Perspectives on Various Issues of Interest

Protecting Brand Value through Anticounterfeiting Supply Chain Strategies

Combating counterfeits is not a matter of developing software or systems or markings. Our research suggests that a multi-layered approach that adopts multiple strategies and engages the entire organization is needed. Initially, the size of the problem must be defined and the return on investment approximated. This can help define the need for a team of experts to work in this area, leading to a set of performance metrics that are aligned with business objectives and outcomes. Next, the key focal product seg­ ments should be targeted, and a system for identifying products through product trade­ mark registration with customs authorities should be completed.

We discuss the roles of Drug Serialization and the Drug Quality and Security Act, Pharmaceutical Security Institute Database, and technologies such as Blockchain for combating the counterfeiting problem.

Withstanding the economic recession: Examining the efficacy of manufacturing strategy alignment and process integration

In this paper, we examine how manufacturing strategic alignment and process integration affect manufacturing plant performance under two distinct environmental contexts presented by long-term macroeconomic instability. A large-scale dataset was specifically assembled for the purpose of this research investigation by combining plant-level survey data on practices and performance with secondary macroeconomic data for 14 countries from multiple sources. The results from multi-level regression analyses indicate that while manufacturing strategy alignment and process integration are beneficial for plant performance, they have distinct effects when the contingency factor, macroeconomic instability, is taken in consideration. Notably, when plants face high macroeconomic instability, process integration has a stronger effect on performance whereas in low instability environment manufacturing strategy alignment provides higher performance benefits. 

The findings have implications for managers in pointing out ways in which firms can successfully compete during times of recession. In particular, the study found that overly emphasizing the internal manufacturing alignment during recession could lead to opposite result than expected. Although, it could be a common policy to strengthen the internal alignment during recession, too much internal focus could lead firms to go far away from the requirements of the market. The study also offers practical insight regarding the lack of cost implication of manufacturing alignment during recession. The study finds no costs, delivery and flexibility benefit of alignment but negative impact of the same on quality performance. Hence, it would be important for the managers to re-consider the justification of investigating in alignment, especially during recessions. Recessions do not have a set start and conclusion time; hence, decisions about any questionable investment during recession can be detrimental to the future survivability of the firms.

On the other hand, the findings validate the need for process integration during economic instability. Supply and operation managers might hesitate to support processes integration due to initial negative impact on costs and popular negative news such as the cost overruns at Boeing and Airbus due to poor suppliers’ integration. However, the findings of this study highlight that process integration exerts a positive effect on all dimensions of performance when there is no recession, and provides higher quality, delivery and flexibility performance in the presence of economic recession (although cost performance does suffer). Hence, during recession, process integration efforts by firms present a trade-off between costs and other three operational performance factors. Moving the focus from internal alignment to external integration through improving real time information sharing with suppliers and customers will help firms identify the problems quickly and respond accordingly, especially during recession. It is also suggested by several studies that during recession, firms’ sole focus on cost cutting could be detrimental for brand image, future recovery and overall performance. Nonetheless, considering the range of practices required for supplier integration, such as, product/process integration, supplier involvement with new product development, joint decision making, and information sharing, the focal firms need to identify the priority areas for integration rather than integrating all aspects between the parties. To summarize, managers should not expect universal impact of recession on the manufacturing performance but should carefully consider the wide-ranging impact of the recession on the firm’s performance. This is in line with other contingency theory studies that found that contingency factors could have varied influence on manufacturing performance.

Internationalization of manufacturing is a growing trend necessitating a joint examination of international business and operations management issues. Our study aimed at finding the role played by organization-level and supply chain-level factors that impact perfor- mance under different environmental conditions, particularly as pre- sented by the severity of the recent Great Recession. The conceptual framework and the results of this study allow us to integrate these issues and show that careful attention to these factors is needed for manufacturing competitiveness. The organizational and supply chain factors have distinct performance implications. 

The Impact of Chain Organization Size on Efficiency and Quality of Affiliated Dialysis Facilities

In a recently published article we find that the size of chain organizations has a nonlinear effect on performance of dialysis facilities. Medium-sized chain organizations have lower efficiency and higher quality than smaller and larger chain organizations. 

The results call attention to being cognizant of the advantages and disadvantages of their growing size. Our study indicates that as chain organizations grow from a small size to an intermediate size, their efficiency drops and quality improves. We find that the efficiency bottoms out when chain organizations grow to have about 882 dialysis facilities whereas quality reaches its peak when the number of dialysis facilities in a chain organization reaches to about 796. After reaching these inflection points associated with efficiency and quality, facilities within the chain organizations become more efficient, but their quality levels suffer. This presents implications for decision makers to carefully think about the underlying mechanisms. The initial drop in efficiency as chain organization size increases may reflect the investments facilities affiliated with medium-sized chain organizations make when adding dialysis stations and personnel to address the demand growth. We conjecture that facilities affiliated with medium-sized chain organizations do not fully utilize their stations, thereby bringing down the efficiency. Their quality however increases, since staff in these medium-sized chain organizations has more time to give to each patient.

As chain organizations grow in size, it is likely that they see an increase in demand due to cross referrals among facilities within the chain. This increase in demand eventually provides the needed efficiency gains through economies of scale, but the associated deterioration in the quality of care raises concerns. It is possible that the approaches large chain organizations take to increase staff capacity, which differ from those taken by medium-sized chain organizations, could contribute towards deterioration in quality. Larger chain organizations tend to employ fewer registered nurses and licensed practical nurses as a percentage of their staff than medium-sized organizations. To offset the cost associated with staffing, large chain affiliated facilities employ higher levels of patient care technicians as compared to medium-sized chain organizations, which can lower their quality levels. As chain organizations grow, decision makers should appropriately manage the staffing patterns so as to avoid erosion of quality with a corresponding increase in efficiency.

To address both efficiency and quality performance, chain organizations should be strategic and develop appropriate coordination capabilities so that affiliated facilities can improve their quality while retaining efficiency gains through economies of scale. Technological innovations may make it easier to spread tacit knowledge pertaining to quality-oriented best practices. Opportunities for enabling interactions among people involved with clinical care, as well as nonclinical support services, can enhance learning and improve the quality of care. To facilitate quality improvement efforts, chain organizations can oversee the establishment of cross-disciplinary teams comprised of members from the affiliated dialysis facilities as well as the area manager from the chain organization. Organization-wide policies and procedures, including standards for clinical processes and quality improvement activities, should be widely communicated with affiliated dialysis facilities. Performance goals and objectives for dialysis facilities should be established and appropriate reporting structure of quality improvement initiatives and performance should be put in place. Chain organizations should provide feedback to affiliated facilities and, when needed, offer training and cross learning opportunities to the affiliated dialysis facilities.

For facilities within the chain organization, the results present implications for awareness of the influence of the contextual environment that chain organizations create. An independent facility has a better understanding and awareness of its resources and practices than facilities within chain organizations. Our results show that as these independent facilities join others to form a small- to medium-sized chain organization, they are able to improve quality but their efficiency suffers. The efficiency suffers, as these facilities have to coordinate efforts toward pooling their resources. As the size of chain organizations crosses a certain threshold level, the affiliated facilities gain economies of scale and increased demand, such that their efficiencies improve. However, they also witness growing heterogeneity and have difficulty managing the associated ambiguities, which have detrimental effects on their quality performance. An awareness of the changes in the environmental context and adoption of proactive adaptation measures, such as information exchange site visits to other affiliated facilities and training of staff members, can help manage efficiency and quality. Our results may be useful in other service settings beyond healthcare that have multiunit organizational forms, in that becoming part of a network, such as joining a chain organization, can have a positive or negative effect on efficiency and quality, depending on the size of the network.

Source: Dreyfus, D., Nair, A. and Talluri, S., 2020. The Impact of Chain Organization Size on Efficiency and Quality of Affiliated Facilities—Implications for Multi‐Unit Organizational Forms. Production and Operations Management, 29(7), 1605-1623

 

Mitigating the performance implications of buyer’s dependence on supplier

A recent co-authored paper that examines the performance implications of buyer’s dependence on supplier. We identify ways in which the buyer can manage dependence situations.

Our study shows that the effect of dependence on the supplier is influenced by absorptive capacity and relationship with the supplier. This result is instructive in showing to managers that dependence on the supplier is not always a disadvantage situation (although it can well be) so long as they know how to strategically mitigate the effect, and, more importantly, turn it into a positive outcome. In many cases, buyer’s dependence is unavoidable, e.g. if the supplier is a monopoly due to the specific knowledge, technology or resources it possesses. Also, dependence on supplier could be the consequence of a firm’s decision to focus on fewer rather than more suppliers as this would bring benefits to the buying firm (e.g. quality, less variation, more flexibility, etc.). This study shows how to mitigate the effect of such dependence by building internal capability, i.e. absorptive capacity, as well as external capability, i.e. engaging long-term relationships with suppliers for mutual benefit. Our study shows that buyer’s dependence on its supply chain partners is likely to trigger a positive impact on performance when the focal firm develops absorptive capacity. Therefore, managers must invest time and resources to improve their firms’ absorptive capacity to balance buyer’s dependence to make a positive impact on performance.

Another important implication of our study is that while it is important to build a long-term relationship with a key supplier to reduce dependence, managers must invest in strategic relationships in combination with their firms’ internal absorptive capacity because such joint investment helps the focal firm to more effectively balance buyer’s dependence and enhance performance. By showing the role played by long-term relationship (along with absorptive capacity) in moderating the effect of dependence on performance, our findings also offer an alternative effective governance mechanism in a buyer – supplier relationship. This is because few studies show that when dependence in buyer – supplier relationships grows, contractual governance mechanism also typically increases. The problem with formal (legal) contract is that it will add extra costs to both parties in managing their relationship. In this regard, long-term relationship can be considered as an alternative governance mechanism that can satisfy the interests of both parties at a lower cost, hence, offering higher benefits. Finally, while our study is focussed on the buyers and their relationship with key supplier, the implications of a dyadic investigation extends beyond the dyad. This is because dyadic relationships within a supply chain form the fundamental characteristic of a larger supply network and has implications for the relational patterns in the network. Therefore, what is supposed to be an “exclusive” dyadic relationship behaviour can have wider effects within the supply chain. In our study, we argue that long-term relationship as one behavioural aspect of the dyadic relationship between buyers and their key suppliers can alleviate power asymmetry and reduce opportunistic behaviour in the dependence relationship. As such, it is possible that the relationship between two firms that is characterized by either long-term relationship or opportunistic behaviour could spread to other inter-firm relationships within the supply chain, which will affect the performance of the whole supply chain and its members.

Shortening supply chains, rethinking sourcing and production arrangements, and building resilience

Supply chain disruption and the sudden halt in trade has exposed how interdependent countries are in sourcing and manufacturing. An article published in the Wall Street Journal presents the example of Scania, a Swedish company that makes of trucks, buses and engines. The article notes that the company has tried to have at least two sources for most of the 21,000 components it uses. However, for about 35 components (including welded, case and electronic parts) that are unique the company uses only one source. The inability to source some of these components from France during March resulted in a shut down on global operations for a couple of weeks. Idle factories led to stoppage of buying parts, which then cascaded in the supply network resulting in slowed production and purchase of components for suppliers in Asia and Europe that are in further upstream tiers of the supply network.

Development in supply chain capabilities and cross border trade agreements has led to almost a third of global trade to take place within multinational companies, according to an estimate from United Nations. The move towards long-term relationships and supply base consolidation has made several supply chains vulnerable to potential disruptions. 

Many companies are vulnerable to supply chain risk, with potentially significant impacts. According to a report by National Institute of Standards and Technology (2015):

• 11% revenue at risk for a significant supply chain disruption, if not immediately and strategically addressed
• 25% average reduction in share price resulting from a publicly disclosed supply chain disruption
• 30% lower shareholder returns for companies announcing supply chain disruptions compared to peer group

A study by the University of Tennessee (2014) reports that:

• there is 98% likelihood that a manufacturer will experience a disruption in the next 24 months
• 53% of companies have strategic backup plans for factory or distribution center shutdown
• 49% of companies with suppliers could continue to supply if they suffered a disaster in one location

Harris Corporation (2016) notes that 20% of companies go bankrupt within 24 months of a moderate-to-severe supply chain disruption.

According to Deloitte’s survey, a typical company’s vendor base has experienced 15% year-over-year growth, both in number of relationships and volume of transactions. According to Deloitte’s supply chain risk prevention framework, organizations should take the following three steps:

1) Initial involvement

a) Initial exposure assessment

• Multifaceted illumination of disruptive risks
  • Multitiered supplier ecosystem
  • People
  • Production
  • Finished goods
  • Quality
  • Logistics
• Opportunities
  • Prioritization and mitigation plan opportunities
  • Future roadmap planning (immediate, mid-term, and long-term actions)

c) Mitigation and corrective action

• Mitigation
  • Identify alternatives to limit operational disruption
  • Prioritize corrective actions to limit operational disruption
• Corrective action
  • Execute corrective action plan to mitigate disruption events

 2) Steady state control

• Control evaluation and development to achieve operational continuity
• Development of KRIs and KPIs to support operational control
• Planning and optimization for operations “restart” leveraging industry leading practices

3) Future risk planning

• Predictive risk analytics
• Risk dashboards and preventative program management, including risk sensing to look ahead to future disruptive events

Sources:

Hannon, P. & Woo, S. 2020. Steep Drop in Trade Flows Shows Pitfalls of Cross-Border Supply Chains. Wall Street Journal May 25, 2020.

Third-party governance and risk management,” Deloitte’s 4th annual extended enterprise risk management survey report, 2019, https://www2.deloitte.com/us/en/pages/risk/articles/ third-party-risk.html?id=us:2el:3dp:wsjspon:awa:WSJRCJ:2020:WSJFY20

“Best Practices in Cyber Supply Chain Risk Management,” National Institute of Standards and Technology, 2015.

“Managing Risk in the Global Supply Chain,” University of Tennessee Supply Chain Management, Summer 2014.

“What’s in your Supply Chain War Room?,” Harris Corporation, March 22, 2016.

"Preventing supply chain disruption during the COVID-19 crisis” Deloitte. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/us-covid-19-supply-chain-infographic.pdf

Condensing the time-line of developing vaccine - Some scenarios

Here are some key points from an interesting opinion piece published in the New York Times.

Assuming we already know Corona virus, vaccine is expected to be ready by May 2036 if no strategies for shortening the time-line is taken:

If we don’t wait for academic research, vaccine can be made available by August 2034:

 

If we rely on work from studying SARS and MERS to shorten preparations before clinical trials and start trials early, vaccine can be made available by January 2034:

If we don’t wait for academic research and start trials early, vaccine can be made available by April 2032:

Neither of these scenarios seem to help the prevailing situation. Hence, there is a need to move at “pandemic-speed” and put all the existing drug discovery work that is underway that relate to Covid-19. There are at least 254 therapies and 95 vaccines related to Covid-19 being explored.

It is important to recognize that less than 10 percent of drugs that enter clinical trials are ever approved by the Food and Drug Administration. The rest are either not effective, don’t perform better than existing drugs or have too many side effects.

Typically, vaccine development process takes a decade or longer.

Since the virus that causes Covid-19, are roughly 80 percent identical to the ones causing SARS, and given that both use so-called spike proteins to grab onto a specific receptor found on cells in human lungs, there has been some head start with regards to research. 

Here are some additional options to shorten the timeline (even earlier than April 2032):

By going with ‘pandemic speed’ time-line and starting subsequent steps before previous phases are completed, vaccine can be made available by July 2030:

By moving more swiftly to Phase 3 trials by combining phases, vaccine can be made available by January 2030:

If the decision is made to go with emergency provisioning, i.e. vaccinating front-line and essential workers early, vaccine can be made available by December 2030:

If the three above-mentioned strategies are adopted (i.e. moving at 'pandemic-speed’ timeline, pushing to large-scale testing sooner, and using emergency provisions), vaccine can be made available to front-line and essential workers by February 2028 and to everyone else by June 2029.

Along with the above mentioned steps, if we take a bet on a successful mRNA vaccine, this experimental technology may be faster to produce than traditional vaccines and the vaccine can be made available by February 2028.

 

Unfortunately, none of these scenarios can make the vaccine available in 12 to 18 months time horizon.

The risks and difficulties of fast-tracking vaccine research are huge ranging from the fact that poorly researched vaccines can actually makes it easier to catch the virus, or makes the disease worse after someone’s infected. Researchers also can’t easily infect vaccinated participants with the coronavirus to see how the body behaves. They normally wait until some volunteers contract the virus naturally. That means dosing people in regions hit hardest by the virus, like New York, or vaccinating family members of an infected person to see if they get the virus next. If the pandemic subsides, this step could be slowed.

As can be seen the longest time in the fastest scenario illustrated above is taken by supply chain activities such as building factories and manufacturing. If factories can be built now and manufacture can begin early, anticipating that factories will be useful for a future vaccine and that the product will clear regulatory hurdles, the timeline can be brought down from June 2029 (without taking a bet on the mRNA vaccine) to October 2023:

Finally if we can start building factories now and can bet on mRNA vaccine, vaccine can be made available by June 2022:

Finally fast tracking federal approval from one year to six months can further bring down the time and make the vaccine available by December 2021:

Source: Thompson, S.A. 2020. How Long Will a Vaccine Really Take? New York Times, April 30, 2020

Dependence on quarantined areas and strategies for managing sourcing risk

In a recent Harvard Business Review article, Tom Linton and Bindiya Vakil present the following information about the dependence on quarantines areas.

The authors present the following approach to manage sourcing risk:

Source: Linton, T., Vakil, B. 2020. Coronavirus Is Proving We Need More Resilient Supply Chains. Harvard Business Review, 5 March 2020.

 

Impact of Coronavirus on Healthcare Supply Chain

China manufactures the bulk of personal protective equipment used by healthcare providers in the United States. Other countries supplies these equipments are also hit hard by the coronavirus. Healthcare organizations in the United States typically buy more than 2 million N95 masks each month. The shortage of available capacity for production due to factory closures can result in a month long delay in the delivery of N95 marks that are used to protect against the spread of airborne illness. These masks differ from the standard surgical masks as they effectiveness depends on they proper fit and use. Healthcare workers are expected to be trained in the Occupational Safety and Health Administration’s protocols for their use. 

In the U.S. only two companies, 3M and Prestige Ameritech, manufacture the full line of N95 respirators. Historically the production of these masks within the U.S. has been insufficient to cover domestic demand. While the two companies are ramping up the production, it is expected to take up to a month to catch up with the demand surge.

On February 26 the U.S. Health and Human Services (HHS) secretary Alex Azar reported to the House Appropriation Committee  that U.S. has a stockpile of 12 million N95 masks. However, HHS estimated that we will need 300 million masks to cover an emergency and the combined production capacity in the U.S. and Mexico is only 65 million.

To address this gap between demand and supply, measures such a limiting the use of these masks by only healthcare staff who are directly involved in patient care is needed.

In addition to the surgical masks, the capacity shortage is also going to hit pharmaceutical products and medical devices. China produces 100% of the active pharmaceutical ingredients (APIs) for two vital products - penicillin and blood-thinner heparin. Capacity constraints and disruptions in the shipment of these drugs from China will necessitate exploration of alternative options. Food and Drug Administration (FDA) identified 20 drug products that are linked to China through API sourcing or product manufacturing, although these products are currently not in short supply.

From a supply chain management perspective, the disruption caused by coronavirus has resulted in a call for setting an industry-wide higher expectations with suppliers to improve supply disruption notification process, as noted by Chaun Powell, group vice president for strategic supplier engagement with Premier Inc. One could see potential price increases due to the an expanded base for manufacturing critical healthcare products in an effort to limit shortages of medical supplies. Inventory management practices should consider having safety stock in excess of 20% over the peak usage for these critical supplies, asserts Scott Cormier, vice president of emergency management, environment of care and safety for Medxcel. However, Powell notes that the increase in inventory should be gradual so as to avoid putting additional burden on suppliers.

Source: https://www.hfma.org/topics/operations-management/article/the-coronavirus-and-the-supply-chain-what-hospitals-need-to-know.html 

 

 

An enlightening and inspiring experience visiting the underprivileged communities in Panama

It was an enlightening and inspiring experience visiting and witnessing success stories of student-led consulting projects in underprivileged communities (villages) in Panama. These projects are facilitated by Global Brigades, an international non-profit that uniquely implements a holistic model to meet a community’s health and economic goals. The projects include establishment of internationally recognized community-owned banks in some of the country’s most under resourced, rural communities, micro-financing ventures created and run by indigenous tribes, helping these ventures succeed by offering hands-on business solutions, and providing healthcare to underprivileged communities.

 

First-Aid, Rapid Response Drone in India

https://t.co/I2QUtW0g8i

— Anand Nair (@Dr_Nair) December 4, 2019