Putting Food On The Table: Supply Chain Stress during COVID-19
The global pandemic we are currently experiencing is taking its' toll around the globe. There is a cacophony of different approaches and there is yet to be a unified or definitive answer on how best to react. Each day presents with a fresh set of problems, of which we are inundated with from the moment we wake up until our heads hit the pillow. This is the micro.
Simultaneously, on a macro scale, the supply chain is actively scaling up and evolving to enable changing demand to be met and ensure we have enough product to meet the need. This has posed problems for numerous global food manufacturers. COVID-19 has stressed supply, but the public's panic contagion has heightened pressure even further. As people's lives have changed, pharmaceutical companies are working toward an answer, but the answer may be further out than we hope.
In the early 1980’s, there was a new disease popping up all over the globe. Doctors noticed a constellation of symptoms affecting many young, reasonably healthy males. These symptoms were of diseases that commonly befell immunocompromised individuals. This shocked medical communities around the world. What they discovered was a frightening new retrovirus that viciously attacked the immune system. It took them a number of years to identify and diagnose human immunodeficiency virus (HIV). Fast forward forty years, and there is still no vaccine or cure, and medication regimens are rife with side effects. We also have malaria, tuberculosis, hookworm, and influenza. These are all illnesses without a vaccine despite combined decades worth of research.
Of the viruses that do have vaccinations, there can still be massive demand, delays, and setbacks. The right vaccine can take years to develop. Let’s take the shingles vaccine. It was produced by GSK and was over a decade in the making. This vaccine passed testing and was available to the public in 2014. On numerous occasions, the company has stated that they continue to be unable to sustain their supply to meet demand.
Today, we are all experiencing the mutation of a virus proving to be more lethal and contagious than other viruses in the same family. COVID-19 was inoculated into the human population among a perfect mix of factors: unprecedented international travel, lack of adequate preparation in healthcare for a pandemic, ease of transmission, and lack of early identification. Some researchers quote anywhere from as little as 12 months away before a vaccine is available. The media and the public have seemed to jump all over this. However, this estimate has been reiterated and contradicted equal numbers of times by the media, multiple various scientific experts, and government. Everyone's lives are disrupted, and the problem is no longer somebody else’s.
What really gets to me is the notion that we aren’t taking this seriously. There exists a very real possibility that this particular vaccine could take much longer than anticipated to develop, and we need to adjust our expectations.
Adjusting expectations is more involved on a macro scale. Logistics of sustaining the supply chain throughout this new “normal” are complex. Supply chain has been a big topic in the media of late as this pandemic has unfolded. Not generally considered a sexy topic for media to cover; it has now become a pivotal theme. Some of the most successful and reputable companies in the world have revealed massive gaps in their supply chains. Supply chains are upended and have been forced into ingenuity and creativity to keep their capsized boats afloat. We must consider that even if a vaccine is produced on the stated trajectory, it will still take many years to manufacture, transport, and administer. We are not talking millions of administered vaccinations, we are talking in the billions...
When big pharmaceutical companies take years to produce a vaccination, they will have to replicate this process all over the world to ensure everyone has access. How many biotech facilities on a global scale will be needed to produce the amount required? Even if existing production facilities are able to "quickly" adapt and pivot to start producing coronavirus vaccines, what else will fall by the wayside? Let's say this does take precedence and the world manages to get production underway quickly. Who will now be left to produce the blood pressure, diabetic and cholesterol medication? What about psychiatric medications? Other things to fall by the wayside include HIV vaccines, malaria pills, antibiotics, the influenza vaccine, cancer medications or numerous other critical drugs that people depend on. It is prudent to prepare for a reality that this pandemic could last much longer than people think.
In April, 2019, I was in North Korea, one of the world's least accessible countries. Fast forward to April, 2020 and I am working from home, as all countries now are not accessible. We now spend our days in a similar fashion, trying to fill our time, which parallels the major gaps in the supply chain, cutting us off from needs of the communities they serve. One year ago, thousands of kilometers away. Today, unable to have a beer in a pub or a round of golf with my friends. If this virus has taught us anything, it’s that tomorrow can be radically different than today.
Unbridled hope and anticipation that things will not get worse sets us up for disappointment that can be a painful reality check. What if it does get worse? Peak projections of this virus in Canada are on a timeline four to six weeks from now. Can we maintain this level of social distancing for months? What if those plans you made don’t work out? Have you made contingency plans, or considered how you may have to structure or restructure your business model? On an individual level, it's troubling, but on a bigger scale, many supply chain leaders were blindsided by this and this pandemic will forever change how supply chains operate.
We are already seeing major supply chain disruptions around the globe and mounting international tension centered around supply chain shortages, blockades, or lack of manpower due to massive layoffs. One year ago in Pyongyang, if I was asked what I would be doing a year from now, fast forward to 2020, this would never have crossed my mind. Seeing the world transform into one that is no longer easily accessible has been full of new perspective. Chances are pretty high that the food you consume on a daily basis is not all locally grown or sourced. Raw materials originate all over the world and food is moved more now than ever. The food on your plate often travels thousands of kilometres before it arrives to your table. Disruptions could cause shortage which means no avocados, or mangoes, or whatever your favourite fruit is.
Supply chain encompasses an end to end infrastructure of production, processing, distribution, consumption and disposal, which results in a downstream domino-like effect. If one process is disrupted, the whole supply chain can be disrupted. The global food business is a complex interplay and not always resilient, as you may have noticed, when avocado prices have skyrocketed or there was a shortage of maple syrup, onions, and even champagne.
If this escalates further, the global supply chains of food could be even more significantly impacted. While it is highly improbable the global supply chain would be compromised completely; the risk remains high for unforeseen delays, shortages, and price gouging. The scarcity could create some stressful situations in markets and grocery stores, as we have seen with toilet paper, sanitizer, and masks already. Recently, The CEO of Walmart stated that over only five days, they sold enough toilet paper for everyone in America to have 1 roll to themselves! If the public gets wind of potential food shortages, people may panic buy causing more stress on an already strained supply chain. Concurrently, emerging research is now showing us that the transmission of virus is higher in supermarkets across North America, and avoiding them except when absolutely necessary is recommended.
After speaking with numerous supply chain leaders within the food and beverage space over the last couple of weeks, it’s important to recognize the fact that they are doing everything they can to keep up the demand. They do understand the situation and they have shifted from playing catch up and being reactionary, to thinking about how to improve processes and continuously improve every facet of the value chain. A client of mine at a global leader in food manufacturing said they had trouble keeping up with demand and have had to drive efficiency through every aspect of their supply chain, noting that if one of their plants was hit by the virus, it could completely shut down some of their product lines. They are doing everything they can to automate, problem solve and be creative in their day to day operations. Smaller businesses may not have the resources or capital to pivot quickly, which could further disrupt operations and could have shelves empty for customers.
Now, it is not all doom and gloom. It’s about not allowing yourself to be swept up in panic. There are many reasons we can and should hope for the best, but we must acknowledge this pandemic will have lasting implications. Perhaps, if we adjust our perspective to be optimistic, with back-up plans for if things do turn sour. Supply chains were not designed to function under such stress, but are stepping up. It's important to look objectively at the situation and adapt accordingly on both a micro and macro level. If the media hype is correct and we do have an approved vaccine within 12-18 months, it may still take a long time for global distribution, which is expected. But if it resembles any of the above viruses, it could take a lot longer, so we must be prepared for that.
COVID-19 has made us rethink supply chains. On a micro level, everyone will still be able to buy their produce, and on the macro level, companies will drive improvements, ultimately resulting in more resilient supply chains. At the end of this pandemic, our supply chains will come out stronger and better prepared than ever. But in the meantime, we can take it day by day, one avocado at a time (except for now, he's currently at home... like everyone else).
