It’s the arrival no one wanted. As this next wave of COVID-19 hits Australians in winter’s peak, health officials are back out warning the public. We have all been put on notice around the severity of Omicron BA.4 and BA.5, our preparedness and the steps we are taking to ensure we have the right arsenal of test, trace and prevent.
To mask or not to mask, to test or not to test, is again the question.
Understandably, health officials want to ensure communities are taking all available steps to protect themselves and their loved ones — especially those in vulnerable groups.
As we ride this next wave and eventually come out the other side, it is important we don’t lose sight of the bigger picture relating to national pandemic preparedness.
These peaks and troughs of COVID-19 continue to prove a nightmare for procurement planning and supply chain management — as governments try to best balance ongoing public health demands as well as very real cost pressures to budgets and constraints on the public service.
It’s a tough environment and COVID-19 fatigue is real beyond just the medical diagnosis — it permeates across the public service as well as in the household of everyday Australians.
While the Australian government’s commitment to instituting a Centre for Disease Control (CDC) approach to pandemic preparedness is welcome, a focus on the supply chain is crucial.
For instance, when COVID first hit, Australia’s national medical stockpile was limited. Masks weren’t readily available and there weren’t enough gloves, gowns or goggles.
This placed Australia at a disadvantage, and, alongside other governments we experienced an international ‘hunger games’. First for PPE, then testing (PCR and then rapid testing) followed by vaccines.
The consequence was massive inefficiencies and huge spending of public dollars, in turn creating both price and supply risk for governments spending billions. It also resulted in a ‘boom and bust’ procurement environment for the private sector supplying vital medical equipment and solutions.
Various parliamentary inquiries since, both at federal and state levels, have highlighted Australia’s critical dependencies on foreign-sourced materials — and the exposure of our supply chains.
Much has been discussed improving Australia’s manufacturing sovereignty, but this does need some balance against the reality that raw materials will still need to be imported, as well as the cost and scalability of local manufacturing in a globally competitive environment. In my time I have seen many products quoting sovereignty only to be unveiled as ‘assembled’ in that country.
International manufacturing can — and should — play an important role, especially in the near to mid-term. But there are ways the government in Australia can adjust to maximise international cost efficiencies and reduce risk.
Alongside the recognised need for improved pandemic preparedness comes the tension no treasury wants: to continue spending at the levels they have been — and in many cases, are now facing sizeable deficits and debt recovery tasks.
But there is a way to find the right balance between cost and risk.
One area that provides a win-win, is a ‘between waves’ commercial model allowing government agencies to truly prepare at a significantly reduced cost.
At its core it involves governments committing to a steady ‘base’ state of purchasing and stockpiling health critical solutions over an extended period. This occurs between waves, when no one else is buying tests, removing the competitive tension by moving away from mass ‘just-in-time’ models.
We call this model a ‘pilot light’ approach, and it provides four key advantages:
Firstly, through a consistent procurement model, governments maintain certainty and security of supply in the event of future outbreaks. Crucially it also provides a consistent, budgetable, lower-cost base and no risk of price gouging. Even more important in today’s inflationary environment.
Secondly, manufacturers are incentivised to sustain product development and R&D. It means quality assurance is maintained at a high level through consistency and experience of staff secured through the knowledge of this reliable supply.
Thirdly, transport providers can provide consistent pricing– and also spread supply chain risk across different transport modes that balance price and environmental sustainability such as sea freight.
Finally, and most importantly, consumers win through the high quality of product, that is consistently improved and tailored to shifts in disease variants, as well as being readily available and competitively priced. No more paying $100 at the service station for a single rapid antigen test.
To ensure the best public health outcomes for their populations, governments are seeking controlled and competitive pricing when it comes to these ‘pandemic products’. The pilot light model is the way to achieve this. It provides a sustainable approach, delivering cost savings but most importantly, ensures health outcomes are able to be met, providing a standing buffer to cover short-term peaks and the abillty to scale quickly to health demands when needed.
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