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BMC Staff Discusses Cooperative Purchasing Changes During COVID-19

Baltimore Regional Cooperative Purchasing

The protective measures taken to stop the spread of COVID-19 have caused countless disruptions to the systems and standards so many have worked to build.

COVID-19 has emphasized the prioritization of safety measures and abrupt shifts in supply, demand, materials and resources, causing many to adapt their operating procedures.

BMC’s Director of Cooperative Purchasing, Debbie Groat, authored an article for the Maryland Public Purchasing Association (MPAA) Newsletter. In the article, Groat, who also serves as Chair of the Cooperative Purchasing Subcommittee for MPAA, details the changes in operating procedures for cooperative purchasing post COVID-19.

The article examines the shifts made in cooperative purchasing to meet the needs of the region during a time where demand was overwhelming.

See the below article excerpted from the MPAA Newsletter:

Post COVID19 – Changes in Operating Procedures - Cooperative Purchasing

Emergency management prepares for unexpected emergency situations that may arise. Risks are evaluated and plans are put into place at every level of government. The cooperation between the Federal Emergency Management Agency (FEMA), the Maryland Emergency Management Agency (MEMA), and local emergency managers is well coordinated. This collaboration and cooperation is what makes unforeseen emergencies more manageable. When it comes to purchasing in emergencies, contractors and contracts are lined up and ready to be used to provide the supplies and services needed to resolve the emergency. When these resources are exhausted, we look to other cooperative contracts and on-demand purchasing. That strategy worked very well for regional emergencies, such as the Howard County floods or Baltimore City riots. But the COVID19 pandemic was global and raised the bar for the need to globally cooperate and collaborate.

According to the FEMA COVID-19 Pandemic Operational Guidance for the 2020 Hurricane Season May 2020: “As a result of the COVID-19 pandemic, the Nation is facing unprecedented challenges as we respond to additional disasters, anticipate emergent incidents, and prepare for the 2020 hurricane season. Although the operating environment has changed, the Federal Emergency Management Agency’s (FEMA) mission of helping people before, during, and after disasters remains the same. Federal, state, local, tribal, and territorial (SLTT) officials, along with the private sector and nongovernmental organizations (NGO), must partner together to fulfill their respective missions and help disaster survivors. As the Nation continues to respond to and recover from COVID-19 while posturing for the coming hurricane season, emergency managers must continue to operate under a framework of a locally executed, state managed, and federally supported approach to incident stabilization.”

New challenges in mid and post-COVID19 stabilization reared their ugly head because this time, the highest risk was a supply demand that was impossible to meet under our current operating practices. Let’s look at one operating procedure that may see some drastic changes, Just-In-Time (JIT) ordering.

Credit for the origin of JIT practices was traced back in the 60’s to Japan and Toyota Manufacturing. It did not become popular in the United States until the 80’s. According to Wikipedia; The main reasons prompting production facilities to use JIT included: inventory reduction, labor cost reduction, space reduction, stock reduction, production increase, quality improvement, throughput time reduction, and standard hours reduction. In short, the relationship between the raw material supplier and the product manufacturer was developed so the manufacturer could depend more heavily on the raw materials being available precisely when needed or just-in-time. This dependency on the supply chain became stronger and more reliable over time. Beyond manufacturing, government adopted JIT for office, custodial, and MRO supplies. Warehouses became smaller or nonexistent, and stock on hand was minimized. There were tremendous gains in efficiency and reductions of the cost of holding unnecessary stock. The trust in the supplier’s ability to meet our demands was strong. That is until COVID19.

When COVID19 hit in the United States, we followed other countries already dealing with the virus. The demand for PPE was quickly soaring on a global level exceeding normal stocking levels. Anne Arundel County’s Emergency Management Department studied the PPE usage in two area hospitals and found that their COVID19 burn rates for PPE supplies were 2 to 3 times the normal usage.

The global demand for personal protective equipment stressed the supply chain to unimaginable levels. And, frankly, it broke under the pressure. Government turned to unlikely sources, such as distilleries and clothiers, to modify their operations to make the products that were needed, such as hand sanitizer and non-surgical gowns. We saw soaring transportation costs and manufacturing plants become overwhelmed to the degree that their distributors refused additional orders due to the high risk of not being able to fulfill the order. Equally challenging, was the dependency on foreign manufacturing for these PPE supplies when they were desperately needed in that country. Product was delivered to the tarmac only to be purchased, on site, for a higher price. The supply chain was in chaos and government could not depend on just in time, near in time or anytime delivery.

Wikipedia goes on to say, “Natural and man-made disasters will disrupt the flow of energy, goods and services. The down-stream customers of those goods and services will, in turn, not be able to produce their product or render their service because they were counting on incoming deliveries "just in time" and so have little or no inventory to work with. The disruption to the economic system will cascade to some degree depending on the nature and severity of the original disaster. The larger the disaster the worse the effect on just-in-time failures.”

“The COVID-19 pandemic has caused disruption in JIT practices, with various quarantine restrictions on international trade and commercial activity in general interrupting supply while lacking stockpiles to handle the disruption; along with increased demand for medical supplies like PPE (Personal Protective Equipment) and ventilators, and even panic buying, including of various domestically manufactured (and so less vulnerable products) like panic buying of toilet paper, disturbing regular demand. This has led to suggestions that stockpiles and diversification of suppliers should be more heavily focused.”