The Strategic National Stockpile: A Logistical Chain of Fools

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COVID-19 has brought supply chains more prominently into our lives. Those include getting toilet paper onto store shelves, assuring take-out food gets delivered, as well as deliveries being made during the Christmas season. And the first COVID-19 wave revealed our Strategic National Stockpile cupboards were mostly bare. (Spoiler Alert: The "why" has far more to do with logistics than political affiliation.)

The source of today's information comes from a series of interviews with various members of what constitutes our Strategic National Stockpile (SNS), an amalgamation of many government agencies. It is in response to a call by the National Academies of Sciences, Engineering, and Medicine (NASEM) to understand how well the SNS functions. All qualitative, no p-values. The authors found problems in governance, command and control, data management, "market" intelligence, and risk expertise. 

            "obsession with cost and profit has now infiltrated our sense of public health and how we are going to take care of each other in the most dire circumstances." Tara O'Toole Chair [1]

In 2018, NASEM [1] found the SNS to be "well run and effective" but with an expanding mission, less budget, and increasingly lean supply chains. [2] The distribution over the last mile was "jeopardized by underfunded and disorganized state and local public health departments." And communications with its partners and policymakers should be enhanced. 

"Persistent awareness is key to preparedness."

The US treats national emergencies as one-off events, as do our perceptions if one believes the concept of a once in a hundred-year storm like Sandy. But much like storms, pandemics recur, and we need to think of our preparations more as a night light, always on for safety, than as a light switch available when you need it. 

Supply chains cannot be rapidly altered in the necessary time frames, often 2-3 days. The global sourcing of equipment, like PPE, cannot be quickly re-shored, nor can we require other countries to continue to supply us as we found in the case of hydroxychloroquine where India placed immediate export restrictions back in the late winter. Despite the complexities of multiple supply chains and our dependence upon global sources, we assumed that the SNS would be "a stockpile in place for the common good and a backstop that would be adequate and available to meet the community's needs." That assumption was, and is, wrong.

The Pandemic

The government's initial response was slow due to many factors, including a misguided belief by the CDC that they had fully managed the situation and executive leadership that believes this was just "the flu." Once engaged, though, the systemic problems of the SNS became more apparent. Chief among them,

  • "A singular lack of federal-level market intelligence and supply chain transparency." In other words, we had no idea what stores we had on hand, where they came from, and who was in a position to provide more. This lack of information leads to
  • "A lack of technology for material visibility." In other words, without knowing our inventory, we had no idea of our shortages. Both inventory control at the SNS "relies on a manual count of inventory" and hospitals that do an even more inadequate job of knowing what they have on hand and when it might expire. It is hard to believe in a world with UPS, FedEx, and Amazon's logistic knowledge that our healthcare system continues to manually count inventory as if it were the neighborhood bodega. The barcode technology and methods to correct this have been in use for over 20 years; healthcare is one of the few places that have stubbornly resisted this most basic business requirement. PPE was required to be barcode labeled in 2018, but inventory systems have not integrated this information, which would inform them of the quantity, source, and expiration dates of their PPE. 
  • Our global supply chains mean that not only are we dependent upon others for our healthcare supplies, but even if we wanted to manufacture them here, we remain dependent upon them for the raw materials. We experienced this in making masks, where all of the components come from China and making pharmaceuticals where the precursors are produced in India and China. "Government edicts to control production will not function in a global supply chain that does not have raw materials available domestically."
  • Communication among the various agencies was uncoordinated no one was on the same page, and perhaps not even reading from the same book. Those managing the supply chain were not effectively communicating with those in charge of "clinical and emergency issues (in the CDC, FEMA, and HHS)."
  • The SNS "lacks strategic sourcing, forecasting, and planning capability." So, in addition to not knowing what is on hand, we have no means of anticipating our needs. As a result, the SNS is flying blindly; its actions more reactive than proactive.
  • Hospitals lack "visibility into their needs." Without knowing what you have, it is hard to order more. Additionally, hospitals and health systems are not experts in supply chains and rely on group purchasing organizations to keep them stocked. Those organizations failed health systems because they viewed their role as providing goods at the least expense in a system "dominated by just-in-time efficiencies rather than just-in-case management." Stewardship requires more than merely a low price; it requires resilience in the face of unexpected situations. 

Together these problems resulted in the early depletion of the SNS stockpiles, which resulted in greater exposure of healthcare workers, caregivers, and patients to the virus, leading, in turn, to a greater number of infections in the face of a decreasing ability to respond. As a system of agencies talking but not communicating fought "over decision rights and ownership of issues," procurement of supplies was left to states competing with one another, hoarding what they could, to care for their own possible needs, and creating shortages where demand was more significant.

The authors go on to suggests five critical attributes for a new system.

  • Flexibility – an ability "to withstand different requirements that need to be pulled together." SNS should not be considered a stockpile, but can quickly expand their resources to act as a steward that knows where to find supplies or how to make them quickly
  • Traceable and Transparent – you need to know what you have on hand, where it comes from, and how long it will be good to use – just like food in a market, or, better yet, a book on Amazon. As it turns out, transparency is not only a problem in healthcare pricing, as the authors write, "Our work with health care providers has shown how difficult it is to derive trustworthy data from hospitals, GPOs, and distributors in health care."
  • Persistent and Responsive – it must be situationally prepared, to be ever vigilant and not a system one treats as a one-off need. You need to consider many scenarios and have plans for them.
  • Globally Independent – we cannot be beholding to others, or at least to those who are untrustworthy. It is impossible to return some forms of manufacturing back to the US. Still, we should "maintain domestic sources where it makes sense," and in the other instances, find trustworthy partners. This requires some balancing of interests and needs. 

"…it may be in our best interest to source domestically the nonwoven materials for PPE, given our recent challenges in supply distribution and quality control for masks. But we would not want a policy so isolating that it could prohibit global access to the best available vaccines."

  • Equitable – supplies must flow towards need. That requires more than a collaborative spirit; it requires cooperative mechanisms of inventory and governance. Knowing what the "right" amount is is difficult to understand in advance. Just-in-time has failed us in these circumstances, and we should fund research and education into developing just-in-case systems. 

They offer some recommendations on how to re-organize SNS governance, a topic that is perhaps more for policy wonks than for concerned citizens. But an inventory system that is transparent and traceable is low hanging fruit. The barcodes for most of our needs are already required and in place, the software that has helped Jeff Bezos be personally worth more than Exxon Mobil is readily available. It will make us safer, and it should be a priority.

[1] More specifically, NASEM's Impact of the Global Medical Supply Chain on SNS Operations and Communications: Proceedings of a Workshop.

[2] Lean logistic chains are just-in-time systems where warehousing is minimized, and products are delivered as needed to reduce holding costs. The difficulty with these systems is in recognizing how much you should have on hand to buffer variations in need.



Source: A Commons for a Supply Chain in the Post-COVID-19 Era: The Case for a Reformed Strategic National StockpileMilbank Quarterly DOI:10.1111/1468-0009.12485