Developing supply chain immunity for future pandemic disruptions

COVID-19 taught Americans a lot of valuable lessons. Many organizations tried their best to provide the necessary supplies to mitigate the pandemic. In spite of that, lack of vaccines and shortages of personal protective equipment (PPE) at the beginning made matters worse. At the time of this writing, there are more than 40 million cases and more than 692,000 deaths in the USA. For a rich country like the USA, this is a sad outcome.

Disasters have been classified in many ways. The level of difficulty for mitigating the disaster depends on whether there is a slow or sudden onset and whether the disaster is localized or dispersed (Apte, 2009). There seem to be other factors that interfere with the immunity of supply chain. We hypothesize that high availability of information at the beginning is feasible if the pandemic is localized, which in turn generates public trust. For a pandemic that is dispersed, thus involving people of all kinds, as the pandemic lingers the availability of accurate information from a single authority of truth goes down, and that creates lack of public trust. Figure 1 explains this concept.

Pandemics are often of slow onset and linger for a longer time. They can disperse quickly as the virus spreads or mutates, but vaccines can mitigate this spread and mutation. For this reason, the deaths in the USA pre-vaccine are understandable but not after the vaccine became available. As new information is provided by agencies and the media, we reach an optimal level of public trust, but as such information increases in variability over time distrust sets in. This distrust is not so much tied to lack of information as much as lack of verifiable accurate information (Figure 2).

Based on this framework, COVID-19 represents a disaster with a slow onset, yet one which is dispersed around the globe. Dispersion was largely a function of international travel, as infected passengers traveled from China to Southeast Asia, Europe, the USA and South America. Our analysis of supply chain disruptions, developed through Resilinc (https://www.resilinc.com/), a supply chain disruption tracking platform, shows the domino effect of COVID-19 on supply chains, as shown in Figure 3. One can observe how COVID-19 moved across the world and began to disrupt supply chains first in China, then Europe and into the USA. It eventually spread back to other areas like Southeast Asia. Variants of the virus, such as the South African and Indian (Delta) variant, also spread slowly and created a fourth wave in many Western countries, such as the United Kingdom and the USA.

During a pandemic such as COVID-19, the distribution and delivery of critical supplies and services to the affected population proved a major undertaking. Lockdown of factories and offices, export restrictions and rapid spread of the disease among workers in congregate settings created multiple shortages of medical products, particularly in areas where manufacturing assets did not exist for these supplies. Response supply chains for vaccines and PPE should be established in anticipation of pandemics and need to be robust. Unfortunately, governments did not provide adequate warning of the spread of the pandemic, resulting in significant medical shortages, overwhelming populations showing up in intensive care units and emergency rooms in hospitals and significant loss of life during the early months of the pandemic in many Western countries (Handfield et al., 2020).

In this article, we examine one aspect of strategically “prepositioned” supply chains. Our primary objective is to review the experiences our team went through during COVID-19 and prepare a rationale for a new type of capability required to address such slow-moving, dispersed pandemics in the future. We define this capability as “supply chain immunity” and describe the characteristics of this capability in terms of what we observed was lacking in many humanitarian and government supply chain systems.

We introduce the attributes of supply chain immunity. Based on this, we suggest approaches for developing future supply chains in case of slow, lingering disasters such as epidemics or pandemics in the future.

COVID-19 impacted considerable humanitarian operations. We believe the concepts and model of “supply chain immunity” presented in our research are particularly important for humanitarian organizations to absorb, given that pandemics have spread worldwide due to lack of preparation and prepositioning. Nongovernmental organizations (NGOs) such as MSF (Medicins Sans Frontieres or Doctors without Borders) are one of the first organizations to help when local government organizations in an underdeveloped country are overwhelmed by such a large disaster. COVID-19 response took humanitarian response to a new level, resulting in a whole-of-world response from NGOs such as Project N95 and the Helena COVID-19 Network Project, global relief partnerships such as COVAX, the World Health Organization (WHO), military and governmental organizations in the affected country that get called in for assistance, like the Army National Guard in the USA, the Federal Emergency Management Agency (FEMA), state-level chief procurement and emergency management officers, the Defense Logistics Agency, Department of Health and Human Services and US Air Force Contracting (Handfield et al., 2020). All of these seemingly disparate organizations were working to address the shortages created by the pandemic concurrently but were not always aligned in the same direction. So, while there was a whole-of-world response, the effort was not coordinated with a whole-of-world strategy. We use our engaged scholarships findings, analysis and recommendations in this paper as an early guide to aid these parties in pulling the same direction the next time around.

Recent research from the COVID-19 pandemic provides rich criticism of long-term concerns and areas for future progress in managing such events. Supply chain immunity has been offered by experts as an analogy for resilience and agility. Handfield (2020), Handfield et al. (2020) and Handfield et al. (2021) developed rich propositions for these concepts as the supply chain evolved at the start of the pandemic. Glas et al. (2021) discuss similar immunity analogy concepts for the purchasing and supply management and identify research gaps citing earlier works in humanitarian logistics (Falagara and Wakolbinger, 2019; den Boer et al., 2020). Glas et al. (2021) provide a detailed analogy of supply chains and immunity yet fail to acknowledge the earlier works surrounding the concept. This omission may be a result of the rapidly evolving and nascent nature of this idea in the literature. This paper provides the first detailed explanation of the supply chain immunity concept in humanitarian logistics literature, building upon these earlier works.

Altay et al. (2021) discuss a framework based on global pandemics and the spillover of pandemic impacts. They suggest that increased coordination is required among humanitarian organizations to improve and expand the performance of humanitarian logistics on the community. This concept is at the heart of our research.

The COVID-19 pandemic created many issues in the medical supply chain. Dolinskaya et al. (2018) write that following a substantial disaster like the COVID-19 pandemic, one of the most important components of the supply chain is distribution of critical medical supplies. The authors conducted 11 interviews on “logistical challenges of the medical emergencies” (p. 199). They identified the factors affecting the efficacy and efficiency of the humanitarian medical supply chain and created a framework. They conclude that this supply chain is complex, requiring interdisciplinary team of experts. To some extent, our research proposes a similar framework that includes the gathering and use of both market and medical intelligence by requisite experts.

Sokat and Altay (2021) address the particularly harmful impact of epidemics and pandemics to vulnerable populations. The authors discuss how humanitarian supply chains have mostly explored lifesaving operations but most not cover the mitigation of inherent risk factors and exposure of certain populations. Their article conducts a review of research that intersect on the three dimensions of epidemics/pandemics, humanitarian operations and vulnerable populations.

Other work has focused on specific regions such as Africa. Ahanhanzo et al. (2021) explore the regional resources and their utilization for the first year of the COVID-19 pandemic in West Africa. They compare the data from West Africa with the data from USA as of March 14, 2021. Their article claims that:

They hypothesize that since African countries have had much more experience with epidemics and pandemics, they have their response strategies build on resilience based on past experiences, such as the Ebola outbreak in 2014. Babatunde et al. (2020) specifically review logistics models that were used due to medical and healthcare emergencies. The research finds that:

On a similar note, Thompson and Anderson (2021) study issues for future humanitarian supply chains in response to COVID-19. Their editorial paper offers viewpoints that create a context for the articles in the special issue, and frame the research for “vital work necessary to understand and make the humanitarian supply chains more resilient” (p. 157). The viewpoint is based on a small case-study focusing on USA using “contemporaneous reporting in USA newspapers between February and July of 2020” (p. 157).

Operations researchers in humanitarian supply chains have proposed that supply chain practitioners cannot be completely reactive and void of predetermined goals. They have suggested an exploration into combining theories such as social exchange theory and transaction cost theory as a way to reimagine how we understand humanitarian supply chains that operate in environments of higher political and military influence than those in steady state commercial operations (Olortuntoba et al., 2019). They have also suggested theory extension which we provide with our concept of supply chain immunity.

Much of the post-COVID-19 supply chain research has mirrored other humanitarian studies, focusing on concepts of resilience. We expand this research focus by developing the concept of supply chain immunity for humanitarian supply chains. Immunity involves a blend of resilience and agility. Humanitarian supply chain issues and disruptions can be reduced by taking an immunity approach to supply chain management and logistics. We suggest that critical entities (private sector enterprises, governments and non-profits) need to collaborate to create immune systems that are resilient and agile after an event in one time period, to increase preparedness for similar events in future time periods. A case in point is that the USA relied almost exclusively on China for PPE before 2020. However, during COVID-19 the USA, and others, had to deal with disruption discovery, recovery and the need to redesign massive areas of their global supply chains for PPE (Blackhurst et al., 2005). Had America and others operated under our concept of supply chain immunity, they likely would not simply do things like stockpile (resilience only). Under our suggested framework, entities work to build immunity responses with concepts like strategic sourcing plans for PPE and other critical materials with alternative sources, new technology replacements for current designs and a build-up of domestic capability to manufacture critical suppliers and train for, recruit and retain critical skills in supply chains. We believe our research provides an important practical framework to bridge these gaps in humanitarian logistics research based social exchange and transaction cost theories.

Social exchange theory considers the obligations, expectations, risks and rewards that arise from exchange as well as the creation and cultivation of political and social relationships that arise from repeated exchanges that can exist at various levels and build shared, common network understanding (Emerson, 1976; Granovetter, 1985; Biggart and Delbridge, 2004). Supply chains contain elements of social exchange and the ongoing networks established therein have shown to increase efficiency and effectiveness (Choi and Hartley, 1996; Johnston et al., 2004). When major supply chain disruptions occur such as those seen during COVID-19, traditional networks and social exchange relationships can become disrupted as well. This leads to the need for the ability to create, reform or dissolve previous exchange relationships in rapid fashion without adding additional layers of uncertainty and chaos. Humanitarian supply chain managers have to consider this possibility in the future and plan to manage these relationships across ever-increasingly complex global supply networks. Supply chains that seem certain one day can literally become a global commons rife with erratic buying and selling behaviors overnight when information is lacking or miscommunicated across disrupted exchange networks (Handfield et al., 2020).

Similar to social exchange theory, transaction cost theory considers the most efficient means to conduct transactions by minimizing costs to do so (Williamson, 1979, 1986). Transaction cost theory has various components that lay the foundation for a concept of supply chain immunity during pandemic disruptions. For instance, asset specificity speaks to the value of an asset for one exchange purpose that is not transferable equally to other use cases. For instance, some of the equipment in the strategic national stockpile (SNS) was obsolete by the time it was needed. Further, contractual warranty terms on testing equipment created a situation where expendable component asset specificity risked voiding critical equipment warranties for test machines, requiring agencies to decide whether or not to delay tests to protect equipment warranties or violate them for near-term needs. We are still dealing with a situation where asset specificity for N95 respirators is leading to shortfalls in certain US-based needs based on brand specificity that could be met by our foundering domestic PPE manufacturers. Such levels of specificity are generally based on the bounded rationality of an ignorant consumer market and one that is compounded in environments of high uncertainty (i.e. global pandemics). Bounded rationality impacts both decisions and rules of operation (Olortuntoba et al., 2019). Supply chain decisions are made with imperfect information and asymmetric information. Information asymmetry can lead to agency problems such as moral hazard and adverse selection. With imperfect information and chaotic environments comes the chance that supply chain managers and procurement personnel will make risky choices in sourcing materials and services from parties that are not qualified, the adverse selection problem which has been seen throughout the COVID-19 crisis. Further, as the chaos of a global pandemic unfolds and public funds are thrown around ad hoc, there is less and less opportunity to monitor agents (contractors) and more incentive for them to engage in opportunistic behaviors that may not benefit the principal; the moral hazard problem that has also been endemic across the globe during COVID-19. We witnessed a plethora of opportunistic and bounded rationality exchange behaviors during COVID-19 that completely skewed the visibility into PPE stock levels (Finkenstadt and Handfield, 2021a, b).

Social exchange theory and transaction cost theory provide a platform to view the risks of attempting to make large, uncertain supply chain decisions during global humanitarian crises. In order to avoid or counter those risks we offer the concept of supply chain immunity. Supply chain immunity constitutes an integrated medical, policy and supply chain intelligence system. One of the most important lessons learned from the COVID-19 pandemic experience was regarding the disconnect that exists for a robust medical and biological surveillance mechanism, which can be linked to a cohesive national response for supporting materials to combat a healthcare risk. As noted in recent research, “Disease outbreaks like COVID-19 have not historically been considered a national security matter” (Lentzos et al., 2020). Rather, the focus of concern was primarily around systematically designed biological weapons (Lentzos et al., 2020). The WHO, which has traditionally been reluctant to address security-related issues, has stated bluntly that in the case of epidemics or emerging infectious diseases, “In most situations, the public health system will be the first to detect cases and raise the alarm” (World Health Organization [WHO], 2002). However, the failure of public health systems to respond to COVID-19 has led to the recognition that a different model is needed. As stated by Lentzos et al. (2020), “To strengthen global health security and health intelligence, the traditional state-based intelligence community must actively engage with non-security stakeholders and incorporate space for new sources of intelligence.”

Fatal flaws in our medical and healthcare supply chain systems are not new. Indeed, a recent review of health security warning intelligence failures was recently compiled (Wilson et al., 2020), providing fresh evidence that our current public health surveillance practices are part of a consistent pattern of warning intelligence failures that have persisted for over a century. Very often, intelligence failures are a function of dismissing clear signals of unusual respiratory diseases, failure to recognize changes in seasonal strains of influenza or – most often – a failure to communicate with critical stakeholders. Warning from a national security perspective can be viewed as:

The recognition that warning failures can produce a loss of life in the USA equivalent to the Vietnam War is a sobering thought and calls for a new approach in government. The usual channels, such as the Centers for Disease Control and Prevention (CDC), FEMA, Department of Homeland Security and the Office of the Assistant Secretary for Preparedness and Response, failed by any measure to prepare the USA for COVID-19.

Our vision for the requirements for a renewed SNS system is closely related to the concept of supply chain immunity (Handfield et al., 2020). A supply chain immune system works in much the same way that the body’s immune system recognizes and eliminates invaders. One’s body has an innate immune system, active from the moment of birth (Johns Hopkins Medicine, n.d.). When the body recognizes an invader, the immune system takes action immediately, sending “warrior” cells called phagocytes to surround and kill the invader. Another immune system, called the acquired immune system, produces antibodies that protect the body from a specific invader. These antibodies are developed by cells called B lymphocytes, after the body has been exposed to the invader. Once exposed to a threat, such as a virus, the immune system recognizes that particular threat and defends the body against it. This is the essence of immunization: It trains the body to produce antibodies to protect against harmful diseases.

Then how does immunity apply to supply chains that are under threat? Imagine describing supply chains in terms of the flows of materials between buyers and sellers, who in turn have their own sets of buyers and sellers, all interconnected in global flows of materials and funds moving between them (Handfield, 2020). Managers can create demand- and risk-sensing capabilities at the right points in these flows, as well as alerts and plans to prepare for events that can disrupt or alter these flows.

The physical laws of nature play an important role in framing the concepts of this paper, as do the laws of biology that exist in supply chains. As we began to think about what is happening in today’s supply chain systems, it became clear that a few critical variables are at play. These variables mimic the properties of physical phenomena, specifically the ways one’s body develops immunity to viruses and infectious diseases.

To begin with, mass, motion and time are critical components defining supply chains. All the elements of supply chains – cash, inventory and information – can be defined in terms of both their motion and the time associated with the beginning and end of that motion.

So, what is the most important metric governing physical supply chains? Free cash flow is the most important element, as it is key to every job. Supply chains can be characterized as material in motion. Stated another way, supply chains are cash in motion. The fundamental law of supply chain flows is that faster movement of materials is better than slower movement. The faster cash moves in the echelons of a supply chain, the faster free cash flow is generated for a business in a defined period.

We advance the notion here that free cash flow can also define unhealthy supply chains. When material is sitting in inventory instead of moving, it cannot generate free cash and thus loses value. Likewise, when the blood is not flowing well in a human body, the cells cannot fight invaders as well as they should. Thus, the laws of motion derived from the first principles of physics can help us understand why material is not moving, and why it is sitting still.

Another important and related factor involves distance, which determines relative speed and acceleration. By studying how the laws of time, motion and distance apply to supply chain phenomena such as cash, material and information, we can begin to derive the key laws that frame ways to design more effective supply chains. We need supply chains that are more autonomous, can better sense demand and are less dependent on human response.

We will demonstrate how the ongoing evolution in supply chain flows has important implications for how supply chains can respond to threats through improved immunity, and how managers can observe and exploit these flows. The concept of supply chain immunity is further operationalized using evidence for these insights gleaned from our many years of working with leading enterprises, observing managers in action, and in some cases tying ideas to the metaphor of natural physical flows. The post-COVID-19 world will require supply chains that can evolve in response to the new threats imposed on them, including new emerging pathogens that threaten global supply chains (Gottlieb, 2021).

The world we knew in 2019 became forever changed in 2020. Although global supply chains have grown more efficient through improvements in software technologies, cloud computing and mobilization, many business processes have been forced to rapidly adapt and innovate in a post-COVID-19 world. Disruptions shut down many businesses. Lack of consumer demand left products stranded, rejected or heavily discounted. Bloated inventories had to be written off as obsolete. Capacity imbalances in different tiers caused shortages, booms and busts. Moreover, product shortages occurred regularly, especially in healthcare, food, pharmaceuticals and electronics. The US national stockpile was woefully unprepared to deal with the onslaught of the pandemic in hospital intensive care units (Finkenstadt et al., 2020).

Compared to the physical world, which has evolved over millions of years, our modern-day supply chains are at an infantile stage. We can certainly do better, and the opportunity for improvements in supply chain design and structure is massive. Using the natural world as a source of inspiration, we can see how even the smallest detail has adapted to changing circumstances over time and continues to adapt. Events like the COVID-19 pandemic will catalyze a new spurt of adaptations in supply chain design.

Supply chain management is about getting things moving – in other words, flow! Flow applies not only to roads, airports and ships, but also to how we think about getting things to people. Companies such as Amazon have constructed massive distribution centers near major hubs including Los Angeles, Atlanta, New York, St. Louis, Raleigh and Chicago, with direct access to on-ramps to interstate highways built in the 1950s. We not only need to leverage what is already in place but also to ask ourselves how we would design an optimal supply chain from scratch. How do we design supply chains that not only result in the lowest cost but that also flex under pressure? How can we ensure that supply chains do the least damage to our environment by reducing fuel consumption and preserving biodiversity?

Just as palmetto trees flex and only lose a few leaves in hurricane-force winds, while pine trees snap, our supply chains must bend to withstand the storms of major pandemics and imploding financial systems. Many experts talk about creating supply chain resilience. Instilling a supply chain’s resilience by carrying a lot of inventory and retaining wasteful redundancies is like surrounding a pine tree’s roots with concrete and inserting a steel pole into its trunk to make sure it does not break (Sheffi, 2017). This solution is inefficient, costly and ultimately harmful to enterprises. A better way is to apply the laws of physics to create supply chain immunity.

A company’s ability to act quickly based on early notification of events is critical to creating an important organizational resource for the future. We define supply chain immunity as the capability of an organization to detect changes in its ecosystem, recognize the shift in conditions, and respond in an agile manner to accommodate these shifts. Given how the flows of nature occur, a company’s ability to detect signals and act quickly before a disaster strikes, its network shuts down, and a disruptive event takes place, is more critical than ever. In a post-COVID-19 world, how do we develop the capabilities to optimize and design supply chains based not just on lowest cost, as we have done previously, but on the ability to flex under pressure and operate under duress?

Supply chain immunity is an organization’s ability to survive in the face of massive disruptions of products and services in its supply chain. However, many of the professionals and academics working in supply chains have noticed that it is not enough to know where the disruption is occurring; it is essential to know what to do in an emergency. What this means is having a playbook that presents a plan for how to respond, that provides guidelines for people to follow when something unexpected happens. It should be general enough to cover any potential threat. It is also necessary to know how to minimize the potential effects of supply chain failures from shutting us down, should a major global event like a pandemic affects us. What the world needs is a plan for ongoing and persistent immunity.

Two of the primary requirements for supply chain immunity are the elements we discussed earlier: visibility and velocity. Let us explore this further. Because of the rapid succession of shifting events over the persistent COVID-19 crisis, the need for real-time supply chain information has never been clearer. People working at home need to see what is happening in their supply chains right now and need to review these data with others to reach immediate consensus on how to deal with unexpected disruptions. Real-time data lead to action plans on how to deal with new crises and disruptions. Although many digital supply chain tools have been adopted in recent years, they are only as good as the timeliness of the data that are presented in them. A look backwards is unlikely to be helpful. Think of looking at a speedometer on your car as you drive down the road. You need to know how fast you are going right now, not 5 min ago.

Organizations also need to train managers on how to make decisions using real-time data. This means creating a culture where managers are not afraid of deciding based on these data, or what is often called the “hinge factor”. A hinge factor is a defining moment, decision or event that turns the tables and ultimately affects the flow of events in a battle, society or supply chain situation. For example, the contract manufacturer, Flex, developed a real-time analytic system, that tracks all of their inventory across 88 different global factories. Their “control tower”, called “The Pulse”, shows where material is flowing across their system, and whether it is on a truck or plane during transport, sitting in receiving, being worked on or being shipped to a customer. In the case of Flex, the Pulse created hinge factors for all managers, who had to learn how to make decisions using real-time data. Flex’s new ability to see what was happening in its supply chain required a cultural transformation, which required managers to rapidly absorb information and adapt to environmental shifts. Flex was not able to do this just because they had nifty tools and lots of data. Flex had to purposefully sit down with all key stakeholders in the value chain and ask about goals and potential decisions they might face. From there they were able to design and construct the right signals using the best available data in a world of data saturation. Understanding an organization’s critical decisions, signals and data along their value chains is critical (Finkenstadt and Handfield, 2021a, b).

A greater number of organizations are investing in systems that produce real-time data on changing situations, allowing managers to respond to these data more quickly. For instance, the Resilinc platform provides rapid updates on events occurring near an organization’s major distribution centers and suppliers in its network. It can rapidly notify managers of a disruptive event and the net financial impact of a disruption on other nodes (physical entities or planning points) in the supply chain. This increased intelligence is equivalent to having accurate, up-to-date intelligence in a battlefield. However, as Durschmied (2000) points out in his book, The Hinge Factor, it also requires that generals in battle, as well as managers in the field, understand what to do with the intelligence. Knowledge without action is a choice that is often viewed with regret in hindsight.

In seeking to understand the characteristics of supply chain immunity and how it related to the need for a renewed SNS, we adopted an inductive observational approach, based on our team’s extensive involvement in the national COVID-19 healthcare response during March–June 2020. Traditional supply chain and operations management research methods have relied on case study methods, which are often positioned using structured interviews and targeted respondents. For instance, Yin (2014) notes that case study research is most appropriate when researchers are interested in learning how or why something occurs, when the research focuses on contemporary events, and when no controls of behavioral events are necessary. Yin readily acknowledges that the results of case studies are not generalizable to populations, and that their purpose is to “expand and generalize theories” (p. 10). Voss et al. (2002) note that case research in operations management can be used in exploration, theory building, theory testing or theory extensions. However, when confronted by an episode such as the COVID-19 pandemic, in which events are moving so quickly that structured interviews cannot be planned ahead of time, qualitative interview protocol are often lacking, and the problem has not yet been defined, a different sort of method needed to be employed to analyze the results of this work. The methods described above are well defined and are recognized as appropriate for development of new forms of supply chain theory building. Qualitative case studies are an appropriate approach for development of new concepts such as supply chain immunity (Handfield and Melnyk, 1998).

Our approach in this paper can best be summarized in Figure 4, using a type of research what has been called “engaged scholarship” (Touboulic et al., 2020). Engaged scholarship seeks to bridge theory and practice. A critical requirement in this case is co-creation and reflexivity that allows the researcher to challenge assumptions and investigate novel supply chain phenomena as they occur (Touboulic et al., 2020). We identified this method as the most appropriate given the rapidly evolving nature of the observed response scenario during a persistent and slowly unfolding pandemic, coupled with the fledgling state of theory development in humanitarian logistics. As Joint Acquisition Task Force advisors for the federal government, we are positioned in such a way as to draw a richer picture of this contemporarily unprecedented humanitarian crisis.

Figure 4 provides a visual summary of our engaged scholarship method which became a stream of actions as part of the real-world response. During the response we served as both an expert advisor and an academic observer. As an observer we kept notes and interview information based on our interactions with 34 government agencies, healthcare organizations, intermediaries and other supply chain and manufacturing organizations. Each expert then completed their own thematic coding and then compared with other experts within the team to look for patterns across various expert positions (supply chain academics, healthcare academics, healthcare providers, emergency response personnel, federal procurement personnel etc.). Then we summarized findings for ourselves and shared this information across the team to conduct a cross case comparison for internal and external reliability. From that we develop our theoretical arguments and recommendations for future operations, and validated the patterns found.

Issues were moving very quickly, so we took detailed notes on almost every conversation held with different parties during this time. We were able to observe phenomena such as how small private sector companies interacted with a broad initiative to find critical items, and how ineffective large federal agencies were at conducting market intelligence and acquisition. We spoke with hospital intensive care unit about the challenges they faced in supply, and suppliers of PPE and medicine about the overwhelming demand for their products that they were facing. Many of the issues that came up were not obvious or of interest in the pre-pandemic world for many of these supply chains. When we looked back and reflected on our detailed notes, a pattern of events emerged. In validating the results, we asked other parties to review the notes and coding structures we had used to link the different elements shown in Figure 5. Re-reading of the notes corresponded to the patterns shown in Figure 5.

Figure 5 provides a pictorial representation of what transpired during the COVID-19 pandemic, based on the direct observations of our team who served on the Joint Acquisition Task Force. The following severe disconnects between the medical intelligence and national healthcare communities were one of the most distinguishing features of the chaos that ensued during this period (Handfield et al., 2020):

1. The medical intelligence community was aware of the COVID-19 threat in early December. This information was not properly disseminated to the medical community or the national healthcare community until much later, which prevented them from making adequate preparations, ordering enough PPE and medical supplies and taking conservation measures.

2. A lack of supply market intelligence and expired inventory left the government ill prepared for the pandemic. The SNS was blind in managing the supply chain, and its response was too little, too late.

3. A lack of material visibility technology across the SNS, FEMA and state procurement offices led to poor estimation of demand and the inability to detect shortages in healthcare networks (US Government Accountability Office, 2020). You cannot manage what you cannot see.

4. The US healthcare system relies on suppliers that are primarily overseas which left us at the mercy of export policies and priorities of other nations, leading to significant shortages during the crisis.

5. Disparate communication, lack of governance over decision rights and ownership of issues among public agencies resulted in poor decision-making during the pandemic. We observed a systemic failure in response across multiple agencies and firms.

6. States were competing with one another for materials. There still today exists no standing policy on how to allocate limited medical supplies and PPE to states. For instance, when interviewed, 3M noted that they distributed inventory based on historical customer shipment rates and “hot spots” (personal interview).

7. Contracting with distributors to hold inventory in warehouses and holding them accountable for distribution in an emergency was not a functioning, workable solution. Distributors ran out of material before anybody else.

These failures were strong indicators to our team that an attempt to “fix” the current system of response was not going to work. The time is ripe for the creation of an agency that will oversee pandemic warnings and has a sense of how to improve the intelligence dimension around such a system. In a recent position paper, Polyak et al. (2021) suggested that biological threats are likely going to occur with increasing frequency, due to both natural and man-made sources.

1. New infectious diseases have been emerging at a quickening pace due to increased zoonotic transmission from animals, driven by population growth, climate change, habitat loss and human behavior, and these diseases are spreading faster with increased global travel.

2. The number of laboratories around the world handling dangerous pathogens is growing in part as a response to increasing pandemic risk, boosting the likelihood that a contagious pathogen could be released accidentally.

3. As the technologies of modern biology become more powerful, affordable and accessible, there is also the disturbing possibility that a malign actor could develop and use a biological weapon, including one that is highly contagious, in violation of the Biological Weapons Convention and United Nations Security Council Resolution 1540.

Almost all the executives we met with in preparing this paper admitted that they were unprepared for a pandemic; indeed, the entire country was unprepared. Despite the “near misses” that occurred during the SARS and Ebola pandemics, most organizations had not adjusted their business continuity plans for any type of global pandemic event. At a federal level, the SNS was also not able to respond in a timely manner, and few hospitals received supplies that were effectively used during this period. A chief procurement officer of a major healthcare provider in the Midwest stated:

Many hospitals we interviewed had a business continuity plan around disaster recovery for a single site going down – but not for a pandemic! Many executives think that having extra inventory on the shelf is a solution for having single suppliers go down, but having an entire region or country go down and operating at 30% is not something that can be easily planned for.

During a pandemic emergency, the most important metric governing physical supply chains is clearly no longer cost savings, which procurement has emphasized in the past. It is domestic supply availability of critical caregiver PPE and medical products. However, supply availability is often sacrificed by healthcare executives during “good times” in favor of cost savings, due to exposure to sourcing from low-cost countries like China, Vietnam and Malaysia that are across the ocean. This change in thinking is at the foundation of what is required for a post-pandemic resilience plan. We must seek to find a path between cost savings mandates and development of a reliable domestic source of supply. This is not an easy task to navigate due to reasons such as.

1. Many of the providers we met with have reacted by developing large stockpiles of PPE, with 90–120 days of supply. Some have gone out to lease warehouse space or have developed third-party logistics (3PL) contracts to operate warehouses that hold large volumes of inventory in anticipation of future pandemics.

2. In addition, many healthcare distributors have built up significant stockpiles of PPE in response to pressure from state governments such as California and New York, which require 90 days of PPE supplies. Many distributors “ran out” of supplies during the COVID-19 crisis and did not have enough on hand to meet the growing demand for masks, gowns and gloves during one of the most difficult periods in our nation’s history. For instance, one large distributor, Cardinal Health, was holding more PPE (Smith, 2021) in its warehouses and has also diversified its sourcing for those products to guard against supply disruptions if demand surges (Hufford and Evans, 2020) again during new outbreaks of COVID-19 (Abbott, 2021). The $197 million inventory reserve was the main driver of a 40% drop in Cardinal Health’s operating earnings in the most recent quarter.

We do not believe that building massive stockpiles of PPE is an effective use of funds, nor is it a long-term measure that is sustainable. Why? Because supply chains can be characterized as material in motion. As we stated before, supply chains are cash in motion. The fundamental law of supply chain physics is that faster movement of materials is better than slower movement. The faster cash moves in the echelons of a supply chain, the faster free cash flow is generated for a business in a defined period of time. When material is sitting in inventory instead of moving, it cannot generate free cash and thus loses value. In the same way public agencies, who may not consider cash flow, also cannot sit on inventories as they degrade and lose value over time. This degradation results in less responsive inventories and the need to rapidly replenish stale inventories at premium costs during a national crisis. Many of the PPE items necessary for COVID-19 response sitting in the SNS had expired by the time we needed them (Handfield et al., 2020). We need supply chains that are more autonomous, that can better sense demand and that are less dependent on human response. This requires an effective intelligence capability that does not exist today. To harness the benefits of supply chain immunity, we recommend a number of actions, which are discussed in the following section.

The current administration has proposed that some sort of “Mission Control” act as a unified program management unit, that includes the CDC, National Institutes of Health, Biomedical Advanced Research and Development Authority, Food and Drug Administration (FDA) and Centers for Medicare and Medicaid Services (Office of Science and Technology, 2021). Unfortunately, this proposal neglects to include an obvious fact: none of these agencies have any medical intelligence capabilities, nor do they understand how supply markets and supply chains operate. These were the two critical components that produced the loss of life in the last pandemic. The bias toward forensic epidemiological approaches persists as they continue to fight the ongoing decline of public support of public health. The reality is that we are witnessing a demand for a multidisciplinary approach not unlike the transformation of clinical medicine from that of generalists to the massive ecosystem we have now.

There is a need for a much broader and far-reaching solution, one that extends beyond traditional silos defined by government, but a new playbook that combines the essential elements of medical intelligence, supply market intelligence, clinical analysis and predictive forecasting analytics to create a new type of public intelligence agency. The solution we propose is shown in Figure 6.

We propose the need for a new intelligence capability as follows.

A comprehensive capability that relies on both global public health signals and tacit human intelligence signals through a network of trusted experts around the world is at the heart of a threat response system. This would include the following:

1. A funded agency capable of observing direct indications of reports of human disease, coupled with indirect indications and warnings such as official acknowledgment and action, demand for medical services, local perception of threat, comprised infrastructure and change in business practices.

2. Validation of medical threats with tangible multi-indicator analyses and early warning signals communicated to others within the national threat infrastructure.

3. A multidisciplinary approach with specialists that have specific knowledge over different pathogens and biological threats.

A second capability lies in the ability to create a market intelligence capability that is focused on the availability of critical medical supplies and services required to respond to threats. The last pandemic illustrated how our country was held hostage to export restrictions from other countries where the majority of PPE and medical supplies were manufactured. It is unlikely that the USA will develop a healthcare manufacturing infrastructure that covers all possible medical threat outcomes any time in the near future. As such, an agency tasked with monitoring conditions across supply markets should have the following properties:

1. A multiagency materials inventory portfolio based on in-depth supply market analysis is needed. At a minimum, this should include specialists in the following categories: disposable medical supplies (PPE, gowns, gloves), pharmaceuticals, plastics and resins, medical equipment, biologics, healthcare personnel and respiratory products. This will require a team of supply market analysts with special knowledge of these categories. The team will need to track the condition of critical supply markets for medical supplies, the supply risks within those markets and acquisition strategies to manage the risks.

2. Because re-shoring all healthcare products is not practical or cost effective, this team should also be responsible for developing a “make or buy” set of analyses that develops recommendations for investment in critical manufacturing infrastructure within the USA. This should be deployed in conditions of elevated market risk that creates extreme exposure to other countries where the bulk of manufactured supplies are produced. This might include critical pharmaceutical products and raw materials. This team needs the ability to forecast potential commercial demand for items in both surge and normal operations. We observed investments in domestic markets during COVID-19, such as PPE, that did not consider the government’s lack of buying influence during normal conditions. As the pandemic has moved along and overseas markets have reopened, low-cost global alternatives have made many of our government’s domestic investments moot.

3. We also require the capability to deconstruct and map supply chains from consumer to raw materials. These maps need to be constructed using historic event data such as those we have observed with Resilinc’s software. Agencies and organizations should use these event models to predict possible supply chain disruptions and estimate the best alternate source for each node and channel along the supply chain. For instance, when COVID-19 cases began to surge in India, going to the next best priced option for active pharmaceutical ingredients (APIs) would have primary sources and alternate sources in the same cities. That would not do much good if a source is disrupted by a regionally catastrophic event. Interactive, supply chain risk event maps would allow organizations to establish alternative sources and solutions to their supply needs based on lowest risk to disruption, given an event scenario, versus simply the next most attractive source based on price or performance. Price and performance are key discriminators for source selection, but not when all the top options are colocated in a disaster zone.

A national monitoring system is required to keep track of current inventory levels in the national supply chain, enabling the ability to enhance allocation, decision-making and critical hotspots. This system should have the following functions:

1. This agency should have access to an inventory visibility system tied to a “control tower” with real-time analytics that track the current status of material in critical stockpiles throughout the country. During the COVID-19 response, no one knew where products were coming from, where they were being sent and who was receiving them.

2. National monitoring of critical materials through a modern QR or barcode inventory tracking system, which requires investment across a trusted network of hospitals, distributors and manufacturers. This is not expensive technology and relatively easy to deploy.

3. Development of national allocation strategies, based on hot spots and simulation analysis to better predict how to stem the spread of biological threats and viruses. Development of strategies for effective pathogen protection and public communication channels.

4. Alternative contracting approaches for collaboration with distributors and state procurement agencies. Development of contractual incentives with vetted suppliers and government agencies like veterans affairs that creates an effective way to turn inventory with inventory turn policies to prevent expiration.

Clinical bridges are needed to support interpretation of market signals and translate them into material decision-making and acquisition contracts. Today there are few linkages between agencies such as the CDC and the FDA, and the nature of materials required to respond to healthcare threats. These bridges should focus on:

1. An important component of national planning is the ability to translate potential medical threats into a diagnostic assessment of healthcare requirements for response in the event of a pandemic or biological event moving into the USA. For instance, what is the likelihood of different forms of immediate emergency response requirements in terms of clinical medications, PPE, physician capabilities, medical testing, vaccines, mental health support or other immediate requirements?

2. In addition, an assessment of the public health requirements and estimation of the volume of resources needed under different tabletop exercise scenarios is needed. These assessments should be based on credible clinical requirements but should also develop estimates of capacity requirements and limitations, emergency response preparedness, equipment estimation, conservation measures and the appropriate channels for warning communications.

The recommendations and conclusions reached in this study were reviewed systematically employing engaged scholarship methods, that relied on direct observations of individuals engaged in the COVID-19 healthcare system response. The representation of events in Figure 5 led us to derive the concept of “supply chain immunity”, which implies an ability of a system to withstand sudden shocks, like the one experienced in 2020 during COVID-19. The reality we are witnessing today is the need for a multidisciplinary approach not unlike the transformation of clinical medicine from that of generalists to the massive ecosystem we have now. We find that humanitarian crises can morph previously innocuous supply chains into crucial global commons that can be disrupted with erratic buying and selling behaviors overnight when information is lacking or miscommunicated across disrupted exchange networks. There is a need for a much broader and more far-reaching solution, an information exchange solution that extends beyond traditional silos defined by government; a new playbook that combines the essential elements of medical intelligence, supply market intelligence, clinical analysis and predictive forecasting analytics to create a new type of public intelligence agency. These elements assist in providing more assured, transparent and accurate information to networks that may be rapidly established or reconstructed during a humanitarian crisis. In the absence of economic exchange networks, potentially interdependent entities should seek to build an ongoing network of information exchange partners to help overcome barriers and conflict in supply chains. Creating a long-term orientation with potential exchange partners has been shown to reduce supply chain conflict and increase exchange partner satisfaction (Griffith et al., 2006).

We acknowledge that the use of an employed scholarship approach has limitations, including limitations on generalizability of the results. We also acknowledge that our level of engaged scholarship across the federal, state, local and international response to the largest pandemic in modern history is somewhat unprecedented and lends credence to our methods. Further we contend that our work holds critical findings and lessons learned for humanitarian disasters of this magnitude in the (hopefully) rare occasion they should occur. We consider our methods valid and reliable and suggest them for future humanitarian response studies when events are unprecedented, networks change rapidly and frequently and scholars are embedded as both advisors and observers.

COVID-19 has created issues in supply chains and their immunity to such pandemics considerably. However, we believe our research in this area can help humanitarian organizations (MSF, United Nations Children’s Fund, Americares, MercyCorps, World Vision, World Food Program) in the future in case there is another pandemic of this magnitude. The established supply chains that are resilient due to their immunity is one of the lessons learned from COVID-19 for future epidemics and pandemics.

However, we believe that expanding the core features of supply chain immunity and its ability to deal with risk represents an important empirical line of study that could develop maturity levels for immunity. Further research is also needed to extend insights into the resources needed to create supply chain immunity, including technology investments, human resource investments and strategic partnerships with supply chain participants.

Analytic models are required to enable improved scenario planning and tabletop exercises between all parties in the healthcare supply chain. Such exercises should be undertaken at a provider level but could also be conducted in a system-wide industry exercise, where all participants would engage in such an exercise and share joint lessons learned from the exercise. An improved national healthcare intelligence warning system is needed at a national level, to inform all parties of the risks of human viruses and other airborne threats. This would entail a comprehensive capability that relies on both global health security risk signals as well as tacit human intelligence signals; a network of trusted experts around the world is at the heart of a threat response system. Components of such a solution would include:

1. A funded agency capable of observing direct indications of reports of human disease, coupled with indirect indications and warnings such as official acknowledgment and action, demand for medical services, local perception of threat, comprised infrastructure and change in business practices (Polyak et al., 2021);

2. Validation of medical threats with tangible multi-indicator analyses and early warning signals communicated to others within the national threat infrastructure; and

3. A multidisciplinary approach with specialists that have specific knowledge over different pathogens and biological threats.

Organizations, both public and private, should seek to establish information networks based on the potential for future humanitarian crisis exchange to reduce transaction costs and increase operational speed and effectiveness when time is of the essence. There is an opportunity to build a more robust national health response system. It is time a dialogue is started.

This paper forms part of a special section “The COVID19 impact on humanitarian operations: lessons for future disrupting events”, guest edited by Bhavin Shah, Guilherme Frederico, Vikas Kumar, Jose Arturo Garza-Reyes and Anil Kumar.