MIT Professor Yossi Sheffi on why governments must invest in tech to solve global problems
Renowned MIT Professor and supply chain management expert Yossi Sheffi recently released his 6th book, titled ‘A Shot in the Arm: How Science, Engineering, and Supply Chains Converged to Vaccinate the World’.
Sheffi’s book, available to purchase via Amazon, Google Play and Apple Books among others, explains how the government funded the vaccine’s developments, how supply chain managers ensured the availability of the materials needed, and how the vaccines were distributed to a world in danger of losing the battle against a pandemic.
The text delves into all of the challenges of delivering a successful vaccine roll-out, whether they be of a financial, psychological, logistical or scientific nature.
The book also sees the MIT Professor and highly-respected author break into unfamiliar territory by detailing the medical science behind vaccines and other Covid-19 pharmaceuticals. In the process of doing so, Yossi Sheffi spoke to an array of pharmaceutical experts to learn how the vaccines were developed and prepared for mass production.
Keen to learn about how Yossi Sheffi put together the book, what he feels about society’s reaction to the pandemic, as well as his thoughts on to what extent supply chains have changed, we sat down for a chat with the MIT Professor himself.
Read on to find out:
- How the theories of Daniel Kahneman tie into the spread of misinformation about vaccines
- Why Yossi Sheffi believes the public sector should fund the private sector to help find technological solutions to global problems
- The challenges of getting developing countries vaccinated
- Why there will be no pivot away from just-in-time supply chains
Hi Yossi, thanks for taking the time to talk to us at Trans.INFO.
Of course, your expertise very much lies in the field of supply chain management. Therefore, how challenging was it to dive deep into the science behind the creation of the vaccines and the way they work?
It’s fair to say that 100% of it was new to me. I’m an engineer, I do mathematics, operation research, and obviously, supply chain management. But I have no knowledge in biochemistry and molecular biology.
I would nonetheless say it [the learning process] was probably one of the most fun parts of doing this book, because all of my previous books besides the first one, are very mathematical and addressed to PhD students.
My business books were based on interviews and collecting my own data. I used a lot of sources, because in many cases, people who talk to me don’t want to be quoted. So they send me to other sources.
I had the real pleasure of talking to some of the giants in the field. Among the people who talked to me was Phil Sharp, a Nobel Laureate who won the Nobel Prize around 30 years ago for his work laying the foundations for the mRNA vaccine.
I also talked to Bob Langer, co-founder of Moderna, and around 40 other companies. Bob is also an Institute professor, which is the highest level of MIT professor.
Another person I talked to was Kati Karico, who works in BioNTech. By all accounts, she is potentially the next Nobel Laureate in this area. Kati is responsible for what actually made mRNA; both the BioNTech, which is the Pfizer shot, and the Moderna shot, use her science.
I had fascinating interviews with other people as well. The whole first chapter involves understanding why mRNA works and what the differences are between this and other vaccines. I find this topic fascinating.
I am always trying to learn new things. This topic was admittedly outside my wheelhouse, so to speak, but I enjoyed it tremendously. So I tried to then explain these findings and that’s essentially the first part of the book.
The book covers so many different aspects; natural science, behavioural science, psychology, logistics and economics. Has the process of writing the book changed your perspective with regards to how we live, work, cooperate as a society? Although amazing things have happened thanks to quick action and collaboration, we’ve also seen negatives in the form of misinformation.
The beginning of the book is about the science, then about the manufacturing and the supply chain, and finally about how to get the vaccines into arms – the last stage of the supply chain and issues such as vaccine hesitancy and how to deal with them.
When you write a book like this, first of all, you’re deeply into the subject. I tend to write in spurts of 5 or 6 hours, not in 20 minutes spreads. I concentrate for a long time.
At one point I thought to myself, what is the so-called expert on Fox News talking about, and how can they justify it? How can people listen to this material and fall for it? It brought me back to the works of Kahneman, specifically his book ‘Thinking Fast and Slow’.
Kahneman won the Nobel Prize because he was able to show that the basic economic principle – that people are rational, they look at the data and make a decision – is not the case. People have an idea of what their knowledge is, what the truth is, and then they find people that will prove it to them and give it to them. That’s exactly what happened.
When you look at Fox News and some other right wing outlets, you see ‘experts’, doctors and mostly politicians talking about why you shouldn’t get vaccinated and why masks don’t help. Some of them even say the whole vaccine is a hoax. And you think, OK, in the United States at this point, three quarters of a million people have died. That’s more than Vietnam, World War Two, Iraq, and Afghanistan together.
So how can you look at it and say “this is just not real, I don’t have to do anything about it. I don’t have to vaccinate or wear a mask, I need to fight for it in the name of freedom.” It’s absolutely crazy. Then you read Kahneman, Tversky and others, and you can see that this is exactly what’s going on here. So I tried to put a framework around it as well as trying to explain it to myself and the readers.
It’s really unfortunate, but then again, this can repeat itself in other areas. For example, why did MIT just cancel a talk by a well-known scientist? He had different points of view, he said the current policies of diversity, equity and inclusion entail treating people as members of a group rather than as individuals. For questioning the current orthodoxy, he was uninvited. How can they cancel somebody because these views are not related to science?
Once you sign up for a certain point of view, I think even scientists, like some of my colleagues, stop looking at the facts. They stop looking at the implications and stop looking at what they’re actually doing.
So it’s a question of whether somebody’s point of view is more important than freedom of speech – than getting all points of view and open debates on campus. It got myself and many of my colleagues thinking, how can it be? It nonetheless helped me to read up on Kahneman again.
Having covered so many aspects of the vaccine rollout in the book, what lessons can be learned when it comes to the respective roles of the public and private sectors? To what degree should we lean on each, and how can the two cooperate in a mutually beneficial and effective way?
Well, this requires a long answer; it is one of the elements of the book.
What we saw was a collaborative effort in many ways. The amazing thing, even within the Trump administration, which should get a lot of credit for Operation Warp Speed, was the way money was pumped into the private sector in order to get the vaccine quickly. Yes, they did fail on auditing, but they deserve credit for this.
Scientists cooperated across the board. One example relates to the multiple regimes of tests when you have any new pharmaceutical or a new vaccine. One of the problems was that there were 130 to 150 companies trying to develop vaccines and we had hundreds of companies trying to develop testing procedures.
They all needed the same materials; they were competing all over the world, and one of the things that they needed were monkeys to test. It turned out that China is the source of 80% of the monkeys in the world. China stopped allowing exports of monkeys, because they wanted the monkeys to be used to test and they had five companies that were trying to develop vaccines as well as a testing procedure.
Now, when you do a test, you give the vaccine to, let’s say, half the group, and you give the placebo to the other half. Several companies in the United States realized that they could share the placebo. So the placebo was the same for everybody. I was told by several executives that this was unprecedented – never before had anyone done anything like this.
So to me, the cooperation among companies, among scientists, including the sharing of genome data, even with the Chinese, who shared the data very quickly, is hopeful.
I’m saying this as the title of the book is ‘A Shot In The Arm’, while the subtitle is ‘How Science, Engineering, and Supply Chains Converged to Vaccinate the World’.
To me, this is a blueprint for solving other big problems. Take, for example, global warming. It’s very similar in that both are global issues.
So if Southern California applies some rules on fracking, it means nothing if coal power plants are being built in another part of the world. It just doesn’t work – the world needs to work together. The same is true if we have the United States vaccinated and Africa is not.
We won’t get rid of this pandemic until we start to understand it’s a global problem that requires a global solution. Here I can refer to the book I wrote on sustainability, which says that the current approach, which is based on people, is not going to work.
Customers may talk of a good game, but they are not participating in one. I used experiments in the book which found that 80% of customers said that they’d buy sustainable detergent, for example, even if it’s 5 or 10% more expensive.
However, when you do experiments in a supermarket, as we did, it’s actually only 7%. That study was conducted in Boston, Massachusetts, which is one of the most progressive states in the United States.
So companies cannot support sustainability properly because customers are not willing to pay. They can do things on the fringes, they can actually greenwash and do small stuff, but they cannot really change their business model significantly.
It requires huge investment, a lot of money and new businesses. It would require, for example, McDonald’s to stop selling meat. However, instead of that, they’ve just moved away from plastic straws, which does almost nothing.
Even so, one can understand why Walmart cannot stop selling meat. Some people want to eat meat despite everything. And by the way, as you know, cow methane is 28 times more harmful to the environment than CO2. McDonald’s knows this of course.
So, if people are not willing to change, and these companies and governments cannot change it, what’s the solution? At the end of the day, as I argued in my previous book, the solution is technology.
Renewables are getting better and they are great, but also limited at the end of the day. We cannot have 100% energy from renewables because the sun doesn’t always shine, the wind doesn’t always blow, and they take a lot of land. Many nations don’t allow nuclear, so what remains is that we have to take the carbon already in the air out of the air.
There are techniques for this, carbon capture and sequestration, they work in the lab. In order to scale it up though, you have to invest hundreds of billions of dollars.
Now, if we go back to the pandemic, if we are unable to convince 40% of Americans to get vaccinated when three quarters of a million people have died and more are still dying, and they’re not willing to do what they need to do now, how can you convince them to reduce their standard of living, to drive less, to consume less, to pay a little more for something, when the danger is decades away and there’s a lot of uncertainty about it?
My solution is that you’re not going to convince them. We have a technological solution for the pandemic in the shape of the vaccines and a continuing technological solution from Merck & Co, who are coming up with a pill right now. There’s also a technological solution to climate change – we have to take carbon out of the air.
Two-thirds of humanity are still living on less than $5 a day and they’ll want to have air conditioning, a car, a concrete house and to eat meat. Two-thirds of humanity have yet to get to a western living standard and we can’t tell them to stay where they are. We cannot say after we’ve polluted the earth that others cannot do it – it’s just immoral and we shouldn’t even think about it.
I’m nonetheless optimistic, because we just had a case whereby governments and private companies invested trillions in trying to help the economy. Let’s imagine if governments and the private sector start realizing the danger is real.
Governments could start investing billions of dollars in developing technology that will take CO2 out of the air. I hope that the answer that comes out of COP26 in Glasgow is that instead of talking about driving less or doing less, governments will come out and say, “OK, everyone put 1% of GDP into a fund”. It could be managed by a scientific board or nobel committee, for example. Then we can develop a real technological solution for this rather than trying to convince people that the world’s about to end.
And that’s where I come out of the pandemic feeling hopeful in the sense that if governments come together, there are enough industries that will, if given the money, invest in it [tackling global issues].
That’s what governments can do to help, not by laws that say “do less with this and less with that, let’s develop electric cars.” It’s nothing, if you look at the actual numbers. If all the cars in the world became electric tomorrow, we would still have to get the electricity from somewhere. We would also still have to make the batteries, which are energy hogs to produce.
Despite the fact that some politicians have good intentions, they think they know what the public wants. To me, looking at the data, what the public says and what the public does are two very different things. I think we need to invest in technology, and I hope this will be one of the outcomes.
I would imagine one of the most difficult aspects of bringing the vaccine to as many people worldwide would be reaching people who live in rural areas in developing countries that lack infrastructure. In such cases, is it easier to bring the people to the vaccines rather than the other way around?
It’s really interesting – don’t underestimate the difficulty of vaccinating in developing nations. One of the problems with vaccinating in a developing nation is that they may believe in traditional healers rather than western medicine.
U.S. Department of State from United States, Public domain, via Wikimedia Commons
As is described in my book, the problem with HIV was that it was very difficult to get certain African nations to start HIV treatments, to give them condoms and explain to the country what this was about. There was a huge campaign to enlist the traditional healers and some of it was successful.
However, before we can even think about the logistics, we have to talk about the fact that they must want to do it [get vaccinated]. To me, you have to go to the villages because you have to get the traditional healers onboard.
This means using vaccines like Johnson & Johnson and AstraZeneca, which don’t need to be stored at -80C. They will be the leading vaccines for this.
Effort should be focused on this area, but I think it will be too hard to get the people to the vaccine. If we can, sure. However, the challenge in this case, even when you don’t have good freezers, is always to get the exact number of people and vaccines at the same place at the same time.
That challenge is even bigger when you cannot hold the vaccines for a few weeks or a few days – when you just have to fly in there and get everybody vaccinated. Otherwise you’ll have to throw it out. So the challenges are bigger, but not insurmountable.
Besides distributing the finished vaccines, which is difficult enough during a time of supply chain disruptions, another major logistical difficulty referred to in the book was sourcing everything needed to produce the vaccine. What endeavors have those behind the scenes had to go through in order to ensure the supply of these vital components amid all the highly-reported disruption?
We had 130-150 companies competing for what are basically very similar ingredients, not to mention the people developing tests that were also competing for many of the same ingredients. A lot of ingredients became available because suppliers really ramped up relatively quickly.
One of the interesting examples in the book concerns the way suppliers were looking at their estimates of the chances that companies would develop a working vaccine. They took the approach of allocating more to the companies that were thought to have a better chance of developing a vaccine, and this actually helped a lot because companies like Pfizer, Moderna, Johnson & Johnson, and Astrazeneca, were getting a lot of of the materials, while the the other companies were not.
Merck & Co, for example, an excellent pharmaceutical company, tried to develop a vaccine, but it didn’t work. Once they realised this, they quickly notified their suppliers so that they would stop sending so much.
Therefore, companies cooperated quite a bit and not much has gone to waste. Not much has gone to companies that weren’t able to be used, and even if there was excess supply, they were able to resell it.
So in the end, although we were worried, it turned out to be not nearly as bad as we had thought.
According to a report by Bloomberg, major US universities are seeing more applications to supply chain courses this year due to increased media exposure on logistics, while curriculums are changing to focus more on things like risk management and production reshoring. However, last month I spoke to the Christian Barrot at Kuehne Logistics University regarding this, and he expressed the belief that companies are unlikely to change. He also said that courses at his university would not be amended in the same manner as the institutions mentioned in the report. Do you foresee companies significantly reconfiguring their supply chains, and shall universities adapt their course material to reflect this?
Okay, so this is the question that was in the media, and it’s wrong.
First of all, let me separate the two things. Firstly, what will happen in schools – will we teach people more of this or more that? Secondly, what will happen in the business world?
So first of all, we don’t teach digitization, we don’t teach reshoring. We teach fundamentals. That’s the difference between training and educating. In education, we teach fundamentals, how do companies decide on where to locate the plant? How do companies decide on how to structure the network? There’s a lot of consideration going on there.
Resilience is one of them. Speed to market is another one, there’s also a lot of attention paid to cost, as well as the availability of raw materials. We give these aspects a lot of consideration and we’ve always taught this, and the principles can be applied when the data changes. Perhaps your conclusion would change, because the data has changed, but the principles are there. So in further education at MIT, I don’t see a big change.
We’ve been teaching a lot more on advanced technology because technology has become increasingly important in the last 10 years. That’s not something that is the result of the pandemic.
Now, will the corporate world start adopting more reshoring and different inventory management policies?
Let’s start with just-in-time. Some people say we should stop doing just-in-time, that it’s the root of all evil. It’s absolute nonsense. First of all, just-in-time, which is a general name that’s used because people understand it, is really referring to the Toyota Production System, which has many elements including just-in-time and minimizing inventory. It’s actually more resilient than any other system because suppliers and customers are connected to the company in a much stronger way, and they can respond much faster to anything.
Just-in-time has also brought in high quality products, it’s not lower cost – it’s a high quality product. That’s the main thing, the lower costs are the result of this high quality product – you have less warranty problems and less rework problems. So it brings lower cost, but it’s not the cost of inventory. The cost of the inventories is comparatively very small.
The problem with a lot of inventory is that, for example, if you have a flaw in some part, you have to work through the whole inventory to find out what’s going on rather than stopping the line immediately in the way the Toyota Production System suggests.
Finally, more inventory is good for small disruptions. If there’s a ship stuck in the Suez Canal, yes, you have some more inventory for two weeks, perhaps up to a month you can withstand it. However, that is not the case when you have large-scale disruptions like the pandemic.
Let me give you one particular example. Toyota, the father and mother of just-in-time, after the Japan disaster, realized they had some problem with semiconductors. They learned that building a plant and increasing capacity takes a long time. Sometimes building a plant takes years, but even just increasing capacity on the margin takes time.
So, they developed a significant inventory of semiconductors for cars. In fact, in 2011, when the market started growing, they were one of the few companies along with Tesla who were able to keep manufacturing at almost the same rate.
As a result, Toyota actually sold more cars in the United States than General Motors for two quarters. General Motors was affected by the chip chip shortage, so Toyota was able to be the number one seller of cars in the United States, which had never happened before.
But guess what, at the end of the second quarter, Toyota ran out of this inventory and announced a 40% cut in production across the board. When you have a long-lasting global issue like the pandemic, you cannot move from one chip foundry to another. If something affects the globe, inventory doesn’t help you for anything longer than a short period. So I don’t see companies changing from just-in-time.
In terms of reshoring, most companies are talking about moving production out of China. However, the media gives the impression that if you get a factory out of China, or you get your supplier out of China, then you’re out of China. The supply chain is an ecosystem though – it’s a huge network of suppliers and their sub-suppliers and their sub-suppliers. It goes all the way to the mine or the agricultural field where the raw material comes from.
This is a huge system and companies spend billions of dollars and decades building these systems. It’s unrealistic to expect them to just get out.
Most of them are not in China anymore because of low cost. China, especially along the coast, is not a low-cost manufacturer anymore. Many Chinese companies are in Bangladesh or other low-cost countries like Sri Lanka.
China is a huge, growing market that’s becoming more nationalistic. Therefore, the more you want to sell to China, the more you have to make in China. Although every country does this in some way, only the Chinese really mean it. So I just don’t see companies leaving en masse.
The problem is, a lot of it [far-shoring] is down to bureaucracy and environmental regulation.
One example here is the disruption at the LA and Long Beach ports.
Long Beach Port (Photo credit: Charles Csavossy, Public domain, via Wikimedia Commons)
Although the ports are now operating 24/7, it doesn’t help. You need trucks to carry the containers from the dock to warehouses. The rule in Southern California is that you cannot have trucks more than five years old. Once the rule went into effect, the small truckers went out of business and could not invest in new trucks. Now you have a limited number of trucks.
Furthermore, the big companies that do have newer trucks won’t invest in more trucks because by 2030 the rule is that all the trucks coming to the port have to be electric. Electric trucks are not available, so they’re not investing in the current technology.
I appreciate the fact that living in Southern California I would like to breathe clean air. I understand it. But you have to pay in order to have it. When you just make a rule and hope for the right outcome, there are unintended consequences. Now we are seeing one of these.
To me, in the long term, the solution is to educate policymakers in system thinking. Everything is connected to everything else and you cannot have free lunches.
Yes, you can have a rule that trucks have to be less than five years old, but you have to subsidize the small truckers and help them buy new trucks. You have to do something in order to make sure that there’s no shortage of trucks.
Right now we have a shortage of everything. So this is just one small example, that policies made with the best intentions may have unintended consequences that nobody thought about before.
For more information on Yossi Sheffi’s latest book, along with his other acclaimed texts, including ‘The New (Ab)Normal’ and ‘Balancing Green’, visit the MIT website here.