Enhancing Medical Supply Chain Resilience In The New Normal
The COVID-19 pandemic has disrupted manufacturing, logistics and supply chain operations everywhere, and nowhere has this been more acute than in global medical supply chains.
According to CNN, data from Drewry states that one year ago, it cost $1,920 to book a 40-foot steel container on a standard route between China and Europe. Now, the cost has surged to over $14,000, an increase of more than 600%. Meanwhile, the cost of buying a container outright has effectively doubled.
With this spike in shipping costs, presently in the United States, medical devices such as dialysis-related products, personal protective equipment, testing supplies and equipment, and ventilation-related products are in short supply.
The issue has been one of both supply chain resilience, with manufacturers needing to ensure that existing production and supply of medical equipment and supplies could continue amidst lockdowns and border closures, and reducing lead time-to-market, for existing and new medical products in the pipeline.
In this article, we review some ways organizations can mitigate vulnerabilities and increase resilience in their medical supply chain:
Leverage on Partnerships
For medical technology and equipment companies, working with the right partners can help enhance the resilience and speed-to-market of your medical supply chain. Whether it is:
- Feasibility Assessments
- Design Concepts
- Enabling Technologies
- Product Development and Improvements
- Global Production Capabilities
It is important for organizations to find the right partner with the expertise and capabilities to support each stage of the product life cycle.
This includes providing quick-turn functional prototypes to pre-production short-run clinical studies, including execution of design verification and process validation activities.
Such strategies will enable manufacturers to better cope with the increasing demands while reducing manufacturing overhead, ensuring regulatory compliance, and also speeding up time-to-market.
Meanwhile, other areas of partnerships include vendors supporting companies in the redesign and improvements of medical devices.
Experienced vendors can help fulfill a number of roles including being the ‘voice of the customer’ in crystallizing what changes the market is looking for or taking the lead on design concepts, trade-offs, feasibility and ROI analysis.
Diversifying Production Globally
Meanwhile, with the pandemic affecting many parts of the world, medical companies may find their production operations hobbled by pandemic measures such as quarantines and widespread lockdowns.
When the pandemic hit in 2020, an estimated 80 percent of active pharmaceutical ingredients (API) in the United States. were largely sourced from typically China and India. Additionally, India also sourced about 70 percent of its APIs from China. This poses a high risk for the United States, should either of these countries encounter challenges in meeting their supply demands.
One strategy to mitigate the effects of such disruptions is to diversify production across multiple facilities globally, or to work with a production partner that can support in a similar manner. In fact, even having two suppliers may not be sufficient as any disruption or issues from one supplier could spell significant price increase and stress on the remaining supplier.
For instance, the demand for robotic surgical equipment had already been increasing pre-pandemic, but once it demonstrated its ability to reduce complication rates and improve clinical outcomes as compared to manual surgical procedures, the demand for it spiked.
Furthermore, robotic surgical procedures can facilitate social distancing in hospitals while reducing the amount of time a patient needs to spend recovering in the hospital.
To meet these increasing demands, it is crucial for manufacturers to examine their core capabilities to see which aspect of the production process can be outsourced to a partner. For instance, a manufacturer that specializes in developing the software that enables robotic surgery might choose to outsource the manufacturing of the hardware to a partner.
It is therefore crucial for countries to source different types of products from different countries.
Certain countries and regions specialize in manufacturing different products – Northern Italy produces test kit swabs, Malaysia produces medical examination gloves, Cambodia produces personal protection equipment, and China and Taiwan produce face masks. This helps enhance supply chain resilience while reducing time-to-market for products.
Mitigate Risk and Source From Reputable Vendors
Another aspect of enhancing medical supply chain resilience is to proactively conduct risk assessments to determine possible sources of supply chain disruption, and actively work towards developing contingency plans. This would allow production lines to quickly pivot and shift, as and when new developments happen.
For example, with commodity goods like generic drugs, it is common for companies to source from a single supplier due to stronger cash flows and predictable supply when operations are running smoothly. However, while these supply chains are narrow and efficient, they are also extremely vulnerable to disruption and lack resilience. For critical products such as medical supplies, companies may need to do more to mitigate any risk of disruption.
In another instance, 2011’s natural disasters in Taiwan and Japan left the automotive industry unable to ship finished cars to customers because of missing and often inexpensive components. This exposed the dangers of relying on a single source of supply, and one of the easiest ways to mitigate that is to develop a multisourcing strategy that could involve categorizing suppliers not just by cost, but also by revenue impact in the event of a disruption.
Additionally, while a more expensive option, another way to build supply chain resilience is to move the product closer to the end customer through nearshoring, which allows for shortened cycle times for finished products and a reduced dependence on global networks.
Going beyond risk assessments, medical companies can further strengthen their supply chain resilience by partnering or sourcing only with reputable suppliers with a track record for consistently delivering on time and on budget. Forming ecosystem partnerships is one way to collaborate with strategic raw material suppliers and external service partners to ensure better preparedness and resilience for the future.
In summary, while medical supply chains are expected to continue facing disruptions and challenges in the post-pandemic new normal, there are many strategies organizations can implement to enhance supply chain resilience and reduce time to market for their products.
As the instinctive partner for leading medical technology and equipment companies, Interplex is continuously building on its strengths in the design, engineering and production of medical devices – while improving our operational excellence – to help bring products to markets faster.
For more information about solutions for our expertise in Medical Product Design, Engineering and Production, drop us an email at firstname.lastname@example.org.