Amidst the public debate these days about whether or not individuals should get shots for either the regular, seasonal flu or for H1N1, there is another challenge. That is, if you do want to get a shot, where and how can you get one? This is not a trivial question as there have been numerous delays and canceled clinics around the U.S. in the past two weeks.
What does this have to do with operations and supply chain management? Several things.
First, manufacturing and distribution of vaccine dosages is a substantial supply chain challenge. The U.S. Centers for Disease Control and Prevention (CDC) had hoped to have 40 million doses of the H1N1 vaccine ready by the end of October, but there were numerous manufacturing delays. As of October 30, Dr. Thomas R. Friedan of the CDC stated that there were 26.6 million doses available, up from only 10 million a week prior to that.
Manufacturing flu vaccine is a challenge – each dose must be grown in a chicken egg and carefully handled and harvested to avoid any contamination. The yield of antigen is unpredictable, making it difficult to forecast how much to produce. In addition, production must start several months before doses can be administered. Another challenge is that the revenue is relatively small for a complicated product. In short, vaccine production is a complicated process, that must be started months ahead of need and the revenue and yield is very unpredictable.
Once the vaccine is produced, then there is the distribution challenge. The CDC must ship the vaccine to numerous hospitals, clinics, doctor’s offices and pharmacies. In the current situation, many if not most of these organizations want more doses than are available. Thus, doses must be allocated and some potential patients will be left without. Once vaccine is actually delivered to a clinic, it must be administered as efficiently as possible. In short, the distribution of vaccine is one giant application of the newsvendor problem (see pages 222-223 of textbook). In the current case, there seem to be more stockouts than excesses.
- · How does vaccine distribution relate to key operations and supply chain management questions including: quality management, new product development, forecasting and project management?
- · Could more vaccine be made available if the government or patients simply paid more money for it? What are the pluses and minuses of producing extra at an increased cost?
- · How should the government and producers balance safety – i.e. carefully assessing the vaccine so that few unintended consequences occur – versus speed of getting the vaccine to patients?