For executive leaders across the health care industry combating supply chain disruptions is critical to managing through the COVID-19 crisis.
Global supply chains have been substantially impacted by COVID-19. With healthcare at the forefront of this global crisis, disruptions in medical supply chains were inevitable.
Sudden shortages and unexpected disruptions have forced leaders across a wide array of healthcare sectors to focus increasingly on securing mission critical supply chains. Shortages in personal protective equipment (PPE), diagnostics tests, and ventilators have been highlighted across media platforms. No matter how well publicized, even a single gap in previously sturdy supply chains have forced leaders to develop risk mitigation strategies in areas where they may not have deep subject matter expertise.
The complexity of global supply chains – from procurement to manufacturing to distribution channels – increases the likelihood of sudden disruptions from the global pandemic. By focusing on risk mitigation strategies and considering go-forward adjustments, leaders can better prepare their organizations to endure near-term issues, and reset a upon a sturdier foundation.
Considering the Regulatory Environment
What happens when the Government for a key supplier enforces a mandatory shut down or introduces overnight legislation which restricts exports? Such regulatory changes have become a reality impacting all aspects of medical supply chains. In the United States, regulatory entities like FEMA, have played an active role in the distribution of essential medical products. In manufacturing, government mandates have led to facility closures and reduced production capacity globally. Global mandated production shutdowns – from China, to India, to Mexico to California – now must factor in to how organizations architect their supplier ecosystem. It is expected regulatory changes will continue to dynamically evolve following the global crisis.
Increasing Agility & Diversification
The healthcare system relies upon a dynamic combination of medical products to provide patient care. Ranging from raw materials, like aluminum, to complex active pharmaceutical ingredients (API), a variety of supply chains must work synchronously. These supply chains rely heavily on manufacturers outside of the United States. With up to 80% of APIs produced abroad, it is evident that medical supply chains can be highly fragile amidst a global crisis.
To combat the fragility of global medical supply chains, it is crucial that organizations remain agile in procuring materials and products. Taking a diversified sourcing approach and reevaluating supply chains to improve resistance to disruptions is a top priority for company leadership, according to a recent PWC survey. Acting with agility and increasing diversification will assist leaders in mitigating risk on a go forward basis.
Eliminating Gaps & Blind Spots
As leaders begin to shift from panic to planning, gaining visibility into crucial supply chains is the essential next step. To mitigate the risks of supply chain disruptions, a focus on intel from customers, suppliers, and regulatory entities is required. The data provided will enable leaders to eliminate potential gaps in supply, predict areas of inefficiencies, and reduce blind spots. Although the unpredictable nature of COVID-19 will likely lead to continued shortages, proper planning will enable organizations to effectively reduce risk and meet the needs of customers.
As leadership teams prepare their organizations for post-COVID operations, adjustments in global supply chains will occur. These adjustments may include: localization of suppliers, adjustments in manufacturing, and increased focus on supply chain visibility. The increased focus on supply chain strategy across the healthcare sector will drive industry-wide supply chain optimization and insulate organizations against negatively impactful disruptions going forward.
Additional Resources:
https://www.navigatecorp.com/the-supply-chain-and-covid-19-managing-the-disruptions/
https://hbr.org/2020/03/coronavirus-is-a-wake-up-call-for-supply-chain-management