Posted by: Christian Verstraete | November 26, 2009

H1N1 and its impact on the Supply Chain

If you haven’t heard about H1N1, you probably haven’t been on planet earth the last 6 months. Today, I ran into a blog from Bob Ferrari, titled “H1N1 Vaccine Supplies: Fixing Supply and Demand Imbalances”, and I could not resist commenting. Actually the virus may strike twice.

Pharmaceutical companies are frantically working at making and delivering more vaccine. According to the World Health Organization, the vaccine is still in short supply. In the mean time, in many countries, the peak of infection is over. But obviously, a second one may arrive in the new year, so we are heading for an interesting winter. Delivering the available vaccine to the countries in greatest danger, is what any supply chain team would do. Unfortunately this is not what’s happening in the current circumstances, resulting in plenty of vaccines available in some countries where its safety and effectiveness is put in question, while other countries, greatly affected by the virus, are unable to respond to demand. When will we be open for a fair distribution?

But that’s not the only effect. Let’s assume the virus comes back and hits a large population. Has anybody thought about what effect this will have on production and supply chain? Factories will have to reduce their capacity, and supply will not be able to address demand. In the current, globalized world, we will have to explain to customers in country A they cannot buy their favourite products due to an outburst of the virus at the other end of the planet.

They will probably ask why we have not planned for that, and they actually may be right. How many companies are planning for such events? I have not heard many.

Now is the time to rethink about this method, called Scenario Planning, originally invented by Shell. Apply it to the current situation and imagine 20, 30 or 40% of the workforce employed in your current supply chain is home with H1N1. What are you going to do, how will you supply your customers, and how can you prepare for this?

If the scenario ever happens, you will be able to continue deliver, and I’m sure potential customers will spot that. They may even come over to you. A disruption always provides opportunities. So, H1N1 may be one, and Scenario Planning may help you benefit from it.

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