Victimized By Our Own Success

Wednesday, October 26, 2005
One of the ironies that has resulted from more efficient management of manufacturing and supply chains in modern enterprise is that the very efficiency becomes a double-edged sword. The advent of information systems technology, and the use of that technology to manage manufacturing, transportation, delivery and inventory control is resulted in a Just In Time (JIT) management system. The effect of that system wrings out any ability to surge needed materials on an emergency basis. Hurricane Katrina demonstrated the vulnerability of the modern JIT system.

How does JIT affect our potential response to a pandemic flu situation? The New England Journal of Medicine identifies our current model of manufacture and supply as a major issue in our ability to respond to a pandemic flu situation. In the case of pandemic flu, the JIT system is even more disadvantaged because of a cumbersome and outdated system of pharmaceutical manufacture.

Bottom line: There are extraordinarily difficult systemic issues to be addressed if we are to mount a societal response to major disasters, including pandemic flu, unless we take a much more active role in involving private industry in the process of planning. This partnership is very much in its infancy and should be made a much higher priority in government planning--and given the nature of emergency response planning, this has to be accomplished at the federal level.

3 comments:

Knucklehead said...

RogerA,

Interesting connection there! Responding to emergencies is clearly something JIT is ill-suited to deal with. One of the things that makes JIT work (and is a part of the comlex system that is JIT), when it does, is the ability to forecast accurately.

Emergencies, by their very nature, defy forecasting (at least the supply chain version of forecasting).

The clues for how to deal with this undoubtedly lie within the business practices of those who live with JIT. For example, those customers who wish to wring the most benefit out of hyper-efficient supply chain management must either accept the responsibility for delivering accurate forecasts of their needs or, conversely, accept the financial risk for bad forecasting.

If governments want the pharm producers to build plant to manufacture and deliver to meet emergency conditions they've either got to provide reasonably solid forecasting or accept the financial risks of inaccurate forecasting.

It would seem reasonable to speculate that the drug companies would be more than happy to sell as much of whatever as someone is willing to purchase. What they aren't willing to do is produce as much of whatever as necessary to meet some potential emergency JIC.

JIT and JIC don't work well together.

truepeers said...

It seems governments are presently assuming much of the financial risk, in stockpiling Tamiflu, etc. If governments are willing to stockpile, what possible incentive could there be for drug companies to consider changing JIT?

chuck said...

Yeah, I worry about JIT too. Sometimes you want an old beater that never dies, not a highly tuned automotive system that burps and pops everytime a sensor dies.