into a large city like Chicago. But in rural Illinois, the distance becomes an issue. The challenge is it will take a day or two longer to penetrate, but I think the saving grace of that is rural America is used to an outside in mindset, meaning if you live in a rural farm area you are used to driving 30 minutes to drive to a town to get your groceries or prescriptions, because they are not next door. It is a real practical fulfillment issue, which makes the Moderna vaccine the right move for rural distribution, due to its temperature requirements.
LM: Aside from vaccine-related efforts, what do you think are some other aspects of supply chain that are only going to gain further traction moving ahead over the next two-to-five years?
Foster: The importance of visibility is number one, meaning where your product comes from and where it is at. If you look at an elongated supply chain that may start in Asia, as an example, you want to know where that comes from if some kind of disruption happens, and you want to know how much of your supply chain is tied to that regional area, and when it is in transit. The importance of that has been highlighted in this Covid environment. Companies were exposed, and I think we will see a more balanced supply chain, for prices and other things, as it is about continuity of supply. Looking forward, that will continue to evolve, and, for some retailers, it is about making sure the shelves are full maybe more so than the assortment so there are things on for shelves for consumers to consume.
About the Author
Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman