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Predict, Not Just Respond

Adexa’s Response and Solutions to Covid-19 Supply Chain Crisis

Covid-19 Crisis

The entire world is facing an unprecedented healthcare crisis.  Authorities at every level are trying to respond to situations never experienced before at the current scale.  They are responding by, first and foremost, prevention of spreading of the virus; at the same time struggling to match supply and demand.  Lack of visibility, exponential growth of demand for equipment, for hospital beds, for healthcare professionals, and medications.  Uncertainty and lack of risk resiliency (preparedness) and visibility to various options have all contributed to the current crisis.

At Adexa, for the past 25 years we have studied and done extensive amount of research to create solutions using disciplines such as Operations Research, AI and Machine Learning as well as collaborative techniques using Game Theory in order to tackle exactly the kind of issues that the world is facing today.  Today many industries are benefiting from Adexa Integrated Business Planning solutions, in particular healthcare companies such as Allergan, Sarepta Pharmaceuticals, J&J and Boehringer Ingelheim.  We continue to expand and provide our innovative solutions to both industry and government authorities for not just healthcare but also for state of readiness in urgent situations that require deployment of many different agencies and forces that need to come together. 

The Problem

Lack of accurate planning leads to risk of shortages, increased cost of operations, losing market share, lost revenue & profit and in some cases loss of life!  Planning accuracy is critical or else it is a pointless exercise that gives a false sense of comfort to the users and the company.  As a result of inaccurate planning, using spreadsheets or even many of today’s S&OP solutions, execution becomes a nightmare.  Expediting and panic take over.  Manual planning and reacting becomes the norm.  The end result is inefficient operations and lack of customer satisfaction.

In today’s crisis, we have seen a surge in demand for resources that were not planned for. A sudden spike in demand creating risk of availability for PPE in hospitals, medical personnel, hospital beds, respirators, and masks among others. Such a demand in spike created shortages for other medical “products.” In other words, availability of capacity for non-Covid patients since there needed to be a shift of capacity from one treatment to another. We are all too familiar with many other supply chain issues that resulted from this virus such as shortages in toilet paper, paper towels and disinfectants to name a few.

The issue here can be examined at two levels:

1) Understanding the potential risk and being prepared for it,

2) The ability to respond to the problem given that the original plan was not good enough.

Not knowing what the risk is and what the potential cost would be is one of the most common mistakes in supply chain planning. The risk of an event of this magnitude is low but the cost is extremely high. There is a need for much better planning for risks of this kind or any other. It does not mean having inventory ready but being prepared by having an accurate model of the environment and the supply chain, as explained below. The second issue, responsiveness, has both a component of latency and availability of alternatives. The latency is generally slow because of manual intervention and lack of visibility as to what the alternatives are. For example, where and how additional capacity is available for additional respirators, more beds and masks.

The Solution

Understanding the impact of any risk can be estimated using both past data and patterns of behavior using machine learning techniques.  This is called predictive planning. Using this approach, Adexa has been able to predict changes in demand based on weather pattens, product life cycle, temperature variations and many other factors.  In addition, assessing risk on the supply side, can be accomplished by injecting disruptions and then observing the potential financial impact on the supply chain. In this case the loss of life because of Covid 19 goes beyond financial cost.  But even that can be modeled in the risk equation.  Traditional way of what-if planning is far from adequate for risk analysis.  By performing a handful of scenarios, where there are millions of variables and causes is truly a futile exercise.  Systems must be deployed to run scenarios automatically, find the potential causes and tell the management how much to invest to avoid unnecessary costly consequences.  In this case, the recommendation of the system would be availability of PPE, beds, and respirators as well as availability of multiple sources and alternatives for responding to the sudden surge in demand.  Remember, demand planning identifies potential problems but the ability to address those problems lies with the supply planning and risk-resiliency on the supply side.  We accomplish this using ML algorithms to ensure the expected issues are accounted for.

The fundamental requirement of a risk-resilient supply chain is an accurate model of the supply chain.  Just like an airplane cockpit simulator, any kind of change to (say) air pressure can immediately show the behavior of the system and how it can be corrected.  In supply chains, a risk assessment system is just like that performing multiple plans knowing all the attributes, intricacies and potential causes of future risks.  Unfortunately, the S&OP solutions of today do not give you this level of accuracy only a rough long term capacity plan!

One other advantage of Adexa’s risk-resilient planning approach is the ability to respond to real-time events such as demand changes, loss of capacity, sudden disruption of supply and so on.  The way this is done has to do with the completeness of the model and speed of the system to examine all the different alternatives and generating new plans in almost real-time.  In the current environment, many companies are changing their product mix in order to meet the changes in demand in their product portfolio.  Some are even using their capacity to produce new products that are more relevant to today’s market needs such as masks and respirators.  With Adexa, they have the capability to switch sources, change product mix and demand quantities almost overnight and generate plans which are realistic and ready for execution.  Hospitals are also in a position to change bed allocations and exchange capacities with each other based on their capabilities and ability to handle different kinds of cases as well as availability of treatment options.  Having such detailed and attribute-based models of the supply chain provides a state of readiness against any kind of risk big or small.  At Adexa, we are very proud to serve our customers in private or public sector, with solutions that enable them to serve communities, locally and worldwide, with their full potential and keep growing in a very competitive and complex world that we are living in.

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