COVID-19: A Wake-up Call for Supply Chains Globally

March 26, 2020

~ Joel Glende, Transportation & Logistics Steering Committee Leader (BSMA)

 

A World at War with a Virus: COVID-19

From Pearl Harbor to the War on Terrorism, today we have not anticipated the obvious with the COVID-19 pandemic. In recent weeks, ensuring supply chain resilience is at the  advent of a new war. Supply chain professionals are  fighting the Novel Corona Virus and its relentless and voracious appetite to adversely impact  the weakest links in business continuity planning, supplier relationship resiliency, and  product availability to patients.

We at BSMA believe that perfect execution in the supply chain saves lives. This Blog will address the unprecedented challenges faced and solutions being implemented in Life Sciences so we can thrive as a BioPharma Industry by responding intelligently and collectively for a new level of timely excellence.

My first area of focus is the Global Air Freight: Capacity-Demand Hyper-Variability. Significant Imbalance caused by drastic reduction in  passenger and manufacturing  are stressing the Air Cargo sector today. In talking with many logistics executives, I am seeing the need to “re-FLEX” our Strategic Partnership approaches between Shipper and Air Freight Service Providers. For the past decade, there have been many ways that companies have been reducing cost in rates and assessorial fees by utilizing advanced data analytics and, “special contracting” and negotiating tactics to optimize freight spend. Yet many have not seen what they’ve been giving up, a resilient supplier partnership. As cargo is now being bumped or off-loaded for higher yield freight, many companies are currently seeing significant delays in cycle times and even loss of goods from temperature excursions or delays. Plus, they are paying premium spot prices to prevent further losses. If this is not yet happening to your supply chains, it will be. Unless we rethink and change the approach with key service providers, both 3PL’s and their carriers and handlers, the robustness and resilience of the network may be jeopardized. Having  lived through the nine-eleven tragedy, we must  properly reengage and secure multi-tiered service agreements with bidirectional transparency and mutual gain outcomes with our key supplier base. Also, a much better balancing of cost and service essentials can yield dynamic layered options for Strategic Partners.

In closing, I truly look forward to all your comments and suggestions for this Blog and stay tuned for many more to come on a frequent basis. Future topics include:

  • Temperature Management Challenges during Disruptive Times
  • Sourcing Strategies and Tactics during Volatile Periods
  • Resiliency Practices and Proactive Measures
  • Top Service Provider practices to support BioPharma now.
  • Advantages realized by deeper Supply Chain Visibility

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13 Comments

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    I will add that “Trust and Transparency” were fundamentally tested during this exceptional time for the partnership between shippers and logistics providers. Lack of both or either one of them created or amplified undesirable outcomes – yes of course, there were areas simply no one was able to predict and cope with. Your points about the Strategic Partners are spot on and must be re-examined and put in place by the industry, as a lesson learned way before the next natural or man-made disaster. Looking forward to your next blogs, Joel!

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      Thanks, David.. many more forthcoming!!

  2. Avatar

    Sitting on the sidelines, I hadn’t comprehended the full impact to (perceived) “non-essential” suppliers transportation needs. As you point out, transportation, like many industries, need to rethink their contract strategies to better plan for the unplannable.

    Good luck on the much needed blog.

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    Joel–I have always said cost driven RFP buyers who look for lowest $/kilo pay the price in service, capacity and more in times of crisis like this vs. the shipper who has forged real strategic partnerships based on Trust, TCO and more.

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      John, As you are a true veteran of our industry, your comments are truly appreciated and totally agree with you. As you well know, it is a very difficult sell internally within large corporations to see the tangible value in strategic partnerships that are mutual gain but we’re “living the dream” during this period for sure! Thanks again for taking the time, sir! Semper Fi!

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    Joel, I appreciate your article and views. I agree that you highlight the challenges that transactional relationships bring, and how the total cost of service might increase as opposed to strategic cooperation; even in times like these. Still, I think that both approaches can co-exist and so it is never too late to engage with a new partner and start building strategic alliances. I also recognize that now, more than ever, tactical execution is a top priority and long-term goals slide lower on the priority list. Ultimately, retracting capacity, available solutions, that are also viable; will showcase the one and other organizations ability to cope with the global challenges.
    I like your preview to future topics. I am curious to read your future blog especially on temperature management and visibility. Thank you!

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      Lorant– Thank you for taking the time to review and comment! I agree with your position as there are some companies that have been and will shine during this period and of course many that will continue to struggle. And yes, we likely will focus on Temperature Management and Visibility next.

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    Hi Joel, adding on previous comments this crisis definitely reveals how critical It is to develop strategic suppliers partnerships whether, as a customer you source Api or logistic services. Those shippers who have established this trust level with their suppliers are much better prepared for stormy weather and will mostly likely get prime access to solutions over more transactional partners. Looking forward to reading more on your next Blogs. Thanks Véronique

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      Thanks, Veronique– Your opinion is highly valuable and be sure my next article in the next week or so will be of significant interest! Stay tuned!

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    Joel
    Your article is spot on. Supply chains are truly stressed at this time. Strong partnerships and supplier relationships will assist in keeping the critical supply chains in tact. Past years have driven savings but at what expense? This pandemic has exposed the importance of other factors in supply chain not just price.

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      Thank you for your comments and I totally agree, Concetta! We are now in a unique place due to the impact of COVID19 and while we hope that our supply chains fully recover, I’m sure that we all will be reviewing our company strategies to be better armed and prepared… it does make us all more resilient! Thanks again!!

  7. Avatar

    Joel,

    In the midst of a pandemic reliability/resilience is the currency of choice. However, resilience shouldn’t be the flavor of the week/month. It should be planned for well ahead of time. Strong life science supply chains build resilience in as an integral component of success. Building this infrastructure doesn’t always cost financial capital – strategic planning with logistics service providers, keeping contracts tidy, and actively managing business continuity plans are all minimal time investments for major returns. While we may not know what, when, or where the next disruption will be – we know it’s right around the corner and being prepared is a prudent necessity.

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      Thanks Jon & your comment is well received and agree wholeheartedly… nicely described. This has been a real wake-up call for so many companies!

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