The Wall Street Journal has a very important story today (by subscription only) about the contradictions between pandemic preparedness and the supply chain dynamics of a “just-in-time” (JIT) global economy:
The very rules of capitalism that make the U.S. an ultra-efficient marketplace also make it exceptionally vulnerable in a pandemic. Near-empty warehouses are a sign of strong inventory management. Production of drugs takes place offshore because that’s cheaper. The federal government doesn’t intervene as a guaranteed buyer of flu drugs, as it does with weapons. Investors and tax rules conspire to eliminate redundancy and reserves. Antitrust rules prevent private companies from collaborating to speed development of new drugs.
Most fundamentally, the widely embraced “just-in-time” business practice — which attempts to cut costs and improve quality by reducing inventory stockpiles and delivering products as needed — is at odds with the logic of “just in case” that promotes stockpiling drugs, government intervention and overall preparedness.
The article goes on to discuss avian flu and what governments are doing to prepare for this potential threat. It notes that the nation’s pandemic flu strategy focuses on research and vaccine stockpiles, but suggests that this approach does not fully deal with the broader public health and preparedness supply chain, e.g., efforts to stockpile medical supplies such as protective masks, or strategies to maintain the resilience of the nation’s food distribution system. (Supporting this argument is the fact that the pandemic flu strategy does not include the words “supply chain” anywhere in the document.)
The authors then bring forward an argument that the United States needs to adopt a military logistics paradigm for pandemic flu preparedness:
To some former Pentagon officials working on biodefense on Capitol Hill, the only way for the country to prepare for a possible pandemic is to think of health-care preparedness in military terms. This means moving away from a just-in-time system to planning for a just-in-case scenario in the manner of national-security policy makers.
This military model is an expensive option, but it’s one that needs to be considered on an item-by-item basis, taking an inventory of key supplies and assets on the basis of criticality, existing production capacity (and its elasticity in response to demand), and distribution factors, and striking the right balance in our strategy between “just-in-time” and “just-in-case.” This is something that the federal government needs to take the lead in developing, working closely with state and local officials and private industry: the legal fixes and tax incentives mentioned at the end of the story might be necessary, but by no means are they sufficient.