All Set to Speak at MIT on Supply Chain Networks Against Time: From Food to Pharma

I have been enjoying working on my presentation: Supply Chain Networks Against Time: From Food to Pharma, that I will be giving this coming Wednesday at MIT.

My host is Professor Carolina Osorio in the Department of Civil and Environmental Engineering at MIT.

I will be speaking as part of the Pierce Lab Seminar Series.

The topic is very near and dear to me - without food or medicines for those who need them, people would not survive. Moreover, many of such "products" are perishable, so that poses extra challenges in terms of the associated supply chains,

I will be focusing on a series of models that we developed, emphasizing their generalized network structure with the use of arc multipliers since these products as they flow down the links of the supply chains perish accordingly. My plan is to highlight work that we have done on food, medical nuclear supply chains, and blood supply chains, as well as on electric power generation and distribution networks, plus a case study in the pharmaceutical industry. Some of the models we presented and solved numerically in a recent book of mine:

The last time I gave a talk at MIT was on September 19, 2014, when several colleagues and I co-organized the Workshop on Cybersecurity Risk Analysis for Enterprises at the Sloan School.

I was a Visiting Associate Professor at MIT in the same group that is hosting my talk on Wednesday as part of a great program that the National Science Foundation then had - Visiting Professorships for Women (VPW). My dissertation advisor at Brown University, Professor Stella Dafermos, had also held one of these NSF VPWs before me. I enjoyed teaching a course there in transportation, having an office in Building 1, and, the year after, upon the receipt of a UMass Amherst "Conti" Fellowship moved to the Sloan School as a Visiting Scholar. That Spring, sadly, Stella Dafermos passed way.

It will be great to be back at MIT to see operations researchers, engineers, and even some friends on the policy side!

I am very much looking forward to seeing colleagues and students there!

Mr. Jeff Meyer, CEO of Red Cross Blood Services for MA and CT at the Isenberg School

Bringing expert speakers to share their practical know-how and experiences is fabulous for students' education!

Today we had the honor and privilege of hosting Mr. Jeff Meyer, CEO of Blood Services for the Red Cross for MA and CT, in my Humanitarian Logistics and Healthcare class at the Isenberg School of Management.

He was fabulous. First some background: Jeff received his undergrad degree at Babson and his MBA from UCLA's Anderson School of Management, where he focused on (bravo) operations management. How can you not love a speaker who comes in and starts talking about linear programming models and how in many of the team projects at UCLA students wanted to work on Red Cross projects because of the challenging problems.

Mr. Meyer drove almost 2 hours from Dedham to speak to my class and we kept him overtime for about 40 minutes because his knowledge of blood supply chains is vast. He has worked for the Red Cross for 16 years and, would you believe,  he was a consultant for the Red Cross and was offered a job with this organization the day before 9/11. He accepted the job since after the terrorist attacks (and he was in DC and could not get back home for a week) since he decided he wanted to help humanity.

He had worked in California for Red Cross blood services and was responsible for managing the construction of a $41 million facility for blood services in southern CA.

Mr. Meyer had the class (and me) on the edges of our seats informing us of how the demand for blood in the  U.S. has declined since 2008. He spoke of negative drivers and positive drivers and the consolidation of blood centers. The Red Cross now supplies about 40% of the blood in the US and has closed 3 of its 5 testing centers. He spoke about that there are "wet" surgeons and "dry" surgeons, with the former liking more transfusions whereas the latter utilizing fewer in their surgeries. He stated that in studies, more transfusions do not yield better outcomes.

He showed us a map of the US marking where there was Red Cross coverage and presence and as Mr. Lou Wigdor, our Isenberg School writer and editor noted, the white parts corresponded to the oil states!

 I was very impressed that he multiple times spoke about the importance of network optimization, since this is what we have been learning in the class for the past 2 weeks.

He also emphasized how efficiencies can be gained from having a bigger collection site (fewer vehicles needed and there is greater potential for good service and more spread out and comfortable service as donors arrive).  He noted that, although some perceive blood as being a commodity, it is not and there are many differentiated "products" that it provides.

The challenges of this supply chain are immense because of the perishability - with red blood cells having a shelf life of 42 days and platelets only 5 days. Platelets are needed to treat cancer patients and the demand for platelets is growing because of the aging population.

From 2008 and prior there were many cases of blood shortages in the U.S. but the scenario has changed due, for example, to the recession and fewer elective surgeries, more individual blood banking, and medical advances that result in less loss of blood.

He even described a Red Cross blood app which has been very successful - 80% of those who elect to give blood through the app show up for appointments whereas among  those who call for an appointment only 50% do. Clearly, there are also challenges with supply meeting demand and risk associated with donors not showing up.

Interestingly, he also shared with us that different hospitals may have different preferences even as to the kinds of testing that is done on the blood which can cost $200 per pint.

Out of $3billion in annual costs of the Red Cross, $2billion of that is for blood services.

I had done research on blood supply chains with my former doctoral students, Amir H. Masoumi and Min Yu:

• Supply Chain Network Operations Management of a Blood Banking System with Cost and Risk Minimization, Anna Nagurney, Amir H. Masoumi, and Min Yu, Computational Management Science 9(2) (2012) pp 205-231,
• Supply Chain Network Design of a Sustainable Blood Banking System
  Anna Nagurney and Amir H. Masoumi, in Sustainable Supply Chains: Models, Methods and Public Policy Implications, T. Boone, V. Jayaraman, and R. Ganeshan, Editors, Springer, London, England (2012) pp 49-72.

Mr. Jeff Meyer brought out so many interesting research questions today in his brilliant lecture that we will be kept very busy.

I'd like to thank him for sharing with the class such illuminating insights about this life-saving supply chain, for which logistics plays a fundamental role.

Challenges in the Blood Industry - Opportunities for Supply Chain Redesign and Operations Research

The article by Matt Wald (who was a  classmate of mine at Brown University), "Blood Industry Hurt by Surplus" in today's The New York Times  was extremely well-researched and timely. It highlighted the new challenges faced by this critical healthcare industry and ended with the quote by Dr. Ferraris of the University of Kentucky: Every surgeon who's ever lived has seen somebody whose life was saved by a blood transfusion.

Changes in medical procedures with innovations have greatly reduced the need for transfusions in the past several years, with last year's demand being about 11 million units, with 15 million being needed five years ago. As a consequence, blood bank revenue is falling, down from a high of $5 billion in 2008 to only about $1.5 billion expected this year. The Red Cross supplies about 40% of the blood to hospitals and other healthcare facilities, such as surgical units. The cost of a unit of blood to hospitals ranges from $225-$240.

Nevertheless, even at reduced demand, the blood banks still require tens of thousands of donors a day. And, of course, and this cannot be emphasized enough, blood is a perishable product and it must undergo rigorous testing and quality control before utilized in patients.

We have written several articles on blood supply chains and also included the topic in our most recent book: "Network Against Time: Supply Chain Analytics for Perishable Products."

The most relevant paper of ours related to the issues brought forth by Matt Wald is: Supply Chain Network Design of a Sustainable Blood Banking System, Anna Nagurney and Amir H. Masoumi, in Sustainable Supply Chains: Models, Methods and Public Policy Implications, T. Boone, V. Jayaraman, and R. Ganeshan, Editors, Springer, London, England (2012) pp 49-72. Here we dealt with demand uncertainty and with penalties associates with shortages or surpluses (as is the real-world industry scenario now) with appropriate weights imposed. We also handled perishability of this life-saving product using a generalized network approach and also included costs associated with wastage.

Given that this industry has not been immune to mergers and acquisitions, The New York Times article  reports that America's Blood Centers, an association of blood banks,  has seen a drop in members from 87 five years ago to 68 today.  Also, at a recent meeting of blood industry experts, it was predicted that most of the blood collections agencies, because they have good relationships with donors would survive,  but that there would be mergers associated with such blood supply chain network activities as testing, stockpiling, and distribution. In the paper, A System-Optimization Perspective for Supply Chain Network Integration: The Horizontal Merger Case, that I wrote and that was published in Transportation Research E 45: (2009) pp 1-15, I proposed synergy measures associated with supply chain network integration under cost minimization, exactly what is needed in this industry. 

We had had a wonderful exchange with Dr. Walter Dzik of Harvard Medical School and Mass General Hospital, who is an expert on hematology and transfusion medicine since he was aware of our blood supply chain research. He told us that, although now Red Blood Cells (RBCs) are considered to have a shelf-life of 42 days, the goal is to have the blood  stored for not longer than 7 days. Interestingly, it has been found that older blood is also of lower quality. This would put additional pressures on the blood supply chains in terms of time-sensitivity.

Thanks to Matt Wald for such a great article from which many additional research ideas are germinating!

Science, Global Supply Chains, and Operations Research

I was thrilled to see the cover of the recent Science magazine published by AAAS with a feature section on "Rethinking the global supply chain."

In this volume were several themed articles that I especially enjoyed, including "The information highway gets physical," in which ideas from the existing Internet are being promulgated to create a physical Internet for more effective logistics. Personally, and since we are part of a big NSF project to reenvision the existing Internet, I also see many synergies in the reverse direction through appropriate game theory models! In that nice article, written by Jeffrey Mervis, operations researcher Russ Meller was noted, and his co-authored book, "The Physical Internet: The Network of Logistics Networks." I sent Russ a congrats yesterday and he responded en route to the airport for a flight to Europe. I also enjoyed reading quotes from Kevin Gue, who gave a keynote recently at the Physical Internet conference in Quebec City  (and who is moving from Auburn U. to the U. of Louisville). I was already committed to being in Europe in May so I did not attend. The conference was hosted by Benoit Montreuil of Laval University in Quebec City, Canada.

Kevin J. Dooley of the W.P. Carey School of Business at Arizona State University also had a nice article, "The whole chain," in which he stated that Science is key to holistically managing sustainable supply chains, which I thoroughly agree with and which we have been emphasizing in many of our sustainable supply chain research articles with applications as varied as blood supply chains and even fast fashion!

In the volume there were also several additional articles on sustainable supply chains, and I found it interesting to see the lists of references and journals represented.

In particular, I very much enjoyed the article. "The science of sustainable supply chains," by Dara O'Rourke, who is at UC Berkeley. It was terrific to see cited therein our latest book, "Networks Against Time: Supply Chain Analytics for Perishable Products!"

 

And speaking of supply chains, today we heard the great news that our paper, Supply Chain Network Competition in Time-Sensitive Markets, Anna Nagurney, Min Yu, Jonas Floden, and Ladimer S. Nagurney, was accepted for publication in the journal, Transportation Research E! This paper was recently presented at the 18th European Conference on Mathematics for Industry, Taormina, Italy, June 9-13, 2014 and also at the Conference on Optimization, Control and Applications in the Information Age - in honor of the 60th Birthday of Professor Panos M. Pardalos, Chalkidiki, Greece, June 15-20, 2014.

You can read more about our paper in an earlier blogpost. 

The above presentation can be downloaded in its entirely here.

What if Your Plane Was Hit by Lightning and a Highly Perishable Product

This past Tuesday, April 2, I was trying to get back from Oklahoma City to Amherst, Massachusetts.

I had had a fabulous stay at the University of Oklahoma in Norman, during which I gave two  lectures as part of a Dream Course there. I wrote about the outstanding hospitality of my hosts in a post.

The weather in Oklahoma on April 1 was delightful -- warm and sunny,  but,  on my flying day back, it was fray and stormy, and I had heard thunder since about 4AM that night.

When I got to the Oklahoma City airport, courtesy of my wonderful host, Professor Janet K. Allen, I saw that my flight to Dallas was delayed and that I would not be able to make the connecting flight to Bradley airport in Hartford/Springfield.

So I agreed to be rerouted to Chicago O'Hare.

The lightning was continuing and as I stood in line waiting to get a sandwich I started a conversation with the lady in front of me who asked where I was flying to. She then told me that a plane that had just flown in from Chicago had been struck by lightning.

I wandered over to my gate and saw no plane, but, given my endless academic curiosity, I proceeded to investigate. She had also told me that there were long lines and that the airline was offering vouchers (I would not mind seeing Hawaii again).

The Southwest plane below was the one that had been struck by lightning as it was descending into the Oklahoma City Airport, and the mechanics could not start working and checking it out until the lightning was more than three miles away, for safety reasons.

The passengers had seen a bright flash of light in the plane when the lightning struck.

Many nervous passengers that were scheduled to fly on the above plane to Chicago were milling around Gate 18 whereas others were being rerouted.

A woman with an infant against her chest approached the gate agent.  I was going to talk to him since as a professor,  who teaches a course in transportation and logistics, among other operations-type courses, I wanted to gather more information that I could share with my students. I dug up this article from Scientific American on what can happen when lightning strikes a plane.

The woman said that she was traveling, via Chicago, on Southwest,  to Manchester, New Hampshire, where she was relocating to, and on the plane above, with the other cargo, was about a 4 month supply of breast milk.

Breast milk is a perishable product and, I thought to myself, having just had our latest book, Networks Against Time: Supply Chain Analytics for Perishable Products, published, that this "product" has similar characteristics to that of human blood -- you have to give it willingly and it is ingested into another human body. Blood supply chains are one of the case studies in our book.

The mother was panicky. She had done her homework and had about a 10 hour time window in which to get her very valuable packages back into the freezer.  I could really empathize and, being a problem-solver, I offered some suggestions.

In about 40 minutes or so, the plane was cleared for flying and the passengers had boarded (but two who were having lunch were not let back on board once the doors were shut).

And  I went to thank the Southwest gate agents when I heard that the plane from Chicago to Manchester would be held for the mother, her baby, and their valuable cargo!

In my research, I came upon this interesting post about shipping perishables, including blood and breast milk, in disasters, such as Haiti.

About an hour later, I got on my American Airlines flight to Chicago and eventually made it back to Massachusetts. On my leg from O'Hare to Bradley I was seated next to an executive and we talked non-stop. He had been to 116 countries and was in Vienna, Austria when I had been there in March. We discussed everything from our favorite cities to the US healthcare system and how he, at age 72, cannot even think of retiring since work is so interesting. He works in the international insurance business so we also talked about trust, reputation, and the importance of meeting people face-to-face -- and, hence, one of the reasons we fly so much!

Optimizing Blood Supply Chains for Healthcare

Our paper, Supply Chain Network Operations Management of a Blood Banking System with Cost and Risk Minimization, Anna Nagurney, Amir H. Masoumi, and Min Yu, now appears in the journal, Computational Management Science 9(2): (2012) pp 205-231.

It is in the April 2012 issue of Computational Management Science and is in a special issue edited by Professor Georg Pflug.

In this paper, we focus on a specific perishable product – that of human blood – and the optimization of a blood banking network system. Nahmias (1982) claimed that: “The interest among researchers in perishable inventory problems has been sparked primarily by problems of blood bank management. Some of the possible reasons for this interest might be that blood bank research has been supported by public funds.” Prastacos (1984) provided a review, to that date, of blood inventory management, from both theoretical and practical perspectives. Whether or not Nahmias’ statement is still valid – considering all the recent concerns about the safety of perishable products, blood bank management from a supply chain network perspective merits a fresh and updated approach.

This topic is especially timely today, since it has been reported that the number of disasters and the number of people affected by disasters has been growing over the past decade and blood is certainly a life-saving product (cf. Nagurney and Qiang (2009)). Blood service operations are a key component of the healthcare system all over the world. According to the American Red Cross, over 39,000 donations are needed everyday in the United States, alone, and the blood supply is frequently reported to be just 2 days away from running out. Of 1,700 hospitals participating in a survey in 2007, a total of 492 reported cancellations of elective surgeries on one or more days due to blood shortages. While for many hospitals, the reported number of blood-related delays was not significant, hospitals with as many days of surgical delays as 50 or even 120 have been observed. Furthermore, in 2006, the national estimate for the number of units of whole blood and all components outdated by blood centers and hospitals was 1,276,000 out of 15,688,000 units (Whitaker et al. (2007)). Considering also the ever-increasing hospital cost of a unit of red blood cells with a 6.4% increase from 2005 to 2007 further highlights the criticality of this perishable, lifesaving product.

 
In the US, this criticality has become more of an issue in the Northeastern and Southwestern states since this cost is meaningfully higher compared to that of the Southeastern and Central states. Moreover, hospitals were responsible for approximately 90% of the outdates, with this volume of medical waste imposing discarding costs to the already financially-stressed hospitals (The New York Times (2010)).

In this paper, we developed a generalized network optimization model for the complex supply chain of human blood, which is a life-saving, perishable product. In particular, we considered a regionalized blood banking system consisting of collection sites, testing and processing facilities, storage facilities, distribution centers, as well as points of demand, which, typically, include hospitals.

Our multicriteria system-optimization approach on generalized networks with arc multipliers captures many of the critical issues associated with blood supply chains such as the determination of the optimal allocations, and the induced supply-side risk, as well as the induced cost of discarding the waste, while satisfying the uncertain demands as closely as possible.

The framework that we present in this paper is also applicable, with appropriate modifications, to the
optimization of other supply chains of perishable products.


The complete analysis, along with references, can be found in our paper.