Operation Back to Life - a supply chain perspective

As a result of “Operation Back to Life”, Israel has achieved enormous success in vaccinating its population. As of 6 March, 57 percent of their 9.3 million population received at least one vaccine dose, while 43 percent are already fully vaccinated. They are heading at full speed to reach their vaccination target of 95 percent at a time when most developed nations sit well below 10 percent and New Zealand has just started vaccinating our border and MIQ personnel.

The main reason behind such phenomenal vaccination rates achieved by Israel is its early access to the vaccine. There are three reasons how Israel managed to negotiate it with Pfizer:

• The price is nearly NZ$40 per dose (remember, each person needs two), twice as much as the EU and US have offered. We still don’t know how much New Zealand is paying.
• Israel has cleared Pfizer of product liability. While the US has followed the path, the EU might have secured a few exceptions.
•  Israel committed to publicly share critical data around its vaccine program, as clearly stated in their agreement with Pfizer. This transparency has made the writing of articles like this possible.

While many sources discuss Israel’s experience, in this article, we will focus on critical supply chain decisions and understand what role they played in the success of Operation Back to Life.

Central Storage
Firstly, Israel has chosen to store all its vaccines centrally. There is an underground facility near Israel’s largest airport that contains 30 freezers with a total capacity of five million vaccine doses. Why did they go for a central location instead of having multiple locations close to the main vaccination centres?

One reason is cost. Pfizer vaccines have to be stored at a very low temperature of -70 degrees Celsius. Large specialised freezers are scarce and expensive, and centralising storage helps reduce the total number required as their utilisation is higher than in a decentralised option.

For an extreme example, if Israel wanted to store vaccines at each of its 400 vaccination centres, it would need 400 freezers. Currently, they are doing great with just 30. Another reason is the service level. A centralised solution takes advantage of the pooling effect. If any of the vaccination centres run out of vaccines, it is relatively easy to replenish them from the central location. It is also virtually impossible for the central warehouse to run out of stock as there are more vaccines ordered than people.

Now compare this with a decentralised solution. If all the vaccines were stored at vaccination sites in small quantities and one site ran of stock due to unexpectedly high demand, there would be no centre to replenish it from. They would have to order extra doses from Pfizer, which could take weeks.

Small Batch Size
Another critical supply chain decision was to reduce the minimum vaccine quantity that can be transported. The underground facility is managed by a subsidiary of Teva Pharmaceutical Industries, an Israeli pharmaceutical company. After vaccines arrive, their employees repackage large pallets into smaller boxes (yes, working at -70 degrees!) so that each shipment can contain as few as 100 doses.

This decision enables Israel to simplify the entire vaccine distribution network dramatically. Instead of shipping vaccines to large hospitals in packages containing tens of thousands of doses, they can now ship directly to any of 400 vaccination centres, no matter how small they are. This eliminates an entire layer of intermediaries from the vaccine supply chain. Indeed, it creates logistical challenges, but the Israel Defense Force helps deliver to remote locations.

Another benefit of having such a small batch size is higher delivery frequencies. Vaccination centres do not need to wait for many days for a new shipment covering several days of operations. Instead, they can get shipments as often as every day thanks to the possibility to ship in low quantities. Low lead times inevitably lead to low buffer stock and less waste as a result. It is much easier to accurately forecast the demand for the next day than for a few days.

Concluding Remarks
While Israel is different from New Zealand in many respects (mainly, we don’t have an epidemic in New Zealand), a number of similarities can make some of Israel’s lessons applicable here. Both countries are relatively small (although Israel has a higher population density), vaccines arrive at a single entry point, and both countries have a strong central government. These factors suggest that a centralised solution, combined with a lean supply chain, could become a viable option for New Zealand as it is for Israel.

Timofey Shalpegin is a lecturer in the Department of Information Systems and Operations Management. His research interests are collaborative NPD, game theory in SCM, and early
supplier involvement.