A Blog by Jonathan Low

 

May 26, 2020

Why Has the Pandemic Confounded the Great American Logistics Machine?

It turns out that squeezing every last inefficiency out of the global logistics network may have been great for profit margins.

But it failed to take into account the price of unexpected breakdowns and the attendant shortages they produce that will end up costing billions more than the savings touted previously. JL

David Segal reports in the New York Times:

Rationing meat. Scrambling for masks. Running low on crucial drugs. The early shortages for the pandemic - swabs, toilet paper, ventilators - were a foreshadowing, not an aberration. We still don’t have enough tests. Our national pantry, long bursting, lacks essentials. It’s also missing some nonessentials. Just try to buy a bicycle. The heart of the great American logistics machine is beating slowly and erratically, and in some places it has gone into full-on cardiac arrest.
It started with silence, or something close to silence, or perhaps it was simply the absence of a low-level hum that nobody knew was humming until it stopped. In the quiet we realized that, until the pandemic arrived, we had lived in a vast, elaborate, whirring contraption that delivered culture and commerce at spectacular speeds, with astonishing efficiency.
Logistics — the science of making Thing A and delivering it to Point B — had become a national art form, the corporate answer to jazz, stand-up comedy and end-zone dances. America was like an operating system that upgraded itself so regularly that its design and endless enhancements were taken for granted.
Now, the heart of the great American logistics machine is beating slowly and erratically, and in some places it has gone into full-on cardiac arrest. Inevitably, one of our many reactions is pure bewilderment.
Us
Wait. Us?
Rationing meat. Scrambling for masks. Running low on crucial drugs. The early shortages for the pandemic — swabs, toilet paper, ventilators — were a foreshadowing, not an aberration. We still don’t have enough good tests. Our national pantry, long bursting, lacks essentials. Come to think of it, it’s also missing some nonessentials. Just try to buy a bicycle.
Let us acknowledge the obvious: The country is flunking a curriculum that it basically wrote. Which is baffling. American supremacy in logistics has been a calling card for decades, even among people unfamiliar with the L-word.
Logistics enticed millions of immigrants to move here. Opportunity is an idea. Logistics is a job. Actually, it’s an entire ecosystem of jobs, one that starts in factories and ends in showrooms; or starts on drafting tables and ends at building sites; or starts at farms, rumbles through packaging plants, heads to kitchens and lands on plates.
When this country wasn’t enticing labor from overseas, it was hoovering up foreign ideas, then improving them. The industrial revolution started in England, but it was refined to a planet-altering effect by Henry Ford and his car factories. The smartphone was popularized by BlackBerry of Canada. Apple of Silicon Valley crushed the company with the iPhone, which it confects from parts made in China, Germany, South Korea, Japan, Taiwan and the list goes on. The coordination of all these far-flung manufacturers — one imagines an air traffic control room, buzzing day and night — and their harmony in a finished product are a marvel of logistics.
Walmart moves 200 million customers a year through 11,000 stores, a feat it performs through innovations to a supply chain that by the late 1980s included the largest private satellite network in the world. Amazon fine-tuned delivery from its warehouses to your doorstep from one week to two days, to one day, to two hours in certain markets. And the trucks and vans transporting all those boxes navigate to their destinations with rarely a wrong turn. That’s because another American company, Google, mapped the world, street by street, an epochal moment in the history of logistics and an end to the centuries-old, uniquely human affliction known as being lost.
One company, UPS, so mastered logistics that nine years ago it turned the word into the centerpiece of an ad campaign. In a “We Love Logistics” television spot, a woman sang these lyrics to the tune of “That’s Amore,” a love song that invokes both pizza and the moon: “When it’s planes in the sky for a chain of supply, that’s logistics / When the parts for the line come precisely on time, that’s logistics.”
This ditty may have tormented fans of the Dean Martin version, but the overall idea was within the bounds of self-promotion. Today, that ad would sound like satire. Supply chains have fallen apart. Production, we hear time and again, has not “ramped up.” Especially for items needed most, like N-95 masks and Lysol wipes.
It’s a lot easier to buy a pizza.
There’s no point in tagging this as a problem endemic to the U.S. government. It can handle logistics, and for proof look no further than the Postal Service. Ignore the current domestic attacks on the system. Elsewhere, it is the envy of the world, delivering far more letters per employee (269,000) than any other in the Group of 20, according to a 2012 study by England’s Oxford Strategic Consulting.
Many parts of the private sector, meantime, remain hobbled.
It was reassuring to watch leaders of Walmart, CVS, Target and others gather in the Rose Garden with President Trump in mid-March to announce that the companies would chip in to rapidly expand Covid-19 testing, working in tandem with the administration. Today, Target has exactly one testing site, in the parking lot of its store in Chula Vista, Calif. After a stumbling start, Walmart announced that it had beaten its goal of opening 100 sites by May 31. CVS had opened 50 sites as of mid-May, and promised to have 1,000 open by the end of the month.
Every bit helps, but 1,101 sites won’t get us to the goal of five million tests a day that Mr. Trump referred to in late April.
You’d never know it from the halting pace of this rollout, but the United States is a pioneer in public-private partnerships. Spectacularly ambitious ones, in fact. Like the moon landing. The National Aeronautics and Space Administration hired 20,000 companies across all 50 states to produce and assemble the roughly six million parts needed for each of the Apollo missions. They included Playtex, best known as the maker of the Cross Your Heart bra, which was hired to build the spacesuits worn by the astronauts. (We know about comfortable, flexible garments, Playtex said in its pitch.)
“In some ways, NASA had to invent large-project management for the modern era,” Charles Fishman wrote in “One Giant Leap: The Impossible Mission That Flew Us to the Moon,” “while supervising the invention and perfection of the technology to do something that had never been done before.”
Back in the present, and back on earth, the coronavirus is offering a real-time demonstration of how to hopscotch the globe, with ease and speed. Exactly how it gets around is, to some degree, a mystery we are still solving. (Cats can give it to cats, a study published this month concluded.) But starting from an unknown patient zero, it has infected nearly five million people around the world in a matter of months, enlisting victims in its supply chain and deploying them as vehicles to get around.
It is beating us at the logistics game and won’t wait for us to get our mojo back.
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