Fixing the Broken Humanitarian Healthcare Supply Chains

Despite significant advances in supply chain management in terms of both methodology and application, healthcare supply chains, and, in particular, humanitarian healthcare supply chains, have not received the needed attention.

Humanitarian healthcare supply chains have many unique characteristics. For example, as pointed out in the handbook, Humanitarian Supply Management and Logistics in the Health Sector, by the Pan American Health Organization and World Health Organization (2001), “The various stages in the flow of supplies from their point of origin to the moment they reach their recipients – whether they be the organizations managing the emergency or the actual beneficiaries of the assistance – are a chain made up of very close links. How any one of these links is managed invariably affects the others. Supply management must therefore be the focus of an integral approach that looks at all the links in the sequence and never loses sight of their interdependence ...”

Hence, an appropriate framework for humanitarian healthcare supply chains must capture the entire relevant network.

Moreover, Van Wassenhove and Pedraza Martinez, writing in an article in a special issue of International Transactions in Operational Research, that I have blogged about, have argued that “The key for logistics restructuring is better network design” and noted that logistics restructuring is a supply chain management best practice that could be used in humanitarian logistics restructuring, singling out the restructuring of the International Federation of Red Cross and Red Crescent Societies (IFRC).

The news as to how to optimally design and redesign multiproduct humanitarian healthcare supply chains needs to get out more widely since, in 2011, more than 251 drug shortages were reported, including 20 chemotherapy agents, according to the American Society of Health-System Pharmacists. The drug shortage crisis has not only forced patients to switch to more expensive alternatives, but also posed potential hazards of medical errors. Although the causes of drug shortages are complicated, it has been noted that production disruption at one manufacturing facility can lead to widespread drug shortages.

In the paper, "Multiproduct Humanitarian Healthcare Supply Chains: A Network Modeling and Computational Framework," that I co-authored with my doctoral student, Min Yu of the Isenberg School of Management, and with Professor Patrick Qiang of Penn State Malvern, we developed a multiproduct supply chain network design and redesign model with applications to humanitarian healthcare applications. The variables in the model are supply chain network link capacities as well as the healthcare product flows associated with the supply chain activities of production, transportation/shipment, and storage/distribution.

When the capacities are sufficient to meet the demands and no enhancement of capacity is needed, the model collapses to a humanitarian healthcare operations optimization model.

The solution of the model yields the optimal investment capacities and product flows on the links at minimal total cost, with the demand for the various products being satisfied at the various demand points. With this information, a firm or organization involved in the production and distribution of healthcare products can identify the total cost associated with the provision of its products. The framework can handle both the design and the redesign problem with the latter being especially relevant for healthcare, since, for example, vaccine manufacturers may have to regear from year to year depending on the forecasted flu viruses; the same holds for the manufacture of associated medicines.

Given the paucity of multiproduct supply chain network mathematical models and associated methodologies in the literature that can handle both link capacities and product flows as decision variables, along with nonlinear cost functions to capture congestion, as well as risk, we believe that, with this paper, we have made a contribution of specific relevance to humanitarian healthcare supply chains.

We will be presenting the paper at the 2012 POMS Conference that will take place in Chicago, Illinois, April 20-23. The paper has been accepted for publication in the conference Proceedings.

Humanitarian Relief and the Red Cross -- What We Learned

Yesterday, we had the privilege and honor of hosting a guest speaker in the Humanitarian Logistics and Healthcare course that I am teaching at the Isenberg School of Management.

Our speaker was Mr. Rick Lee, who has worked for the Red Cross for close to three decades and is the Executive Director of the Red Cross Pioneer Valley Chapter. He is in the photo above with some of the students. He is a regular guest on radio and TV programs and it was very special that he took the time out of his busy schedule to educate us.

In his presentation, he overviewed not only the history of the Red Cross, even going back to Clara Barton, but also described its various symbols from the Red Cross (see photo below) to the Red Crescent and the Red Crystal, which was introduced in 2006.

The founder of the Red Cross, Henry Dunant, was the first recipient of the Nobel Peace Prize in 1901 and the Red Cross has received 3 Nobel Peace Prizes. The Red Cross has to be politically neutral and relies entirely on the donations of others from time to money to blood.

Keeping the trust of people is job #1 and its principal role is in disaster and emergency response; hence, it has to guarantee the safety of the products that it provides (including food) as well as the integrity of its volunteers and paid staff (not many).

When the tornadoes hit our area on June 1, 2011, and affected an area 1/4 of a mile wide but 39 miles long, the coordination and teamwork that took effect and the role of the Red Cross in it was amazing. The devastation was mapped by individuals walking the areas.

The Mass Mutual Center in Springfield was the major area shelter and the Red Cross served thousands of meals and thousands of snacks through June 30, providing personal care packages, as well as securing healthcare and even support for finding housing. Mr. Lee showed us photos of the devastation and the assistance that followed, with many major corporations, in addition to Mass Mutual, donating thousands of dollars and some bringing water and energy drinks in truckloads.

The Red Cross relies on trust and, hence, financial donations are what is sorely needed during and post disasters as well as trained volunteers (who have undergone background checks). After the tornado disaster, all 100 volunteers showed up (of different religions, races, and professional status, but all joined by the desire to help) without even being called. He told us how he then called 100 individuals representing various corporations to get financial assistance and of the many who responded. A gentleman from Colorado, with ties to Springfield, who had heard abut the unexpected devastation sent in a $100,000 check to help in relief operations.

As for who lifted the spirits of the amazing Red Cross volunteers at the Mass Mutual Center -- none other than Bill Cosby. He showed up and, I might add, he has a doctorate in education from UMass Amherst. He also entertained those who had been displaced to the shelter and lifted their spirits (but he did it outside on Manor Square).

Mr. Rick Lee emphasized many of the aspects of emergency response and disaster relief that we have been covering in the course that I am teaching (without even being prompted) and he brought his depth of humanity and years of experience with humanitarian relief work to the students. One can prepare for high probability, low impact events but the low probability, high impact events are the truly challenging ones (and Massachusetts and New England have certainly had their share of such events this past year alone).

He told us about how someone he knows, after hearing on the news that day that a tornado was to strike, called his wife because the meteorologist was projecting a certain path for the tornado in Springfield and it was to hit their house. He told his wife to put the car in the garage and to go into the basement bathroom and to get in the tub -- the tornado struck 4 minutes afterwards-- the house was leveled, but his wife survived and crawled out from under the rubble. This meteorologist, according to Mr. Lee, saved numerous lives, and will be honored as a Hometown Hero later this season.

He told us about how a preschool in Springfield with 24 children was also leveled but that everyone survived because they had also made it to the basement. When the caretakers and children stumbled out of their destroyed preschool, they saw in front of them a schoolbus (Mr. Lee invoked God here) with child seats and a driver who ferried them all away to safety.

One must understand that trees were downed, houses and buildings were destroyed, certain roads impassable, and electric power lines were down. That month of June, Mr. Lee and the Red Cross volunteers worked 16 hour days.

He also told us that what is needed in those who work in humanitarian organizations and operations is kindness and integrity (but he also said that he wishes that there were courses such as the one I am teaching when he went to college). He emphasized the importance of relationships and communications with the former taking time to develop.

He told us to "Do the Right Thing," although it may not be politically popular and it may be very difficult.

As for the personal rewards of such hard work -- clearly the rewards are not monetary, but as Mr. Lee told us yesterday, when you help someone during his/her darkest hours, there is no greater reward.

The class was too short and some of us continued the conversation with him as he left the Isenberg School of Management.

Averting Critical Drug Shortages, Pharmaceutical Supply Chains, and the FDA

I have been sharing the news regarding the drug shortages -- most recently of pediatric cancer drugs, with the students in the Humanitarian Logistics and Healthcare class that I am teaching this term at the Isenberg School of Management at UMass Amherst.

When there are shortages of life-saving drugs that can help cancer and other patients, from the very young to the old, it is unconscionable. Those in weakened physical shape should not have to endure the added stress of not being able to obtain life-saving medicines and the uncertainty of how the unavailability of such medicines will impact their survival.

There has been much discussion as to the reasons for the shortages, and we have written a paper, A Supply Chain Generalized Network Oligopoly Model for Pharmaceuticals Under Brand Differentiation and Perishability, Amir H. Masoumi, Min Yu, and Anna Nagurney, that is in press in the journal, Transportation Research E. In the paper, we develop a pharmaceutical supply chain network model that captures competition and demand for generic versus brand drugs as well as the perishability of pharmaceuticals. Clearly, if there is only one manufacturing plant and the product gets adulterated or there is some other type of processing failure or economic failure (a firm can no longer recover its costs and make a profit) then the impact on those who need the vital medicines is immense.

I was pleased to see that the US Food and Drug Administration (FDA), as reported by numerous newspapers, including The Chicago Sun Times, has managed to avert a “crisis” for children with cancer by preventing a looming shortage of the lifesaving drug methotrexate, a mainstay of treatment for a type of childhood leukemia. It was expected that the country would run out of methotrexate by the end of next week. According to The Chicago Sun Times, the shortfall arose when one of the four U.S. makers of methotrexate, Ohio-based Ben Venue Laboratories, shut down production late last year because of “manufacturing and quality concerns,” FDA spokeswoman Shelly Burgess said. The shortage is the latest in a series of serious shortages of cancer medications and other drugs that have frustrated doctors and patients over the past year and a half.

The shortage is an issue of life or death for the 3,500 kids diagnosed each year with acute lymphoblastic leukemia, or ALL. They endure two to three years of punishing therapies but are nearly always cured of their disease.

The FDA worked with the three remaining manufacturers that make preservative-free methotrexate, and all have agreed to ramp up production.

In this case, the media outcry led to some important and decisive action.

We need processes and systems in place to guarantee that quality pharmaceuticals can be produced and delivered to those who need them in a timely manner.

Before Disasters Strike -- Assessing Supply Chain Performance Under Disruptions

As documented in numerous studies, as well as books, including our Fragile Networks book, the number of disasters is growing as well as the number of people affected by disasters.

Having the appropriate supply chains in place that are resilient to disruptive scenarios will not only save lives but make the disaster recovery process less painful and costly.

Along with my collaborators, notably, Dr. Qiang of the Graduate School of Professional Studies at Penn State University Malvern, and my doctoral students, Min Yu and Amir H. Masoumi, we have been developing quantitative tools and metrics for supply chains in humanitarian operations and healthcare.

In particular, we have been focusing on a broad class of products known as critical need products.

Critical needs products and supplies are those that are essential to human health and life. Examples include food, water, medicines, and vaccines. The demand for critical needs products is always present.

Our first paper on the topic, Supply Chain Network Design for Critical Needs with Outsourcing, Anna Nagurney, Min Yu, and Qiang Qiang, was published in the Papers in Regional Science 90: (2011) pp 123-142.

Critical needs supply chains also play a pivotal role during and post disasters during which severe disruptions can be expected to have occurred. Indeed, the past few decades have visibly demonstrated that disasters, whether natural or man-made, may severely damage infrastructure networks, such as transportation and logistical networks, may cause great loss to human life, and also may result in tremendous damage to a nation's economy.

Hence, critical needs supply chains are essential in both healthcare and humanitarian logistics operations. Given their importance also in terms of emergency preparedness and planning, special attention to them is needed, since their functions are so important to the well-being and the very survival of our societies.

Specifically, in the case of disruptions to critical needs supply chains, there are two primary parameters that may be seriously affected:

1. the capacities of the various supply chain network activities (production, storage, transportation, etc.) and

2. the demands for the products may not be satisfiable.


Indeed, as shown by numerous recent disasters, disruptions may tremendously reduce supply chain capacities as well as impact the demands for critical needs products.

Hence, it is essential for organizations to have performance metrics which enable them to assess what are the costs associated with supply chain disruptions under different scenarios. Moreover, will the demands be met and, if not, what can one expect to be the unmet demand?

To provide appropriate metrics and tools to organizations ranging from humanitarian ones to governmental ones as well as international bodies, as well as corporations, we have constructed a bi-criteria supply chain performance indicator that captures the probabilities of capacity disruptions under different scenarios as well as demand being unsatisfied.

The indicator is developed, discussed, and applied in our paper, A Bi-Criteria Indicator to Assess Supply Chain Network Performance for Critical Needs Under Capacity and Demand Disruptions, Qiang Qiang and Anna Nagurney, to appear in Transportation Research A: Special Issue on Network Vulnerability in Large-Scale Transport Networks.

Since the goals of supply chains for critical needs are quite different from those of commercial supply chains, they should be evaluated by distinct sets of metrics. As pointed out by Beamon and Balcik (2008), the goals for humanitarian relief chains, for example, include cost reduction, capital reduction, and service improvement (see also Altay and Green (2006)). Tomasini and van Wassenhove (2004), similarly, argued that: A successful humanitarian operation mitigates the urgent needs of a population with a sustainable reduction of their vulnerability in the shortest amount of time and with the least amount of resources.

We hope that our paper has contributed to this growing research and application domain in a rigorous way.

Our earlier work on supply chain disruptions in commercial supply chains included the paper, Modeling of Supply Chain Risk Under Disruptions with Performance Measurement and Robustness Analysis, Qiang Qiang, Anna Nagurney, and June Dong, in Managing Supply Chain Risk and Vulnerability: Tools and Methods for Supply Chain Decision Makers, T. Wu and J. Blackhurst, Editors, Springer, Berlin, Germany (2009), pp 91-111.

Why the Shortages of Drugs and Medicines in the Global Supply Chain and What We Are Doing to Help

You may have been reading the recent news about the shortages of certain drugs and medicines that are essential to the survival of the patients, including cancer patients, that so desperately need them.

From an article in the USA Today, and recent articles in The New York Times, including one that highlighted that 75% of the drugs in the US are generic ones with the majority being produced abroad in plants that are rarely inspected, it is clear that we are in a crisis situation.

Of the 34 generic cancer drugs on the market, as of this month, 14 were in short supply. They include drugs that are the mainstay of treatment regimens used to cure leukemia, lymphoma, and testicular cancer.

Indeed, according to Ezekiel Emanuel, writing in The Times: In 2004 there were 58 new drug shortages, but by 2010 the number had steadily increased to 211 and these numbers include noncancer drugs as well.

How can this be happening in the richest and most technologically advanced country in the world, with leadership in medical know-how?

How horrific that patients, whose treatments and very survival depend on such drugs, cannot procure them in a timely manner?

In a recent paper of ours, Multiproduct Humanitarian Healthcare Supply Chains: A Network Modeling and Computational Framework, Anna Nagurney, Min Yu, and Qiang Qiang, we discuss the issues of shortages of various drugs and vaccines, including the leukemia drug, cytarabine, and how to design and redesign supply chains so that medicines are delivered to those who need them. In the paper, we state that:

Despite significant advances in supply chain management in terms of both methodology and application, healthcare supply chains, and, in particular, humanitarian health care supply chains have not received the needed attention. In particular, humanitarian healthcare supply chains have many unique characteristics. For example, as pointed out in the introduction section of the handbook published by the Pan American Health Organization and World Health Organization (2001), ``The various stages in the flow of supplies from their point of origin to the moment they reach their recipients -- whether they be the organizations managing the emergency or the actual beneficiaries of the assistance -- are a chain made up of very close links. How any one of these links is managed invariably affects the others. Supply management must therefore be the focus of an integral approach that looks at all the links in the sequence and never loses sight of their interdependence ...". Therefore, an appropriate framework for healthcare humanitarian supply chains must capture the entire relevant network.

In this paper, as well as in some of our earlier studies, whether on supply chains for critical need products, supply chains under demand and cost disruptions, or supply chains with outsourcing, our goal is to optimize within the constraints. By developing analytical, transparent tools, one can capture the major issues and can then evaluate how to redesign the networks so that those whose lives depend on drugs and medicines can get them when they need them. We must put in place the proper incentives for decision-makers to guarantee the sustainability of our humanitarian healthcare supply chains.