Month: February 2021

Supply Chain Executive Order

On February 24 President Biden signed an Executive Order aimed at encouraging Supply Chain Resilience. There are two parts, first, a 100-day Supply Chain Review focused on semiconductors, batteries, rare earths, active pharmaceutical ingredients, and closely related flows. Then, second, a set of six Sectoral Supply Chain Assessments: defense Industrial Base, public health and biological preparedness, information and communications technology, energy, transportation, and agriculture/food. These six assessments are to be completed by next February.

As with any significant Executive Order there are several motivations playing out and a variety of purposes being pursued. There has been plenty of insightful commentary. There have already been several efforts to influence how the EO will be implemented. There will be more.

Indirectly, the Executive Order calls-out several conundrums that challenge effective policy-making related to supply chains.

Four urgent vulnerabilities are plucked from six very full baskets of strategic risk. These four have been recognized (by some) as urgent for a few years. The 100-day window suggests some solution paths have been conceived. The tasks between now and Memorial Day are to confirm or deny (and refine) what has been conceived. If confirmed, this window in time will also be used to gin-up support for moving forward.

The one year schedule for the six assessments is, almost certainly, an initial down-payment that, if successful, will start a multi-year process of sustained strategic engagement in crafting meaningful Supply Chain Resilience. In Washington DC a one-year schedule for anything is generous. But tension persists between the real need (practically and politically) to do-something-soon and the temporal components to do-something-substantive.

The Executive Order gives diversity and security equal — uneasy — equivalence in its recipe for resilience. Diversity innately resists being secured. Security and resilience are often in tension precisely because systemic diversification and independent self-organization makes securing much tougher. Too much security results in rigidity instead of resilience.

Authentic sources of dissonance between national security and economic vitality are another uneasy (and inescapable) relationship baked into the Executive Order. The national security shop and the economic policy shop are given co-ownership of the whole Supply Chain Resilience process. Similar dual touch-points persist across the effort, for example when the Department of Homeland Security and the Department of Commerce are given joint custody of the Information and Communication Technology (ICT) industrial base.

Does anyone know if President Biden is a fan of Arnold Schoenberg? Or maybe Stravinsky? Some say dissonance is as All-American as Gershwin and jazz. Whatever the sound-track, this Executive Order explicitly embraces persistent tensions involving time, turf, technique, targets, interdependencies, freedom, risk, and how the real world works, especially at global scale. The Executive Order leans into these tensions, but it is not yet clear how — if — they will be resolved. Schoenberg’s stubborn non-resolutions are very different from Miles Davis.

Over the next year each of the big six or seven players will have the chance to strut their stuff. I expect a policy line-up that ranges from Sousa marches to the coolest jazz. Then the EO outlines how, “as soon as practicable following the submission of the reports required,” the national security and economic policy shops will provide to the President recommendations to “strengthen the resilience of America’s supply chains.”

I’m guessing that the President’s senior folks are guessing — even depending upon — that six honest assessments will (despite dramatic differences) unveil a Venn diagram where — miracle of miracles — all the essential “industrial base” supply chains share about 80 percent of the same problems (and opportunities?) that can be strategically addressed as a network-of-networks. I’m guessing they are correct. For this fusion to be practically reflected in policy and strategy, I am betting on — hoping for — something more jazz-like than march-like.

Late in his career Miles Davis put aside raw improvisation. But even his most composed performances preserve tensions purposefully deployed as creative strength. Herbie Hancock remembers, “What I realize now is that Miles didn’t hear it as a mistake. He heard it as something that happened. As an event. And so that was part of the reality of what was happening at that moment. And he dealt with it…. Since he didn’t hear it as a mistake, he thought it was his responsibility to find something that fit.”

Great attitude — the only realistic attitude — for engaging the dynamic realities of contemporary demand and supply networks. In Kind of Blue and much more, the great jazz trumpeter resolves tension by embracing dissonance. Not easy to do, but possible.

Fresh Vaccine Production Forecasts

Later today the House Energy and Commerce Committee will conduct a hearing on vaccination progress. Following are excerpts from prepared testimony. You can watch/listen to the actual hearing starting at 10:30 Eastern.

According to John Young with Pfizer, “We expect to increase the number of doses we make available for shipment from approximately 4 to 5 million doses per week at the beginning of February to more than 13 million doses per week by the middle of March. We are on track to make 120 million doses available for shipment by the end of March and an additional 80 million doses by the end of May. And, we anticipate all 300 million contracted doses will be made available for shipment by the end of July, enabling the vaccination of up to 150 million Americans.”

According to Stephen Hoge with Moderna, “We are on track to meet our commitment to deliver 100 million doses by the end of March. We have doubled our monthly deliveries since late 2020, and we are aiming to double them again by April to more than 40 million doses per month. Based on this progress scaling up manufacturing, we recently agreed to move up our delivery timeline: we now are aiming to deliver a second hundred million doses by the end of May and a third hundred million doses by the end of July.” (There is a nice overview of the actually production flow on page 6 of Hoge’s prepared testimony.)

According to Richard Nettles with Johnson & Johnson, “Assuming necessary regulatory approvals relating to our manufacturing processes, our plan is to begin shipping immediately upon emergency use authorization, and deliver enough single-doses by the end of March to enable the vaccination of more than 20 million Americans. We are confident in our plans to deliver 100 million single-dose vaccines to the United States during the first half of 2021…”

Representatives of AstraZeneca and Novavax are also scheduled to testify.

Late Spring and early summer continue to be our best bets for matching supply velocity with existing demand velocity. Then we are likely to become increasingly concerned by the thirty-to-forty percent of vaccine “consumers” who are reluctant to consume. It is worth not waiting to work on that predictable problem.

UPDATE: Bloomberg provides a summary of the Tuesday hearing.

Confirming Causes (and Mitigation)

Here’s a brief new synthesis of which non-pharmaceutical interventions work best and why (sometimes, where) they work. It was published on February 22 in the Journal of the American Medical Association.

Investigations of COVID-19 outbreaks have shown that the factors influencing the risk of transmission vary across settings. However, these local factors occur in several well-established patterns that can be prevented when identified. For example, compared with well-ventilated outdoor spaces, the risk of infection is higher in poorly ventilated indoor spaces when there is prolonged duration of close contact (within 6 feet of someone for ≥15 minutes over a 24-hour period coupled with limited physical barrier to viral transmission because of inconsistent use of masks. The context and intensity of exposure are key in the spread of SARS-CoV-2. Large outbreaks or superspreader events have generally been characterized by a confluence of these factors, such as crowded indoor spaces combined with lack of mask use.4 Living and working environments that are characterized by such factors may also contribute to the greater incidence of COVID-19 associated with race/ethnicity, poverty, and zip code.

Nothing new.  But a helpful integration of findings and research citations.  Just to be explicit: from a Supply Chain Resilience perspective, viral transmission is an important element of demand dynamics.  Non-pharmaceutical interventions are a form of demand management.   We want to avoid excess demand for services by hospitals and, especially, intensive care units.  Sudden and sustained demand beyond existing capacity is one of the most dangerous threats to any supply chain.

Lagging or Leading Indicators?

At the end of January the seven-day US national average for covid deaths was still over 3000 per day (down from more than 4000 in mid-January). As of February 21, the average daily death count was under 2000 and falling. Hospitalizations have declined by more than 50 percent since early January.

Some have credibly suggested that given our high incidence of disease and related death that the US could be approaching herd immunity. With more than 500,000 confirmed deaths, the United States has one of the highest per capita death rates and related pandemic disease profiles on the planet.

Given an almost year-long burnt-earth (prairie fire?) strategy — sometimes intentional , sometimes not —  I concur that, first, the United States has had many more mild covid cases than confirmed by our anemic testing capacity and, second, this has reduced the proportion of non-infected persons available to facilitate virus transmission. As a result, there are now some inherent transmission curbs and guard-rails that were not in place one year ago. Vaccinations are adding more, even stronger Jersey barriers.

It is also interesting that since Halloween mask-use in the United States has increased from about 70 percent of the population to about 80 percent of the population. Since late October cellphone data suggest that US residents have noticeably reduced our circulation. Over most of the autumn we had reduced circulation by between one-fifth and one-quarter of typical. But since Thanksgiving we have reduced our circulation by closer to one-third. There are some significant regional differences, but I am — pleasantly — surprised. Less traffic, less opportunity for viral velocity.

Even more surprising, in some places where more contagious variants are prevalent, hospitalizations and fatalities have also started to decline.  Late January peaks in the United Kingdom and South Africa have fallen fast. During this same period, British mobility has been reduced by half. For a few weeks South Africa reduced mobility by over 35 percent.  South Africans allegedly use face coverings more than Americans. The Brits use face coverings a bit less. The health data in Brazil is much more treacherous and both mobility-reduction and mask use are anemic. Human circulation is clearly very influential in virus circulation.

One more comparison: When case counts began spiking in Denmark the government reacted quickly (more). Only about twenty percent of Danes practice masking, but there is rigorous testing, tracing, and public health interventions to contain outbreaks. When the more contagious B117 variant began surging, public actions and private cooperation reduced observed cell phone mobility from a meager 17-percent-of-typical in early December to a 56-percent-reduction by the end of December.  Hospitalization and death rates began dropping in response. Still, and worth emphasizing, the variant continues to find ways to infect an increasing proportion of the population.

Uncertainty has often been the most honest response to the coronavirus. There is, however, plenty of evidence that when more of us spend more time inside in close proximity to each other, the virus finds a way to use this against us.  This is apparently what recently happened at the University of Virginia (more).  This will continue to be a very real risk for at least several more months. When there is much we do not know, it is usually prudent to behave cautiously in accordance with what we do know.

UPDATE: On February 25, the Financial Times reported on these issues, concluding, “Despite recent success in tackling the virus, scientists emphasised that all countries remained vulnerable to surges in new cases. “Any rapid relaxation of protective measures could produce spikes in infection rates,” said Ted Cohen, professor of infectious disease epidemiology at Yale University. “There are large pools of susceptible individuals still at risk.”

Restarting the Conversation

To converse is to turn-with or turn-over. Gently, warmly going back and forth together can open a topic, might open a mind (or two), and may even open conversationalists to each other. I once spent more than two-hours with my mother’s father saying, perhaps, a dozen sentences altogether. He reported to his daughter, “Phil is a marvelous conversationalist.” Well, questions and listening can unlock conversations. Conversation can unlock mysteries.

Over the last few months I have mostly focused on vaccination issues. Below are some of the issues that emerged. As I write this post I am finishing five very full days working issues related to the impact of the polar vortex on a whole range of demand and supply networks. Topics abound. Mysteries abound. Opportunities for conversation abound.

With the online publication of He Looks at the Earth, I will from time to time post on Supply Chain Resilience. I welcome your questions, suggestions, commentary, and more. I hope that from time to time we may end up in real conversations.

Vaccine Production Forecast

Bloomberg has a new report out on how vaccine flow should build over the next few months. For what it is worth, Bloomberg provides evidentiary detail very similar to what I have been scribbling on the back of an envelope. Their projection is both plausible and consistent with serious plans and specific efforts. Their final counts also depend on all the production puzzle pieces to be put in place on time and over time. This is possible too, but some delays and problems are even more likely (e.g. this and this) says me. But flows of about this size on about this schedule can be reasonably anticipated.

According to Bloomberg, “Currently, the U.S. is administering 1.6 million doses a day, constrained by the recent supply of about 10 million to 15 million doses a week. But Covid-19 vaccine manufacturers and U.S. officials have accelerated their production timelines and signaled that the spigots are about to open, providing hundreds of millions of doses to match the growing capacity to immunize people at pharmacies and mass-vaccination sites. A review of drugmakers’ public statements and their supply deals suggests that the number of vaccines delivered should rise to almost 20 million a week in March, more than 25 million a week in April and May, and over 30 million a week June. By summer, it would be enough to give 4.5 million shots a day.”

UPDATE: On February 19 Pfizer revealed it is only weeks away from opening a second filling and finishing plant in McPherson, Kansas. This could double current US throughputs of Pfizer’s vaccine by the end of March.

Vaccine Supply Capacity

Governors, mayors, health commissioners and others are complaining about a “vaccine shortage.”

Los Angeles County Public Health Director, Dr. Barbara Ferrer, recently told CBS-Los Angeles, “The only thing standing between us and doing more vaccination is actually getting more vaccine… We’re ready right now today, at the drop of a hat. If somebody said ‘here’s 400,000 more doses,’ we would get them into people’s arms next week.”

I’m sure that is true. It is, however, a statement that obscures rather than illuminates our current situation.

So far in 2021, roughly 10 to 12 million doses of the Pfizer and Moderna vaccines have been filled, finished, and distributed each week across the United States. By most counts, about 14 million doses per week is the upper limit of current production capacity. (I have seen one credible estimate of 18 million doses, but this is an outlier.) During the third week in February a flow of 13.5 million doses is being projected.

Efforts are ongoing to increase this capacity. Some current constraints could be loosened (update).  Some additional production lines might be opened.  There are credible reasons to anticipate that new capacity from Johnson & Johnson and perhaps, Novavax will deliver several millions of doses by this summer. All of this is well-reported by the media and often-referenced in official statements. It is also consistent with production capacity projections originally laid out at least as early as October 2020.

There is a huge gap between the vaccine doses available today and the demand (need) for vaccinations today. Is this a shortage?

If you mean there is a deficit, then yes there is a deficit of supply. There is a scarcity of vaccines. There is a lack of vaccines to fulfill demand.

In English there is a subtle suggestion that a shortage is caused by a reduction in prior abundance. An English-speaker will hear that something has been shortened, cut, curtailed that has now resulted in a shortage. With the coronavirus vaccine, this is not true. Rather there has been an amazing production of millions of doses from absolute scratch only a few months ago. We are well on our way to having plenty in just a few more months.

Is this etymology or hermeneutics?  What I am sure about is that in discussions with both senior policymakers and vulnerable people looking for vaccinations, there is a sense of shortage that, in my judgment, unnecessarily complicates thinking about demand and supply.

We have a fairly accurate sense of demand. We have a fairly accurate sense of supply. We can be certain of a continuing but narrowing deficit of doses for the next several months. This reality should frame our expectations, preparations, and actions.

Vaccines versus Variants?

While most seem fixated on vaccines, I am fixated on the variants. I have even become concerned that too much attention to vaccines can obscure our very present (if admittedly unclear) vulnerability to the variants.

Three variants are of particular concern (more). Each is more infectious than previous strains.  Each of the variants has been confirmed in the United States. One or more of these variants are likely to be widespread — even prevalent — in the United States by the second half of March.

It is not yet possible to assess the comparative lethality of these variants. Some early studies have not, however, been encouraging. In any case, all other elements being equal, a more infectious variant will increase case counts, which will increase hospitalizations, which will increase fatalities.  When and where hospitalizations overwhelm clinical resources, quality of care can suffer and incidence of death will increase… even if the variant is not innately more virulent.

Since the variants began to circulate only in recent weeks, it may well be two or three weeks before we see US case counts climb.  It will then be another two weeks — mid-March — before we see hospitalizations increase.  By mid-March it will be too late to undo the consequences of transmission from today until then.

Despite tight slow-down and shut-down measures since mid-December, Denmark reports that 27 percent of those who tested positive for coronavirus during the first week in February carry the “new” B117 strain.  Denmark has developed the ability to track these shifts with much greater accuracy than most countries.

Earlier this week the German government chose to continue rigorous Non-Pharmaceutical Interventions to mitigate circulation of variants. The German Chancellor explained that despite a recent decline in hospitalizations and deaths, the variants must be mitigated now.

In Denmark the current covid fatality rate per million persons is 1.95. Germany is at 5.88.  While the US covid death rate has slowed compared to early January, on February 12 the fatality rate was slightly above 9.0 per million.  If during January and early February the United States had a fatality rate closer to Denmark’s at least 65,000 fewer Americans would have died. Covid was the cause of at least 90,000 US deaths in January, our worst month so far.

Overall population circulation, as measured by cell phone data, is down over fifty percent in both Germany and Denmark. Compared to pre-pandemic patterns, US population circulation is down about one-third.  Commercial restrictions intended to discourage circulation (and therefore disease transmission) are much tighter in Denmark and Germany than in most US jurisdictions (see Danish regulations). Meanwhile, with Iowa’s current covid death rate at about 9.0 (admittedly a huge improvement from December’s peak of over 20 per million), the state’s mobility pattern is about 27 percent pre-pandemic, and on February 5 the governor lifted most covid-related public health restrictions.

Despite official warnings (more) and recurring media attention, I perceive a wide-spread tendency to overestimate how vaccines will flip-the-switch — near-term or long-term — and to underestimate the value of care-giving self-restraint to protect the community.  Near-universal face coverings, avoiding interior crowds, better ventilation, physical distancing, more testing, and much more effective tracing and public health interventions will — along with whole-population vaccination — significantly reduce covid related disease and death. With this reduced risk, social interactions, cultural life, commercial activity, and economic bustle can again approach pre-pandemic patterns… with positive adaptations.

There is, I perceive, an urgent threat facing us today. We do not — yet — have sufficient vaccine supplies to significantly reduce the escalating variant threat. How many will die in March and April depends on the care each of us practice today and in the next few weeks. Then as future variants of covid ebb and flow, consistently cultivating the same simple habits that protect ourselves and others will generate significant health and economic benefits for years to come.  “If not now, when?”

Vaccination Update

On January 6, according to data available that morning, the national Vaccine Utilization Rate (VUR) was 30.7 percent. As of January 30, the national VUR was 59.2 percent. The US rate of vaccine consumption has basically doubled in three weeks time. As February begins the number of vaccine doses distributed in the United States will cross the 50 million threshold.

Recent outbound flows of the two currently available covid-19 vaccines have been averaging 1.2 million-plus doses per day. Given availability of upstream inputs and throughput at the finishing plants, current upper-end North American production capacity for these two vaccines is estimated to be about 2 million doses per day. (The highest credible estimate of current capacity that I have seen is 2.5 million doses per day.) To consistently achieve maximum capacity for a never-before-produced vaccine is unlikely this early in production, but flows are projected to more consistently achieve full capacity by the end of March.

Improved Vaccine Utilization Rates are due to several factors including, moving beyond holiday-related friction, accumulated vaccination experience, reformed procedures and processes, more person-hours spent jabbing, expanding the size of priority populations, enhanced flexibility serving priority populations, and increasing the number of access points. Larger-scale drive-through vaccination venues have received significant media attention. Here is a report on the quick standup of a “Vaccination Superstation” in San Diego County.  Data are not yet available to assess which method or combination of methods have been most helpful to doubling the consumption rate.

As higher velocity vaccinations are achieved, it will be even more important that planning and execution reflect effective demand management. (The linked WSJ report is consistent with Supply Chain Resilience TA principles.). Late Friday, January 29, the editors of the Journal of the American Medical Association published an editorial on demand management  very similar to the approach the TA program has outlined since October.  For this virus, better risk prioritizing also advances greater equity. 

The Kaiser Family Foundation reports that the American public is demonstrating increasing confidence in — and demand for — vaccinations.   As demand signals — population pull — increases, it will be even more challenging to effectively target available push. Most outbound flows are not yet structured to support variable demand. Over the weekend a colleague also commented, “The most obvious concern to me is burning out human resources as we poorly manage supply and demand of product. We will continue to need so much from [medical staff and volunteers] in the coming months. That is why making their time as productive as possible now, not slowing them down with paperwork delays [and other distractions], is important.” 

Despite current supply limitations, up to twenty-million doses (about 40 percent of flows) are reported to be “deployed” but not yet administered. The improved VUR is encouraging, but there are also increasing concerns to vaccinate as many risk-prioritized populations as possible before more contagious variants of the virus become dominant. The authors of a variant study released last week conclude, “this virus is traveling in a direction that could ultimately lead to escape from our current therapeutic and prophylactic interventions directed to the viral spike. If the rampant spread of the virus continues and more critical mutations accumulate, then we may be condemned to chasing after the evolving SARS-CoV-2 continually, as we have long done for influenza virus. Such considerations require that we stop virus transmission as quickly as is feasible, by redoubling our mitigation measures and by expediting vaccine rollout.” The more quickly risk-prioritized vaccinations are administered, the more this threat is mitigated.

Potential expansion of production capacity for current vaccines is being explored. But realistic options are unlikely to produce more flow before late Spring if at all. The distribution-friendly Johnson & Johnson single dose vaccine seems likely to receive an Emergency Use Authorization in coming weeks.  J&J anticipates having the ability to produce 100 million doses by the end of June.  Some virologists expect one or more variants to be dominant by the end of March.