By Atalay Atasu, Turgay Ayer, L. Beril Toktay, and Can Zhang
The onslaught of news about natural disasters has been inescapable of late. As we write this, we think of the inhabitants of Puerto Rico, many still without water or electricity weeks after devastation from Hurricane Maria in September. We think, too, of recovery efforts in Sierra Leone after hundreds died in mudslides following torrential rains in August. We think of lives lost and impacted by Hurricanes Harvey and Irma, as well as by earthquakes in Central Mexico. All of these natural disasters occurring within a six-week timeframe.
These stories and images of suffering bring the issues of the developing world to the forefront. During disasters, humanitarian organizations mobilize to provide aid in a rapid and effective manner. While this remains one of the most important (and visible) tasks of these organizations, they help in other critical contexts as well. Even during “normal” times, the people in many parts of the world often lack even the most basic healthcare infrastructure. This is where Medical Surplus Recovery Organizations (MSROs) come into play. These organizations collect and distribute surplus medical products to qualified healthcare facilities in medically-underserved communities around the world on an on-going basis.
As scholars of supply chain and operations management, we became interested in MSROs because we cared about the important work they do and because we were in the unique position to optimize the delivery of healthcare capabilities to resource-constrained healthcare facilities in the developing world. However, MSRO supply chains threw us for a loop. Why? Effective management of MSRO supply chains often cannot borrow from the common wisdom from product supply chains. Our expertise, and that of most industry experts, lies in for-profit supply chains. When selling to consumers within traditional operations, supply is controllable and demand is uncontrollable. For MSROs, the reverse is true. MSROs can’t control the timing and volume of donations, resulting in an uncertain quantity of supplies. Demand, on the other hand, is boundless.
For our study, we focused on MedShare, an Atlanta-based MSRO, named a “Four Star Charity” for the 13th consecutive year by Charity Navigator. This designation recognizes the top 1% of U.S. charities based on the criteria of transparency, organizational accountability, and measurable impact. MedShare, currently in its 20th year of operations, has collected over $207 million worth of lifesaving medical supplies and equipment that has helped over 19 million patients in over 100 countries and territories.
Speaking with MedShare CEO Charles Redding, one understands the weight of responsibility felt by those who work and volunteer for MSROs. Redding lights up when he talks about success stories. He even laughs when he recalls some very specific requests MedShare has fulfilled. For instance, one young lady from Ecuador who had cerebral palsy wanted a wheelchair, but it had to be red. On the other hand, he is vividly aware that allocation of resources can mean the difference between life and death. He recalls a heartbreaking story about a woman in Cameroon who gave birth to quadruplets. The hospital only had one incubator and a queue of babies for that one unit. All four newborns died within hours of their birth.
After we partnered with MedShare, we delved into the system recipients used to order supplies and equipment to develop an understanding of areas that could be optimized. We discovered that when recipients began the ordering process, they logged into MedShare’s website to view the online inventory list. Then they selected items to fill a shipping container. This model was thought desirable because it gave recipients a choice in what they received.
We realized, however, that recipients might not ask for their exact needs, as the ordering system introduced time-based competition among recipients. If recipients were concerned that others might select the items in their cart before the container was filled, they might rush the order and choose items that were not most essential. If recipients rushed through the ordering process to fill a shipping container, they might be able to use the items; however, many of the items might not be what they really need.
We applied a game theory model to the ordering system, which resulted in the discovery of a more effective system for delivering the most appropriate medical supplies to recipients. The model introduces a truth-inducing mechanism that relies on eliminating inventory from view and asking recipients to create a “wish list” ranking their preferred products. The information tells an MSRO whether a recipient is the best fit for a particular item, allowing the MSRO to have high impact with its donations. In short, we recommend that MSROs:
- Not share inventory availability with recipients;
- Ask recipients to create a “wish list” ranking their preferred supplies;
- Choose which recipient to serve next based on the best match between current inventory and “wish list” items.
In the specific case of MedShare, the new model also aligns with the organization’s strategic plan, as it aims to move from “containers shipped” to “recipient impact” as an important metric.
Our collaboration with a humanitarian aid organization offers a prime example of how an operations perspective can maximize impact in terms of value to people. The broader operations management community currently has been engaging in similar questions and stands to make a real contribution. For instance, Production and Operations Management recently published a Humanitarian Operations special issue (in which our first article, “Effective Medical Surplus Recovery,” appears). We value the opportunity to contribute research that makes a meaningful difference to MSROs and the communities they serve.
A. Atasu, B. Toktay, W.M. Yeo, C. Zhang (2017). “Effective Medical Surplus Recovery.” Production and Operations Management, 26(6), 1142-1162.
C. Zhang, A. Atasu, T. Ayer, B. Toktay (2017). “Truthful Mechanisms for Medical Surplus Product Allocation.” Georgia Institute of Technology Working Paper. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3050085
Atalay Atasu is the Dunn Family Associate Professor at the Scheller College of Business at the Georgia Institute of Technology. He also is a senior editor for Production and Operations Management and Associate Editor for Manufacturing and Service Operations Management.
Turgay Ayer is the George Family Foundation Assistant Professor in the H. Milton Stewart School of Industrial and Systems Engineering and the research director for medical decision-making at the Center for Health and Humanitarian Systems at the Georgia Institute of Technology.
L. Beril Toktay is Professor of Operations Management and Brady Family Chair at the Scheller College of Business at the Georgia Institute of Technology. She also is the faculty director of the Ray C. Anderson Center for Sustainable Business and the area editor for environment, energy, and sustainability at Operations Research.
Can Zhang is a PhD candidate at the H. Milton Stewart School of Industrial and Systems Engineering at the Georgia Institute of Technology.