| Dave Kaufman: | That’s the sound of world-renowned cellist Yo-Yo Ma, who gave an impromptu concert at a Massachusetts vaccination clinic after receiving his second dose of a COVID-19 vaccine in mid-March, 2021. When COVID-19 took over our lives last winter, who could have ever imagined that fewer than 12 months later, people around the world would be lining up to receive a vaccine. Pfizer-BioNTech, Moderna, Oxford-AstraZeneca, Johnson&Johnson. |
| Dave Kaufman: | When the world stopped, scientists and researchers did anything but. They went full speed ahead to develop vaccines that will allow life to return to normal. The road, however, has been far from smooth. Procurement issues, delivery delays, and comparisons to countries with production capabilities have led people in Canada and across the globe to wonder just how soon life can return to the way it once was. |
| Dave Kaufman: | When will we all be vaccinated? And will we be better prepared to develop vaccines if we’re ever in a situation like this again? Will all Canadians receive their first doses of the vaccine by the summer, or will vaccine nationalism in the European Union and India get in the way of Canada achieving the goal promised to its citizens, as countries desperately scramble to take care of their own? Each one of us wants to hear the words, “You’re fully vaccinated.” And when we do, it will be like music to our ears. |
| Dave Kaufman: | Cohen’s work in progress has resulted in a lot of troubleshooting, something many of us can very much relate to. |
| Dave Kaufman: | Welcome to The New Normal, the podcast exploring management research brought to you by Delve, the official publication of McGill University’s Desautels Faculty of Management. I’m your host, Dave Kaufman. |
| Dave Kaufman: | On this episode of The New Normal, we will discuss the vaccine rollout and the global supply chain. Among the issues today’s episode will explore: How exactly was the global supply chain affected by the pandemic? If COVID is indeed a Black Swan event, should we be preparing for something we may never encounter again in our lifetimes? And why did Israel’s vaccine rollout fare so much better than Canada’s? |
| Dave Kaufman: | Joining me for this episode is professor Saibal Ray. Dr. Ray holds the Desautels Business Leadership Chair and is presently the academic director of the retail initiative at Desautels Faculty of Management. In addition, he is also the academic director for the Program for International Competitiveness, and of the McGill Center for the Convergence of Health and Economics. Ray teaches the core operations management at the MBA level and has taught courses on operation strategy and technology process implementation at undergraduate and graduate levels. He has received multiple teaching awards, including the Teaching Excellence Award from the Quebec government, and the Desautels Teaching Award for Undergraduate Teaching. His research interest can broadly be categorized as supply chain management. He is specifically interested in studying supply chain risk management, making him the perfect guest to speak with to better understand this episode’s topic. |
| Dave Kaufman: | I began our conversation by asking Professor Ray if he could highlight exactly how the global supply chain was affected by the COVID-19 pandemic. |
| Saibal Ray: | It came in multiple phases to me. The first thing which made it very clear is two things. One is the personal protective equipment. At the very beginning of the pandemic, say 2020, late March, April, when there was… And throughout the world, except perhaps in China where most of these personal protective equipment were being manufactured, lots of countries saw that there was not much available. Whatever supply was available, there was a huge competition for those supply to get it. |
| Saibal Ray: | Many of the domestic manufacturing in many of the Western countries, because personal protective equipment was, until that time, supposed to be not such a priority, there was not much domestic manufacturing. |
| Dave Kaufman: | It’s easy to forget just how competitive the scrabble for PPE was last spring. There were stories of equipment being commandeered in the United States by FEMA, the Federal Emergency Management Agency, to divert from states who they deemed needed the PPE more direly. |
| Saibal Ray: | So, they were dependent on global supply chains, and so there was a huge competition. The personal protective equipment was the first thing which showed the importance of supply chain, importance of a supply risk, in some way. |
| Saibal Ray: | And the second thing, which right around the same time, was the grocery and other basic necessities, which also started having some supply issues. One famous example is obviously about the toilet paper, because there was also panic buying at the same time. But then the grocery shelves started to be empty. And so people, again, they started to understand many of our food items or many of our basic necessities, in addition to the PPEs, we are dependent on a very long and very risky supply chain to get it to the ultimate customer. |
| Dave Kaufman: | However, our concerns about empty shelves at the grocery stores were quickly wiped away. Dr. Ray now points out that the supply chain issues involving the vaccine have, in many ways, become the focal point for all of our concerns. |
| Saibal Ray: | For the last three, four months, both for PPE and especially for the necessary basic necessities and the grocery items, the supply chain problems perhaps was solved by May or so, and the things started to become normal. But in the last three, four months, now the problem is more in terms of the vaccine. And vaccine supply chains obviously is even more complicated in some ways than some of the other supply chains we are talking about. And now, how can we ensure supply of the vaccines? How can we make sure the distribution of the vaccines is proper, and so on? It has brought supply chain to the absolute forefront. |
| Dave Kaufman: | Complicating supply chain issues even further, Dr. Ray says that the COVID-19 pandemic is a Black Swan event, which comes with its own set of unique challenges. |
| Saibal Ray: | The Black Swan event is something which is once-in-a-lifetime event. So, there are certain types of risks that the companies and the government are able to handle because they deal with these risks almost every year. Like flu vaccine, there might be supply problem. There might not be enough. So, these types of things, they handle it every year, so they have a lot of practice, so to say, to handle these types of risks. And they develop certain amount of capability to handle these types of risks in the best or most effective way. |
| Saibal Ray: | But when it is a Black Swan event, like the COVID-19 pandemic, they do not have any practice to handle these type of things. And when you do not have practice, you are doing many of the things for the first time. And so, like these contracts with the pharmaceuticals, even before you go into the supply, the procurement part. Forget about the supply chain part, the procurement part. It’s again, a huge competition. All the countries in the world are trying to procure from this limited number of pharmaceutical companies. |
| Dave Kaufman: | Dr. Ray explains why this is such a complicated issue for countries who seemingly have had to build a roadmap while navigating each new step without any historical precedents to lean upon. |
| Saibal Ray: | Think about the complexity there. You are trying to get this procurement contract before you know which of them vaccines will be successful. Do you want to go with one or two, or do you want to have contracts with multiple people? And again, you are not the only people. And given the size of Canada, the [inaudible 00:08:17] size is not that large, and you do not have domestic manufacturing. So, all this means… Forget about the supply chain. Even the procurement contracts are much more complicated here, and you have to do it in a very, very short amount of time. Government does complicated procurement contracts, but then they have a long time to do those things, do much more research. |
| Dave Kaufman: | Among the issues countries have had to deal with is figuring out which vaccine to procure, which explains why Canada made deals with several companies and purchased enough doses to vaccinate Canadians several times over. |
| Saibal Ray: | Not only is the procurement contracts complicated, the time period to finalize is also extremely short. And that is why Canada had contract with lots of different manufacturers. And indeed, because of that, now that many of the ones have been relatively successful, let’s say Pfizer, Moderna, AstraZeneca, hopefully Johnson&Johnson, and Novavax, that means Canada is now have a huge amount of supply. |
| Saibal Ray: | But then, the question is that because the amounts are not large from Canada, Canada is perhaps sometimes not the priority for the manufacturers. Not always, but sometimes. The timing of the supply is also important, and that’s why Canada is a bit late in getting the supplies, because of the way that Canada’s procurement contracts were done, basically. |
| Dave Kaufman: | Is there a lesson in there that Canada should be having its own factories? |
| Saibal Ray: | This is another thing about PPE. When PPE or when the grocery comes, we always talk that we should have local manufacturing. We should have security of supply, let’s say. That is the most important. Whether local or not, the question is security of supply, and that we should be able to get it when we want it, in the reasonable quantity that we want it. |
| Saibal Ray: | But the problem is that today, most of the people are saying, “Yes, we should have this local supply. We should have this local manufacturing.” But as we discussed, this is a Black Swan event. Suppose this doesn’t happen for the next five years. We’ll be again questioning, “Why did we invest so much in having this local supply of PPE or local supply of grocery?” There might be some investment costs and the taxpayers have to make these investment calls. Are we going to ask the same questions? Or now that it has not happened, will we forget all this history and start asking the other side of the question? “Why are you making this investment when it is not necessary?” |
| Dave Kaufman: | Will we actually forget what last year was like? More on that in a minute. Dr. Ray thinks that there are certain financial traps that we would be best not to fall into, such as getting into the PPE manufacturing game. |
| Saibal Ray: | And this is always the problem with this Black Swan event, right? Because you invest a lot, so you have to be careful in what you invest. You cannot just jump to a conclusion because of this Black Swan event and make an investment. If we really think that vaccine manufacturing is something going for what will be important for us, we should invest. Absolutely. But we have to be careful in, does PPE something that we should invest? Is local grocery we should invest? I am not questioning whether should we invest or not, the question is that we should not come back in three, four years, if this event doesn’t happen, and say, “Why did we make this investment?” |
| Dave Kaufman: | So, in your opinion, then, do the benefits outweigh the risks of having vaccine capability manufacturing in Canada? |
| Dave Kaufman: | I think vaccine capability, absolutely. I think pharmaceutical manufacturing is a capability which is extremely important for any country. For some PPE and so on, I do not know how much value it adds in terms of improving our manufacturing capability, our high-end manufacturing. |
| Saibal Ray: | Do you really think that our memories are so short that in two years we won’t remember what we’ve gone through for the last year? |
| Saibal Ray: | Perhaps not two. Believe me, in five years, we will ask these questions. We have seen in many, many cases, we start asking these questions. There is this recency bias, right? This event is a recent event, so we are very worried about what is the impact. And so, we are making all these judgements. Again, if these things become a regular event and not a Black Swan event, absolutely then. |
| Saibal Ray: | I think we’ll think about a lot of shots to the system, certainly COVID is going to be one of them. I don’t think there’s any way we can edit that out of our memory. But I think along with that, we do have to think about new technologies and shifts in technology. It’s interesting that those new technologies are one of the things that help make at home work possible. We also need to think about AI and data mining, and all of those pieces and how those are going to affect work. That was what everyone was talking about before COVID hit. I also think COVID is playing into some other social movements, which are another kind of shock to the system. Social movements create new work, they change work, things like Black Lives Matters. |
| Dave Kaufman: | But what if this event is really a Black Swan event? Because remember, the Black Swan event, when it first time happen, it becomes a Black Swan event. The stock market crash used to be a Black Swan event, but it is now becoming more of a regular event. Once this becomes more of a regular phenomenon, it’s not any more a Black Swan event. If it remains a Black Swan event, my feeling is that, maybe not two years, but maybe in five years, we might ask that question. “Why did we invest so much money in developing a facility that we are not using anymore?” |
| Dave Kaufman: | Dr. Ray, do you think that Canadians are unrealistic in their expectation of how quickly they’re going to be vaccinated? |
| Saibal Ray: | As an academic, I might tell that they are unrealistic, but as common person, I am always hoping that I will get the vaccine tomorrow, basically. So, I cannot tell that they are unrealistic, especially. The thing is that, as you can see, the government might say that you should not compare yourself, but everyone, governments compare themselves. Everyone compares, right? So, when I am seeing that US is doing extremely well, not in other things, but at least in vaccine, UK is doing very extremely well, and so on, some of the countries that we normally compare ourselves to. |
| Saibal Ray: | And then, when we see some of the Middle East countries and so on, and then when we see that we are not doing some well, yes, the question comes. I understand there are some constraints in terms of manufacturing, in terms of the supply, and so on, but people will ask questions. |
| Dave Kaufman: | But as you’ve stated, this is not a supply issue. It’s a distribution issue. |
| Saibal Ray: | Indeed. As you see that the issue is not the amount of supply. There is clear that actually Canada has enough supply. Indeed, Canada has one of the highest supplies of any country per capita because Canada, it has enough supply for every city to have five times the vaccination. So, the issue is not the total amount of supply. There is absolutely enough. The question is about the timing of the supply, because we want it as soon as possible. The contract seems to be that the supply will only pick up in April, or something like that. And that’s the issue. |
| Dave Kaufman: | The Government of Canada’s website projects that April 2021 vaccine deliveries will be nearly triple the number of vaccinations delivered to the provinces in the month of March. |
| Saibal Ray: | And when the supply comes… Remember, now we have too much demand, not enough supply. At a certain point, it will flip. The supply will be huge. And when the supply will be huge, there again be this issue. Maybe we will start questioning that we have so much supply. For example, a hundred units of supply. We are using only 50 or 60, because that is what we can handle per day. Because there is also a limit on how much vaccination can we do, actually, per day. And the supply might be even more than that. |
| Saibal Ray: | So, it would have been great to have a more regular supply, more spread out supply, and a more supply early in the thing. Because as we have seen with Israel and so on, another example of a country where it’s been successful, vaccine is perhaps one of the best ways to get this whole thing under control. So, if we could have done the vaccine, it is not only from a supply chain and distribution viewpoint it could have been better, but even from a health perspective, obviously, it will be better as early as possible. |
| Dave Kaufman: | I think the discussion about how effective Israel’s vaccine rollout has been is a perfect place to end our discussion. Is it fair to compare Canada, a country that is so much larger and with a much smaller population density, to Israel? If Canada had just one-third of the population and was the size of the state of Vermont, would Canada have done a better job distributing the vaccine? |
| Saibal Ray: | What you are telling is correct in terms of distribution. The distribution will become much easier. There is no doubt about it. But there is the other part of the issue, which is still a question about the timing of the supply. They made sure that there was enough supply early in the process. |
| Saibal Ray: | I agree with you surely on the second point. Yes, it is perhaps much easier when you are a large density of population, which is a large number of population in a small area. When the density is high, and there is not much adverse events like, obviously, weather, and so on, it is much easier to distribute. And that, I agree that Israel has an advantage over a country like Canada. |
| Dave Kaufman: | As we conclude our conversation with Dr. Ray, it is quite clear that, although inevitable from an emotional standpoint, in many ways, it is not fair to compare Canada’s vaccine procurement and rollout to Israel’s, which has benefited from a greater population density, smaller country size, and a lot of luck in procuring the deal that it did with Pfizer. |
| Saibal Ray: | There are two parts: procurement and distribution. The procurement part, I can understand a large country getting advantage in terms of procurement. But Israel is a much smaller country compared to Canada, so indeed the volume of supply gives you advantage in terms of procurement contracts. So, Israel is not in a much better place in terms of Canada in terms of the volume. So, indeed, Israel made a very good deal in terms of the timing of the supply. But Israel has a lot of advantages compared to Canada in terms of the distribution, I agree because it is a smaller country with a much larger density of population, not so much weather issues and so on. |
| Dave Kaufman: | The scramble for personal protective equipment and the vaccine rollout have been fraught with obstacles. But as we enter the second year of the pandemic, very few would have been able to accurately predict one year ago that there would not only be no longer any major issues of PPE shortages, but that millions would already have had their vaccinations. Will countries like Canada be better prepared if another pandemic reaches our shores? Or will our government treat this as a Black Swan event and go back to many of the practices that left us scrambling and unprepared? Stay tuned as we navigate this new normal together. |
