Calabasas, May 12, 2020:
Knowing that the logistics challenge of Desert Storm of the Iraqi War (1990-91) is pale in comparison with those unleashed by the COVID-19 pandemic, I reached out to
Joel Glende
,
Founder and CEO of
Paladin Logistics Consulting
and EVP of Manufacturing & Academia Member Engagement of the
Bio Supply Management Alliance (BSMA)
. He is also Chairperson of its Transportation & Logistics Steering Committee. Joel Glende, a veteran of the Life Sciences supply chain industry, has served
Abbott Laboratories
for 38 years, implementing strategic air-ocean transportation optimization, temperature-controlled logistics, packaging engineering, international customer service and company-wide strategic sourcing.
The Logistics Network supporting the Life Sciences industry is facing onerous Hyper-variability of demand resulting in capacity shortfalls as unprecedented effort is being made to save human lives. Exacerbated by the near shutdown of passenger airlines, adverse location of inventory, foreign sources of supply, and the ill-health of the trucking industry, Glende addresses how to overcome the crisis and mitigate risk.
MISHRA:
How would you describe the overall logistics network of the US dealing with the Draconian demands of the Coronavirus pandemic?
GLENDE
:
The Global Logistics Network has encountered unprecedented challenges in the last few months. The dramatic reduction in Airfreight Cargo Capacity in some market regions is more than 35% compared with 2019, therefore, our costs have been soaring in some cases more than five times contracted price. More critical than cost is the service disruptions that are the fallout of this nuclear-like event caused by a tiny virus. All corresponding logistics functions have been reeling from the adverse Air Cargo situation as well as the significant reduction in sailing strings and corresponding delays in critical movement of Asian and European goods coming by ocean into North America. This has caused a hyper-increase in Air Freight fulfillment need to meet the immediate demands when ocean container rolls occur.
MISHRA:
Recognizing the reduction in transportation capacity, how vulnerable is the logistics industry supporting healthcare?
GLENDE
:
The
Logistics industry has had adaptability and resiliency built in and much of it learned originally from the military Logistics network. However, in healthcare, with cost reduction and elimination of waste in the supply chain realized, logistics has never been so inflexible. The deployment of Lean Six Sigma to reduce days of supply has reduced the capability of the network to meet unforeseen demand surges caused by COVID-19. As a result, logistics has intrinsic weaknesses of dependence on passenger aircraft for movement of commercial freight, which includes Life Sciences and healthcare needs. USA is also to dependence on Asia, primarily China, for many sourced materials used in Pharmaceutical. As Ocean and Air Capacity dwindled recently, this exposed significant inability to fulfill the needs.
MISHRA:
What steps are being undertaken by the logistics industry to expand the capacity for transportation of drugs and related products?
GLENDE:
Since Pharmaceutical freight is one of the most profitable segments in our industry, Logistics Service Providers have been focusing on ways to team together collaboratively to create capacity for life-saving and other critical materials in the war on COVID-19. Also, the federal government has deployed FEMA and the military to properly prioritize commercial freight. Also, many companies have volunteered in the support of expedited logistics services in a multinational effort. BSMA has been at the forefront in promoting collaborative efforts to share knowledge among its members and their various Logistics partners. This array of efforts from many facets of Logistics will provide a plethora of dynamic solutions to insure life-saving medicine is available as needed.
MISHRA:
The biopharma industry has had inventories significantly larger than any other industry, often in excess of twelve months’ supply, what role can logistics play to satisfy demand at the grassroots level?
GLENDE:
Logistics plays an essential role in all aspects of BioPharma from Sourcing to Last Mile. As many believe that BioPharma has an endless inventory and long product shelf life, the reality is far from that. While many stable products with half a century or more of history have significant inventory like many Antibiotics and Antimalarial drugs, most new drugs are in limited supply and in many cases are made-to-order in the case of Cellular Gene Therapies. At the grassroots level our Logistics effectiveness in execution of customer demand is only as good as the relationships between the manufacturer/distributor and the Logistics Service Providers. Each link in the chain provides a vital role. At its essence, the deep understanding of the service needs and requirements, coupled with a thorough understanding and use of the Key Performance Indicators (KPI’s), allows for the interaction of shippers and service providers to be truly effective. Behind the scenes, effective Logistics Networks comprehend a multitude of variables to ensure a flawless execution for their clients. Finally, at the grassroots level the interactions between the shipper’s team of Logisticians and the Service Providers staff play a key role in the execution of business.
MISHRA:
Considering the reality of extreme shortages caused by surge in demand for products, the industry finds that inventory placement is not congruent with demand by location, how can logistics be deployed strategically?
GLENDE
:
Many companies have struggled with this area of hyper demand variability. As with most cases, the anticipation of variability by forecasts and demand planning scenarios play a crucial role in strategy for supply chains. Effective Strategic Demand Planning teams include all aspects of the supply chain to determine how to best serve customers that can include contingency planning. Many companies have created them, starting with Y2K, 911 and Swine Flu, for example. But to deal with significant shifts in demand, there needs to be flexibility in movement of goods regionally to adapt to these swings. It also highlights the need for deep systems tied with service providers to pick up the deployment flexing needed.
MISHRA:
The war on COVID Pandemic has surfaced the need for a National Supply Chain. How does Logistics Network become an integral part of it?
GLENDE:
In addition, nations need to develop a cooperative effort, including a national effort in the USA to bolster our Emergency Resiliency by the creation of a multinational Logistics Network in times of emergency. This needs to be a borderless effort that provides for special measures to be undertaken in each mode of transport to fulfill necessary demand from critically identified items in commerce. Nationally we need the proper prioritization and support of an “Emergency Logistics Network” or so called ‘National’ supply chain network” to provide hyper-critical fulfillment of all anticipated and identified items. This also should include designated regional Depots, likely utilizing Military Bases to insure the safety, support and prioritization methodology as part of our lessons learned strategy for the Resilient National Supply Chain Network.
MISHRA:
How does one overcome the bottleneck of the last mile when the airline delivery finds it difficult to serve the patients in the hospitals?
GLENDE:
This question is often misunderstood as the “bottleneck” perceived is actually a disconnect between shippers and their service partners. In last mile execution, sometimes “last mile” is really hundreds of miles. In direct to patient needs, the shipper plays the most vital role in understanding, evaluating and acting on the needs on an individual and customized service. Oftentimes, this may require “counter-to-counter” and courier types of involvement to execute flawless and repeatable execution.
MISHRA:
Nearly 30 years ago, the major international small parcel companies got into warehousing services to ensure the placement of inventory in a decentralized manner, close to point of use. What do think of that strategy for commercial distribution of PPE, drugs and associated materials?
GLENDE:
Supply disruptions certainly have the attention of the American People today. However, and most ironically, the danger signals have been here all along about potential pandemics and the needs for effective and decentralized distribution based on needs. Yes, a strategy, ideally supported by FEMA and the States would help as we go through lessons learned from this Pandemic. But ventilators and specific medicines though needed for Coronavirus may not be the need for the next emergency. Therefore, we need to improve in other areas that we can control to your point—the availability of having or sequestering small parcel warehousing for distributing needed items. I would think that we should also look at our military bases and associated logistics functions to have a more advanced capability for future emergencies. This might include the US Postal Service and other integrators in support of more effective logistics execution.
MISHRA:
How resilient are the logistics networks, both airline and ocean, between US and China and Europe?
GLENDE:
Resilient is a challenging word and interpretable these days, however, compared with only a few decades ago, one could easily see how massive all modes of transport are in the network of the global economy. Just look at how much we touch today is sourced and manufactured outside of the USA. Therefore, I would argue that our Logistics Networks are very resilient but would caution that we have many dependencies and weaknesses that can cause significant disruptions. I’m not saying that there needs to be more regulation or governance, but rather more forward planning with contingency planning to be able to have Commercial Logistics and the various governments work together in critical periods. We’re witnessing many tremendous efforts being done right now to service our frontlines in this battle for lives. All of these efforts require resilient logistics on a global scale. I’m so grateful to be associated with this tremendous group of Logistics Professionals.
MISHRA:
How would you summarize your message to the global community of BSMA?
GLENDE:
Just as our nation saw the consequences of dependency on foreign oil decades ago and today being a net exporter, we are seeing disruptive price wars because of the fine work done by our Oil and Gas industry. But this time, not tomorrow, but today, we need to strategically mitigate our dependency on one source or one country for a multitude of critical items that are surfacing today. Now is the perfect time to call on volunteers from the highest levels of business, who in so many cases have profited from the bounty of our nation…
Case in point examples include the real need to upgrade our aging infrastructure as a national priority. Also, as a counter to our dependency on air cargo, we need our intermodal networks significantly upgraded. Our Rail Network is at least two generations behind where we need to be as a nation. A resilient and modern commercial cargo rail network needs to be built so we can have more flexible options to endure the Future Shock.
