The Modern Supply Chain and Its Failures


Wednesday, April 1, 2020

In this the second letter in a series to the MRI community that draw from observations created by the COVID-19 Crisis; this week I turn to recent thoughts on Globalization, Manufacturing, Human Health, Education, and our Future Course of Action.

In modern commerce, a sophisticated and efficient interconnected global network provides just-in-time production and delivery, minimizing labor, handling, and storage costs. This optimization was continually developed with digital data exchange processes enabling raw material supply, production, storage, and distribution. The U.S. industrial giants that previously were vertically integrated companies, restructured or evolved into OEMs (Original Equipment Manufacturers) and pushed component and sub system and assembly manufacturing to lower labor-cost regions.  Some of these manufacturers of components held on in the USA, but many more were offshored. The labor force in the U.S. then was pulled into the service sector. It is noteworthy that before 1940 the manufacturing sector was over 35% of the economy and today it is 11%. The sophistication, optimization, and effectiveness of this supply chain has been profitable, and much wealth was built from it, but it carried an unforeseen vulnerability. The global economy on which this was built is now highly compromised and shaken under a global pandemic.

As the US transitioned downward in manufacturing, countries in Asia filled in the opportunity and drove their own infrastructures to modernization. As a result, a large and adaptive manufacturing culture emerged that can be activated to now address the critical and large volumes of medical supply chains. Companies like Foxconn, an electronic assembly company, transitioned in less than a month to supplying 2 million masks a day.  South Korea drove testing with its biotech companies and was able to side-step some regulations at a critical time and used big capacity to obtain the necessary testing data that drove well-informed strategies in fighting the spread, avoiding a national lock-down. Germany is another country that has impressive manufacturing capabilities and healthcare. By ramping up manufacturing and testing back in January, Germany, so far, has suppressed the infection’s spread. While rapid response and data-driven decision-making are common crucial lessons, the ability to produce necessary goods in complex global and distributed supply chains is a societal weakness in such a crisis in many countries. We are now at a point where U.S. companies large and small and their workers that are trying to respond to this crisis deserve our thanks and support. We know that it is not an easy switch to turn on, and if it were, there is still the issue of the supply of raw materials.

There is also a smaller and smaller part of the population that has the skill-sets, and indeed the mind-set, to drive large-scale manufacturing on the scale that is needed.  Recently, even before this crisis, I have had conversations with scientists and engineers within the critical areas of national security who told me that we are heading towards “a materials and manufacturing Pearl Harbor.”  Maybe we should have a new slogan, call it “Make America Make Again,” to overcome our deficiencies.

We are not completely limited. All around the country people are being innovative, but the scale of the challenge is daunting. That does not mean that every single effort is not important. Around the world people are trying to be creative and proactive. There are so many efforts in universities, such as the open access designs of MIT ventilators and the manufacturing of masks in the Nonwovens Institute at North Carolina State University. There is also information sharing within all these universities and colleges that are making innovations and developing protocols, an impressive mobilization of intellectual creativity across the Union, and the world.

At Penn State, under the leadership of Professor Tim Simpson and his team in the newly formed Manufacturing and Sterilization for COVID-19 (MASC, Initiative, a group of over 250 faculty, staff, doctors, scientists, and students is sharing know-how, doing experimental testing, prototyping and aiding small companies to supply needed equipment and designs to Penn State Hershey Medical Center and local hospitals through approved medical equipment manufacturers. One of the companies on the team has now produced over 40,000 face shields and shipped 25,000 to Hershey since last week.  Our local community is also pitching in, including groups and individuals who are sewing masks at home or 3D printing face shields to supplement health care workers who cannot access proper PPE; every single mask is important when the supply chain is broken.

In response to COVID-19, higher education in the U.S. rapidly turned to online classes within a few days, while researchers moved quickly to address alternative testing strategies, study transmission pathways, and to gain insight into the biochemical pathways that will take down what Richard Dawkins calls a “selfish gene,” by which he means all genes, including those of human beings, whose sole purpose is to survive long enough to pass their genes on to the next generation. That makes the Corona virus a wily and tenacious foe.

Though people are responding in ways that are resourceful and innovative, these ideas could be ever more impactful if we had the ability to turn on the industrial complex that was present in an earlier time and provided the foundations of victory in World War II. Nevertheless, I see a spirit with the innovation that we have in universities and in small-company ecosystems, that I call a Dunkirk effort -- that moment in World War II when a strange victory was plucked from the jaws of defeat when  about a thousand small civilian boats left the British Isles to rescue the British and French armies from the beach of Dunkirk.

With a similar effort we will prevail. Simply observing how other countries have responded and successfully redirected resources and scaled manufacturing will be a lesson that should be remembered for the inevitable next crisis.

If nationally there is a movement to seriously reconsider the reshoring of manufacturing, there are many different strategies that can be adopted. Before thinking through those different models, we need to consider strategic industries with a vision toward a long, sustainable investment that will aid our country to lead in new technologies and strategic visions. The COVID-19 challenge is a crisis that we must learn from, but even on the other side of it there are many challenges we will face  in the future. The large population of the planet, the 9-billion challenge, not only feeds into infectious disease and pandemics, but also climate change, terrorism, cyber security issues, defense, equity, food, clean water, etc. -- all the grand challenges that the National Academy of Engineering identified in 2008, the United Nations’ Sustainability Goals, and  Big Ideas at the NSF, to mention just a few. To address all these challenges, we need a continuum of science and engineering to push the technology readiness levels. Such platforms could also be turned on in times of national need. As a major research university, we need even more aggressive partner strategies with industry and national labs to accelerate and enable training and pilot-level technology.

As scientist and educators, we need to drive research to higher so-called technology readiness levels, and we need to transition this work to companies. Penn State and MRI have been closely involved with industry in this effort. The entrepreneurial achievements associated with the Invent Penn State programs are a part of this effort as well. We will have to be much more engaged with this mind-set as we return to work. New and more aggressive partnerships with universities, vocational higher learning colleges, national laboratories, and industry will be required.

This may involve new methods of educating our students to prepare them for the changes in the future. More about that at a later time.

Finally, (and I know you are thinking, Yes!), I’d like to hear your thoughts on where we are heading as a community of scholars and thinkers. As President Barron wrote recently on his blog, “This is truly a ‘We Are’ moment,” and we will rise to the moment together.

Clive Randall
Director, Materials Research Institute