Adapting flow to omicron

Part of the current disequilibrium of supply with demand involves flow capacity from warehouses, distribution hubs, and fulfillment centers to retail and direct-to-demand. Omicron threatens to further constrain. But there is still time to avoid the very worst.

Early last week a friend confessed his large-scale grocery distribution enterprise is getting enough inbound volume, but can not always gin-up sufficient outbound velocity to fulfill the fastest retail turnovers. The problem, he said, started last Spring/Summer when he lost many of his most experienced selectors and drivers. He has not been able to hire fast enough to fill the gaps (in both numbers and skill). (See: Journal of Commerce, Transport Topics, CNBC, Bloomberg, Wall Street Journal, Lehigh Valley Live)

According to the Bureau of Labor Statistics, in November 2021 there were just over 1.5 million “warehousing and storage” employees. This compares with about 1.28 million in November 2019. That’s almost a fifteen percent increase. Problem is retail sales are up nearly twenty-three percent over the same two years. Plenty of toil, turmoil, and trouble is embedded in that eight percent gap, especially for places where the overall national rate is doubled or worse.

Friction is added to this already tight flow by various measures intended to mitigate transmission of SARS-CoV-2 among employees. No one wants an outbreak in their facility. But omicron’s behavior suggests that over the next six to twelve weeks there will be many outbreaks. Most workplaces will be unable to avoid outbreaks of this highly contagious version of the virus.

The Centers for Disease Control offers workplace recommendations. OSHA has developed and enforced related workplace regulations. State and local public health agencies typically have the strongest legal authorities for mitigation measures, including isolation and quarantine. The recommendations and regulations are conditional. What should be done depends on context, including the vaccination status of employees. This is empirically justified. It is also administratively very complicated, especially for large-scale enterprises with operations in many different jurisdictions.

Last week I was asked about the isolation and quarantine policies of food processors, distributors, and retailers. I did not know, so I asked seven market-leaders. I heard back from five. This very informal survey found that their policies reflect CDC recommendations (unless local officials are unusually insistent). While this reach-out found variation, this essentially means that workers with a confirmed case or contact with covid are typically off the job for ten days. With a negative test, this can be reduced to seven days (but the quick survey suggested this is atypical given lack of access to testing). Two respondents suggest non-compliance is widespread due to both ignorance and intention.  But especially in union-organized work-forces, isolation and quarantines have and do impact capacity and through-put.

I was asked this question by smart, well-informed people who are aware of both the best science and official policy on workplace good practices. But as we talked, they disagreed. This is not surprising. In many ways — given our risk environment — it is realistic, even encouraging. But this realistic uncertainty is resulting in industry practices that are more rigorous than recommended by the most current CDC advisories and OSHA regulations. Until someone points me to more authoritative texts, here are the two sources that I have found especially relevant: CDC’s Interim Public Health Recommendations for Fully Vaccinated People and OSHA’s Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace. (The CDC text was updated in October and November.)

Here is what I perceive the CDC is telling work-place managers. These are my words, not official language. The words below represent my understanding of the written text as interpreted by my management-mind into operational guidance. I am a one-time CEO, not a lawyer or epidemiologist. I am interested in safely preserving and enhancing flow. Lawyers and epidemiologists have different roles.

After exposure to a confirmed case of covid, employees should be tested within five to seven days.

Fully vaccinated employees who come in contact with a confirmed case of covid but are asymptomatic can continue working but should wear a mask when in close proximity to others.

Unvaccinated employees who come in contact with a confirmed case of covid should isolate at home for ten days or until receiving a negative test.

Employees (vaccinated or not) presenting with covid symptoms should be tested before continuing to work.

With a negative test, employees can continue working.

If an employee tests positive for covid s/he should isolate at home for ten days or until receiving a negative test.

There are exceptions, caveats, and a range of special considerations, but I understand these six statements to accurately summarize current guidance.

Some obvious implications, but just to be explicit: Vaccinated employees have greater flexibility than non-vaccinated. The more vaccination, the better potential for flow. If I have accurately understood the CDC and OSHA texts, the standard-operating-procedures reported by the five big food suppliers do not reflect the enhanced flexibility already recommended for vaccinated employees. Rapid testing can also reduce absenteeism and related friction.

But here’s the rub, based on where omicron is likely to take us between now and March, even vaccinated employees will be increasingly infected and re-infected. Many of our current work-place mitigation measures are intended to contain transmission. With omicron this intention seems to be overcome-by-events. There is a real risk of accumulated mild symptoms and positive tests decimating flow potential for food, pharmaceuticals, medical goods, and a wide range of freight. Given the contagious speed of omicron and current policies, too many nodes and links are at risk of too many ten day purges.

By the end of this week the rapidly worsening situation in Denmark and the United Kingdom may give us epidemiological confidence in omicron’s severity (aka virulence). If these real-world tests confirm that vaccinations (especially with boosters) prevent serious disease, it is probably time to allow vaccinated-boosted workers (even with a positive test) to continue working with other mitigation measures in place. I do not suggest this is an easy or obvious decision. But failing to proactively facilitate essential flows will also have profound human consequences.