Rethinking Optimization: Designing Resilient, Elastic, and Secure Global Supply Chains
There are now over 2M confirmed cases of COVID-19 around the world, with more than 500,000 of them in the United States.[i] New York City has become a warzone, as described by the staff on the frontlines.[ii][iii] Hospital staff are fighting a battle with inadequate protection to keep themselves from getting infected. While we’re all being told to keep six feet away, medical staff are intubating infected patients with mere inches between them.
The New York Times recently described New York City’s healthcare system as “sprawling and disjointed, making precise infection rates among medical workers difficult to calculate.”[iv] The lack of preparedness and a system with inadequate resiliency, elasticity, and security plays into a larger theme of gross negligence. Too little was done to prepare for this kind of onslaught on the ERs of our hospitals. Too little was done to pre-emptively protect those who have vowed to care for and protect us.
We honor and thank these courageous health care workers not merely by praising them as heroes, but by fixing the systems that have failed them — we have a moral obligation.
The same is true of economic systems, the breakdown of which has contributed to the severity of the present global market collapse. More than 16M Americans have now lost their jobs as a result of the pandemic, [v] and the record for most unemployment claims made in the United States in a single week has been broken multiple times over. [vi]
In the future, there will likely be a study of how to prevent market free-falls, only to discover that the circuit breakers were already in place and worked exactly as designed — prioritizing optimization over resilience. What we must realize as a society in the aftermath of this pandemic is that it was a desire to maximize efficiency of outcomes and profit, over resiliency of systems and supply chains that contributed to a catastrophic market collapse.
We owe it to all those who have lost their livelihoods, and to all those who will lose their lives, to fix these broken systems. We do it not by turning inward, but through collaboration.
RE-THINKING OPTIMIZATION
Prior to coronavirus, a shift towards protectionism was already underway in many parts of the world. It is likely coronavirus will only amplify the trend. It has exposed the inherent risks in our supply chains. Some might argue protectionism is a natural reaction, but it will inevitably put a damper on future economic growth.
Our current supply chains are at the same time global and non-resilient. The problem is not that they are global (which some politicians may argue), but that many have been over-optimized at the expense of resiliency. In the long-term, the reaction towards protectionism will likely dampen future economic growth and close us off from the rest of the world. Building the redundancies and safeguards necessary to operate a resilient, elastic, and more secure global supply chain is a better option.
The relative stability of the last decade allowed us to architect systems and companies that over-emphasized optimization, resulting in systems with less tensile strength. We neglected to build contingencies. We neglected to build the redundancies or architecture necessary for extreme volatility — a dangerous move in a world that is changing so quickly.
In times of stability, business continuity planning has a lower perceived value. This is why resiliency, elasticity, and security are often overlooked in times of prosperity. But we are quickly realizing that we cannot count on stability, not in a global market that is always shifting, changing, and inviting disruption. Today’s ecosystems cannot be counted on to remain stable for long.
In a piece published by Sequoia ventures, titled Coronavirus: The Black Swan of 2020, they note that “as Darwin surmised, those who survive ‘are not the strongest or the most intelligent, but the most adaptable to change.’”[vii]
Yes, this pandemic is unprecedented, but we were aware it was a possibility. The coronavirus has forced us to acknowledge more acutely that the world is always in motion, it is always changing, and we are all collectively impacted by those changes. Companies must be built prepared to absorb the unexpected, whether the unexpected is thrown at us by the environment, conflict, or new technology.
NEVER LET A CRISIS GO TO WASTE
It’s already clear: when this is all over, the people who will be celebrated and remembered will be those who risked their lives to help us — as they should be. We’ll recognize healthcare workers who fought on the frontlines, the shelter staff who worked without sleep to find appropriate housing for the homeless, and the grocery store clerks and delivery people who worked so we could stay home. But, will we fix the logistics systems that forced them to work without adequate PPE supplies or intersystem communications?
We’ve become painfully aware that this pandemic has brought the US health care delivery system to its knees — but it will ultimately pull through thanks to the efforts of the frontline workers, the pharmaceutical industry, and other industries that have stepped up in this time of need. It’s just a matter of time before a vaccine is developed to save us. When it does, I fear that we will quickly forget how many systematic breakdowns came to the surface while we were waiting for it.
We will circulate the vaccine, thank the doctors and frontline workers for their sacrifice while we waited, and then we will move on from all the shortcomings that were exposed over the duration of the pandemic, setting ourselves up to fail again. There will inevitably be increased funding for pharmaceutical research, but will we use this crisis to finally roll up our sleeves and fix our broken health care delivery system?
RISING TO THE OCCASION
There are positive examples of how to architect systems to effectively respond and adapt to acute stress. There’s the story of how 3M began preparing for a situation like a coronavirus pandemic almost two-decades ago, after the SARS epidemic of 2002–03. “The company realized it wasn’t fully equipped to handle unexpected explosions of demand in the event of a crisis, or what it calls an ‘X factor.’ It decided to build surge capacity into its respirator factories around the world.”[viii]
Beginning in January, long before the US Administration acknowledged the devastating potential of Corona Virus, 3M turned surge capacity on and began ramping up production of N95 respirators. It more than doubled its production of respirators to over 100 million per month between January and March, and plans to further increase annual output to over 2 billion, within the next 12-months. [ix]
Similarly, Medtronic, the Minnesota-based medical device company that produces critical care ventilators, doubled its production capacity between January and the end of March to over 300 ventilators/week. These are shipped as they are produced and are allocated to hospitals based almost exclusively on predicted clinical need, determined using disease modeling. In an interview with CNBC on April 6, Medtronic CEO, Omar Ishrak, says the number of ventilators produced weekly will continue to grow, breaking 1000/week by June. Medtronic has also open-sourced the design for one of their ventilators so other manufacturers are able to produce them. [x]
All across the startup world, companies are pivoting to fill gaps and address new challenges as they arise. Recently, StartX, the Stanford University-affiliated startup accelerator, organized 45 startups to form a Covid-19 Task Force. The task force aims to address prevention, diagnostics, and treatment of the novel coronavirus. [xi] This cohort included Bright.md, which is part of the task force that is focused on treatment by assisting frontline health care workers in screening for the virus. Bright.md was also recognized by CB Insights as one of 12 startups using telehealth to fill the gaps in the pandemic. [xii]
These efforts have been desperately needed for a long time. The US healthcare industry has lagged noticeably behind when it comes to the integration of digitized data.[xiii] In the midst of this crisis, we see our failures to integrate information cohesively in even starker contrast: a “sprawling and disjointed” healthcare system that challenges even our ability to measure the number of medical workers infected across facilities.
But in times of crisis, we also see examples of great leadership — individuals, teams, companies, communities, families, organizations — people who see systems breakdown and rise to the challenge of repairing them. For the good of their communities and the global community, they adapt and innovate.
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NOTES:
[i] “COVID-19 Dashboard by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU).” Johns Hpkins University. 2020. Retrieved from: https://coronavirus.jhu.edu/map.html
[ii] Schwirtz, Michael. “Nurses Die, Doctors Fall Sick and Panic Rises on Virus Front Lines.” New York Times. March 30, 2020. Retrieved from: https://www.nytimes.com/2020/03/30/nyregion/ny-coronavirus-doctors-sick.html
[iii] Kristof, Nicholas. “Life and Death in the ‘Hot Zone’” New York Times. April 11, 2020. Retrieved from: https://www.nytimes.com/2020/04/11/opinion/sunday/coronavirus-hospitals-bronx.html
[iv] Schwirtz, Michael. “Nurses Die, Doctors Fall Sick and Panic Rises on Virus Front Lines.” New York Times. March 30, 2020. Retrieved from: https://www.nytimes.com/2020/03/30/nyregion/ny-coronavirus-doctors-sick.html
[v] Cox, Jeff. “US weekly jobless claims jump by 6.6 million and we’ve now lost 10% of workforce in three weeks.” CNBC. April 9, 2020. Retrieved from: https://www.cnbc.com/2020/04/09/weekly-jobless-claims-report.html
[vi] Matthews, Dyllan. “9 charts showing what coronavirus is doing to the economy.” Vox Media. April 3, 2020. Retrieved from: https://www.vox.com/future-perfect/2020/3/30/21184401/coronavirus-covid-19-economy-charts
[vii] “Coronavirus: The Black Swan of 2020.” Sequoia Capital Publication. March 5, 2020. Retrieved from: https://medium.com/sequoia-capital/coronavirus-the-black-swan-of-2020-7c72bdeb9753
[viii] Gruley, Bryan and Rick Clough. “How 3M Plans to Make More Than a Billion Masks By End of Year.” Bloomberg Businessweek. March 25, 2020. Retrieved from: https://www.bloomberg.com/news/features/2020-03-25/3m-doubled-production-of-n95-face-masks-to-fight-coronavirus
[ix] Gruley, Bryan and Rick Clough. “How 3M Plans to Make More Than a Billion Masks By End of Year.” Bloomberg Businessweek. March 25, 2020. Retrieved from: https://www.bloomberg.com/news/features/2020-03-25/3m-doubled-production-of-n95-face-masks-to-fight-coronavirus
[x] “Medtronic CEO Omar Ishrak on ramping up ventilator production.” CNBC. April 6, 2020. Retrieved from: https://www.cnbc.com/video/2020/04/06/medtronic-ceo-omar-ishrak-on-ramping-up-ventilator-production.html
[xi] Schubarth, Cromwell. “Stanford alumni founders tackle COVID-19 with StartX task force.” Silicon Valley Business Journal. March 19, 2020. Retrieved from: https://www.bizjournals.com/sanjose/news/2020/03/19/stanford-startx-covid-19-coronavirus-startups.html
[xii] “12 Startups Using Telehealth To Fill Gaps In Pandemic Care.” CB Insights. March 18, 2020. Retrieved from: https://www.cbinsights.com/research/telehealth-startups-pandemic-care/
[xiii] Whitely, Phyllis. “Busting at the Seams & Screaming for an Outlet: Data Liquidity in the Healthcare Industry.” Wildcat Venture Partners. March 24, 2020. Retrieved from: https://wildcat.vc/busting-at-the-seams-screaming-for-an-outlet-data-liquidity-in-the-healthcare-industry-2/
Originally published at https://www.accelerateinnovation.com on April 14, 2020.
