KEY POINTS

  • The acute shortage of Personal Protective Equipment (PPE), including masks, gloves and gowns is placing the lives of countless frontline healthcare professionals at risk.
  • Public health officials, including the World Health Organization, and trade experts have warned that hoarding could prevent supplies from reaching the most affected areas and actually reduce incentives for companies to ramp up production. 
  • If we look at the cost of building sufficient redundancy and resilience into the healthcare system, that would have enabled it to cope with a pandemic, it is just 5-10% more than the current cost of the system as a whole. Instead, decades of efficiency gains and cost-cutting measures in vital areas have led to this crisis.

Up until a few weeks ago, relatively few people would be able to tell you what an N-95 mask was, let alone the significance this particular type of protective facemask would take on as a lightning rod for criticism over government response to the COVID-19 pandemic.

The acute shortage of Personal Protective Equipment (PPE), including masks, gloves and gowns is placing the lives of countless frontline healthcare professionals at risk. In the US, dozens of healthcare workers have died from the virus. In Italy, nearly 4,000 doctors and nurses have been forced to self-isolate after coming into contact with the virus. 

Tragic and unsustainable

The more healthcare workers become sick, the fewer of them will be available to tend the growing number of patients requiring hospitalization. Why then, are we still hearing stories of doctors and nurses resorting to fashioning their own protective gear out of supplies bought from hardware stores? 

Lack of inventory in other key areas is also putting patient lives at risk. This same issue is also hindering genuine progress when it comes to quashing the virus and reopening the economy. How did the world's largest economy get to the point where doctors in certain states could soon be forced to flip a coin to decide which patients get access to a ventilator? And how is it that, nearly a month into lockdown, so many countries have still failed to ramp up testing? 

Money is no object

It is certainly not a question of money. The cost of enough ventilators to cover the full demand for COVID-19 in the U.S. is less than 0.05% of the US economic stimulus package. The cost of enough testing kits to cover every single suspected COVID-19 case globally is less than $5 billion. If we had enough tests, we could reopen the economy tomorrow and follow the same strategy applied in South Korea or northern Europe. 

Neither are the chronic shortages of key equipment tied to a lack of supply, at least not to the extent that many would have us believe. The reliance on Chinese manufacturers to produce vital medical equipment caused an initial shock to supply chains when factories in the region shuttered their doors in response to quarantine measures. But the truth is there is absolutely enough production capacity to equip every country in the world with the equipment they need. 

With China reopening factories and returning to work, manufacturers in the region have ramped up production of masks to nearly 200 million items per day. Local manufacturers in the U.S., U.K. and other nations have also been quick to respond to demand, boosting production or re-tooling machines to deliver everything from PPE to ventilators. It’s been a story of ingenuity and hustle, the likes of which we have not seen since World War II. 

No, the real story here has little or nothing to do with money or production capacity. If ever there is an inquiry into why so many frontline healthcare workers have been forced to put their lives on the line, it will focus on two key failures. First, the irresponsible approach to supply chain policy which allowed existing stockpiles to run so low. Second, the lack of national and international coordination to match supply with demand. 

The end of ‘Just in Time’

I happened to be in the U.K. shortly before the lockdown measures were imposed. Speaking to a senior member of the health service, he told me that the entire U.K. supply of aspirin would last just three weeks. This kind of "just in time" procurement model is also common in the U.S. As of early March, the Strategic National Stockpile only had 16,600 ventilators. To put that into perspective, New York Gov. Andrew Cuomo recently appealed for 37,000 ventilators to cover patients in his city. 

Just in time procurement, which relies on keeping very limited inventory based on anticipated demand, might work when you’re building cars, but frankly speaking it should be a crime when you’re talking about systems designed to protect human lives. It is no wonder that so many policymakers were caught completely flat-footed when this crisis first struck. 

I think there are many new lessons to be learned about the future of supply chain design from technology development. If we as a cloud provider designed our infrastructure as fragile as many health care or other critical supply chains, we would be fired. Up-time and stability in the face of surge demand is a key criterion for cloud computing, so why is it not for critical infrastructure? Especially since the cost of building surge capacity is a fraction of the cost of not having it at all.

Lack of coordination

Governments that signed off on the way healthcare provisioning is run are now behaving like consumers panic-buying toilet paper, hoarding supplies, and in many cases, actively competing with one another to buy up equipment. 

Public health officials, including the World Health Organization, and trade experts have warned that hoarding could prevent supplies from reaching the most affected areas and actually reduce incentives for companies to ramp up production. And yet there has been no global commitment to abstain from protectionist trade measures. In fact, since the beginning of the outbreak, more than 50 governments have restricted exports of medical supplies, 33 of which acted after the beginning of March. This failure to agree on a coordinated response is creating problems that have no reason to exist. 

Filling the void

Where governments seem intent on going head to head with one another, the private sector is increasingly taking a lead. In the Bay Area, where I live, technology companies were among the first to impose work from home restrictions on employees, well before these came into effect in the region. 

Technology companies have also stepped in to help fill the coordination gap with solutions that help identify and move pockets of supply to areas most in need. For our own part, we’re working with a number of partners to open up a digital marketplace on our platform where hospitals can connect directly with global suppliers of everything from masks to hand sanitizer. 

Heads will roll  

I’ve heard many people talking about a ‘reckoning with China’ after the dust has settled on the current pandemic. My take is that it’s far easier to look for scapegoats than it is to answer the really hard questions. 

Why have we put ourselves in a situation that leaves no margin for error when it comes to protecting human lives in times of crisis? 

If we look at the cost of building sufficient redundancy and resilience into the healthcare system, that would have enabled it to cope with a pandemic, it is just 5-10% more than the current cost of the system as a whole. Instead, decades of efficiency gains and cost-cutting measures in vital areas have led to this crisis. If a reckoning does come, and it surely will, it should be the current supply chain model with its head on the block. 

Christian Lanng is the CEO and co-founder of Tradeshift, a supply chain payments platform used by 1.5 million companies across 190 countries. Lanng started his first technology company at age 19 and was the youngest Head of Division in the Danish Government, National IT and Telecom Agency. Lanng is a recognized thought leader and Fortune 500 advisor, as well as a member of the Global Agenda Council on the Future of IT Software and Services, World Economic Forum. He frequently keynotes conferences on topics such as digital disruption and business agility, and supply chain sustainability.