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Thursday, May 05, 2005 © David George Williams All rights reserved
1
The Influenza Vaccine Supply Chain: Structure, Risk, and Coordination
By David George Williams
Thursday, May 05, 2005 © David George Williams All rights reserved
2
Deaths In England From All Causes
Thursday, May 05, 2005 © David George Williams All rights reserved
3
Deaths In England From Influenza
Thursday, May 05, 2005 © David George Williams All rights reserved
4
The Cost Per Year In The U.S.
• $12 to $15 Billion Direct and Indirect Costs • 35,000 deaths, 90% Elderly • 100 Million Days of Work Lost • 40 Million Days of School Lost
Thursday, May 05, 2005 © David George Williams All rights reserved
5
Aventis Pasteur’s Fluzone®
Thursday, May 05, 2005 © David George Williams All rights reserved
6
Distribution Problems?
Thursday, May 05, 2005 © David George Williams All rights reserved
7
The Chicken Eggs
Thursday, May 05, 2005 © David George Williams All rights reserved
8
The Cold Chain
Thursday, May 05, 2005 © David George Williams All rights reserved
9
Other Problems
• Order Gaming – Duplicate, Inflated Orders
• Opportunistic Vending – The worst example 2000 shortage:
• 11 days, 3 transactions, price from $23 to $147
– Fax and email spam distorts supply visibility
Thursday, May 05, 2005 © David George Williams All rights reserved
10
Manufacturer
Distributor
Health Care Provider
Vaccine Recipients
And General Public
Insurance Company
Goods
Goods
Goods
Goods
Money
Money,Information
Money,Information
Information
Money,Information
Money
Information
Money
The US Flu Vaccine
Supply Chain
Thursday, May 05, 2005 © David George Williams All rights reserved
11
The Timeline
PRE-SEASON FLU SEASON
MANUFACTURING CAPACITY
ALLOCATED
BOOKING PERIOD
PRE-BOOKING REGULAR BOOKING
KEY ISSUE: FORECASTING AND PLANNING
KEY ISSUE: DISTRIBUTION AND REALLOCATION
PRODUCTION BEGINS
Thursday, May 05, 2005 © David George Williams All rights reserved
12
Manufacturer Health Care Provider
Goods
RISK BORNE: WITH PRE-BOOKING:
• DEMAND UNCERTAINTYWITH REGULAR BOOKING:
• YIELD UNCERTAINTY
RISK BORNE: WITH PRE-BOOKING:
• YIELD UNCERTAINTYWITH REGULAR BOOKING:• DEMAND UNCERTAINTY
Money,Information
The Risks
Thursday, May 05, 2005 © David George Williams All rights reserved
13
The Root Problems
PRE-SEASON FLU SEASON
MANUFACTURING CAPACITY
ALLOCATED
BOOKING PERIOD
PRE-BOOKING REGULAR BOOKING
KEY ISSUE: FORECASTING AND PLANNING
KEY ISSUE: DISTRIBUTION AND REALLOCATION
PRODUCTION BEGINS
Third Strain Identification
Shipments Go Out
EGG BASED PRODUCTION PROCESS TIME
Thursday, May 05, 2005 © David George Williams All rights reserved
14
The Root Problems
PRE-SEASON FLU SEASON
MANUFACTURING CAPACITY
ALLOCATED
BOOKING PERIOD
PRE-BOOKING REGULAR BOOKING
KEY ISSUE: FORECASTING AND PLANNING
KEY ISSUE: DISTRIBUTION AND REALLOCATION
PRODUCTION BEGINS
Third Strain Identification
Shipments Go Out
EGG BASED PRODUCTION PROCESS TIME
NO SLACK IN THE SYSTEM FOR DISTRIBUTION LEAD TIME BUFFERING OR STAGGERED PRODUCTION
Thursday, May 05, 2005 © David George Williams All rights reserved
15
The Root Problems
PRE-SEASON FLU SEASON
MANUFACTURING CAPACITY
ALLOCATED
BOOKING PERIOD
PRE-BOOKING REGULAR BOOKING
KEY ISSUE: FORECASTING AND PLANNING
KEY ISSUE: DISTRIBUTION AND REALLOCATION
PRODUCTION BEGINS
Third Strain Identification
Shipments Go Out
EGG BASED PRODUCTION PROCESS TIME
NO SLACK IN THE SYSTEM FOR DISTRIBUTION LEAD TIME BUFFERING OR STAGGERED PRODUCTION UNCERTAIN
DEMAND
Thursday, May 05, 2005 © David George Williams All rights reserved
16
Coordination
Manufacturer
Distributor
Vaccine Recipients
And General Public
Goods
Goods
Goods
Goods
Money,Information
Money,Information
Money,Information
SometimesMoney
Information
Money
Health Care Provider
Insurance Company
Money
Information
Thursday, May 05, 2005 © David George Williams All rights reserved
17
Coordination
Manufacturer
Distributor
Vaccine Recipients
And General Public
Goods
Goods
Goods
Goods
Money,Information
Money,Information
Money,Information
SometimesMoney
Information
Money
BUYBACK VALUE
PREREQUISITE REPORT
Health Care Provider
Insurance Company
Thursday, May 05, 2005 © David George Williams All rights reserved
18
Coordination
Manufacturer
Distributor
Vaccine Recipients
And General Public
Goods
Goods
Goods
Goods
Money,Information
Money,Information
Money,Information
SometimesMoney
Information
Money
BUYBACK VALUE
PREREQUISITE REPORT
Health Care Provider
THE E-HUB: A
VIRTUAL MARKET PLACE
Insurance Company
Thursday, May 05, 2005 © David George Williams All rights reserved
19
Coordination
Manufacturer
Distributor
Vaccine Recipients
And General Public
Goods
Goods
Goods
Goods
Money,Information
Money,Information
Money,Information
SometimesMoney
Information
Money
INSURER BUYBACK:«INCREASE VACCINE
SALVAGE VALUE AT THE HEALTH CARE PROVIDER
BUYBACK VALUE
PREREQUISITE REPORT
THE E-HUB ALLOWS FOR TRANSPARENT
ORDERING AND REALLOCATIVE EFFICIENCY
FORECASTS BASED ON PRE-BOOKED, EXACT AND HONEST ORDERS
ALLLOW FOR BETTER CAPACITY ALLOCATION AND STABLE
DEMAND PLANNING
Health Care Provider
THE E-HUB: A
VIRTUAL MARKET PLACE
INCREASED INCENTIVE TO FORECAST
WHEN BUYBACK IS RESTRICTED
Insurance Company
Thursday, May 05, 2005 © David George Williams All rights reserved
20
Acknowledgements
• Jennifer Alfisi of the Health Industry Distributors Association (HIDA) • Catherine Fuller MD • Google: the most important human invention after the printing press
• Brian Greenberg MD
• Jay Grossman DDS • Janet Heinrich of the United States Government Accountability Office (US GAO) • Leonard Kruimer of the Crucell Corporation in the Netherlands
• Jeanne Santoli of the Center for Disease Control (CDC) • Jeffrey Wasson MD • Dr. Prashant Yadav