American hospitals are disastrously short of masks and other personal protective equipment (PPE), and demand will only increase. They estimate they will need 20x their ordinary supply over the next few months. In its current form, our supply chain cannot handle this demand shock.
In this blog post, I’ll share my view of how this problem happened, and explore some ideas for how we can better serve our healthcare workers.
The current shortage of PPE is not due to a single cause. It has at least five components: insufficient inventory stockpiles, manufacturing capacity and quality control, international trade compliance, air uplift capacity, and working capital financing. And if we don’t plan ahead, we’ll have a sixth, involving last-mile distribution.
1. Inventory Stockpiles
The country’s hospitals, medical distributors, and state and local governments don’t have enough inventory for the 20x demand shock we’re experiencing. The hospitals’ and distributors’ just-in-time inventory models were built on the assumption of normal demand. They did not account for the possibility of a pandemic.
Sadly, it seems key decision makers and regulators in the medical supply chain have not taken the lessons of “The Black Swan” by Nassim Taleb to heart. When this is all over, we will probably see new regulations about PPE inventory levels that distributors maintain as a safety stock, as well as much larger government stockpiles. Those measures might have bridged the gap, but it’s too late for the current crisis, so I’ll turn instead to the problems that we can address right now. Solving for the current crisis will take strong leadership, focused action, and a trusted coalition between government and the private sector.
2. Manufacturing Capacity and Quality Control
China is the only place in the world that can scale manufacturing as fast as we need right now. Our sources estimate the production capacity of Chinese PPE at 160M units per day.