SUPPLY CHAIN MANAGEMENT- Are Supply Chains Up for the Post-Pandemic Challenge?

INTRODUCTION

During the pandemic, medical technology businesses are likely to have identified stress points and vulnerabilities in supply chain infrastructures and operations that might otherwise have remained unnoticed. The struggles to address both peaks and troughs in product demand in a time of extreme uncertainty has helped bring weak links to light. These weak links, now that they have come to the forefront, must be tackled immediately in order to face any future pandemic waves or knock-on effects, and to prepare a solid front for any other unexpected events that may impact the market and supply chain.

Troubleshooting any weaknesses detected within the supply chain is key to preserving market dynamics from disruption to long supply chains, ensuring the immediate reprioritising of sup­plies critical for patient treatments, and preparing for the forth­coming flood of pent-up demand for postponed elective procedures. Failure in the medical device supply chain simply cannot be an option, as lack of stock may impact scheduling of future diagnosis and treatment, including drug administration, and ultimately put lives in danger. It is therefore urgent businesses update their policies to include plans for operational continuity, disaster prevention, and business recovery in order to minimize the impact of future disruptions on product supply.

In addition to this, assessing supply chain risks should not be an ad hoc activity but an iterative process that is carried out periodically and continuously with the ob­jective of keeping risk as low as reason­ably possible. In fact, supply chain models come with risks by definition: the just-in-time (JIT) model for instance, while it has advantages, such as reduced storage fees, a reduction in waste and therefore carbon emissions as well as greater flexibility in in­ventory management, has a very slim margin of error and typically requires a se­ries of back-up plans to prevent any prob­lems. Whatever the supply chain model, however, a risk assessment can only be beneficial, and it might be well overdue.

THE MANUFACTURING MACHINE

The risk assessment process should ideally start within manufacturing plants. Here, it is advisable to review engineering spares policies, equipment, and assets usage and check that service level agree­ments are in place covering both the ap­propriate depth and frequency of service. Clear schedules and governance guide­lines must be put into place to make sure that manufacturing controls are working as expected, and each key process in the manufacture of medical devices must be reviewed in light of recent pandemic expe­riences. It is vital to determine whether processes are still fit for purpose, whether risk parameters have changed, or a change in conditions dictates the need for new risk mitigation strategies. After com­pleting this analysis, businesses will need to make sure their response is agile and flexible enough to deal with peaks and troughs in product demand. This may re­quire additional investments, for example, execution of moulding or assembly capa­bilities for medical devices across alterna­tive or multiple sites.

APPRAISING SUPPLIER NETWORKS

Supply shortages (15%), lack of alter­natives (12%), and delays in production is­sues (12%) are some of the top post-pandemic concerns identified in a re­cent survey of supply chain professionals in the medtech industry.¹ One case in point is the polymer industry, which supplies medical device manufacturers; this sector has not yet recovered from the effects of the pandemic and as a result, downstream markets are experiencing longer lead times from suppliers and extended door-to-door shipping times for multiple routes and shipping lanes.² Reasons for these de­lays may include a surge in plastic prod­ucts demand, a global shortage of shipping containers, and interruptions in production schedules.³

The same survey suggests that to pre­pare for potential natural disasters or other unforeseeable circumstances, manufacturers should improve the qualifica­tions of multiple suppliers and of the review process (14%), try to source locally (16%), improve the visibility of supplier in­ventory, capacity, and lead times (13%), and endorse the restructuring of supply chains with second sources (12%). The availability of raw materials in different parts of the world of course impacts the ability of businesses to source locally, but they must also remain well aware of the exposure that source countries have to nat­ural disasters, political instability, and other events that might impact the supply chain.

Keeping up to date with news and de­velopments relating to the supply chain is therefore another critical activity for man­ufacturers. To do so, they will need a rig­orous and comprehensive tracking and a management process that ensures early notification on potential disruption to sup­ply and a consequent quicker implemen­tation of mitigation activities to avoid or minimise future impact.

A CHECKLIST FOR SUPPLY CHAIN REVIEW

Based on the latest assessment of their supply chain, businesses may need to take action to mitigate issues caused by further and not yet known vulnerabilities among suppliers. The following dozen points in the checklist cover typical areas to keep under close control:

• Manufacturing suppliers’ site changes, mergers, acquisitions, market volatility
• Regulatory compliance (current and fu­ture trends)
• Product lifecycle reduction, eg, obsoles­cence of raw materials
• Supplier constraints, such as capacity, capability, low volume challenges, and logistical risks
• Supplier solvency and financial health
• Risks due to supplier reliance on raw materials and concentration in coun­tries likely to be impacted by climate change
• Supply chain disclosure aligned with appropriate policies, eg, regulatory, commitment to low carbon emissions
• Reliance on single-sourced key strategic items
• Supplier material/process changes and notification of change
• Uncertainty and level of understanding of the supply chain, role of distributors, upstream manufacturers, complex sup­plier networks, complete processes, and supplier maps
• Pre-screening and auditing of supplier quality
  -Organisation quality process assets
  -Manufacturing/processing equipment
  -State-of art health check
  -Potential internal process failures

SUPPLY CHAIN MAPPING

The results of the assessment should be used to draw up a supply chain map of the procurement path of tier one and sub-tier suppliers for key purchased and man­ufactured items. This type of graphical or tabular representation is ideal to ensure everyone in the business clearly under­stands the process and potential risks. It can prove a vital tool in today’s post-pan­demic recovery but should be part of reg­ular best practice as it will support regulatory activities, such as tracking Eco­nomic Operator compliance under the EU Medical Device Regulation (MDR), which makes Manufacturers, Importers, and Au­thorized Representatives jointly and sever­ally liable for nonconformities.

Supply chain mapping is particularly useful in highlighting:

• Supplier names, sites, and geographi­cal locations
• Single source relative supply chain risk score
• Dual-source alternatives and prefer­ences for primary and secondary sourc­ing
• Material demand chain: material type, processes, distribution, sub-tier suppli­ers (first level)
• Strategic and generic procurement, supplier agreements, including robust, active Notification of Change processes and aligned safety stock policies
• Validation level information and recov­ery time objectives
• Commercial engagement splits for dual-sourced, fully validated supply chains

ASSESSING NEEDS FOR NEW PRODUCTS

Finally, manufacturers should closely reconsider new products that are being developed, as they are, by definition, dy­namic, and require an alignment between operational, business, and product strate­gies. New products also require an evalu­ation of the production and distribution model that needs to be built taking into consideration initial launch requirements and future demand. This may vary de­pending on each product and on whether the launch protocols are for a bespoke de­vice for individual customers (such as a customized auto-injector) or a platform design for multiple customers (such as a safety device for prefilled syringes); the lat­ter is likely to have a low-volume introduc­tion but a forecasted growth to high volume. Businesses therefore need to iden­tify potential risks to ongoing product sup­ply to support product growth and meet demand. A scale-up strategy is essential to make appropriate decisions relating to tool investment, tool cavitation, assembly investment, or transition from low-volume engineered fixtures to full automation.

PROACTIVE PLANNING

Each medical device manufacturer will discover different patterns of risk as a result of COVID-19. It is therefore imper­ative that businesses carry out an in-depth and urgent re-appraisal of their supply chain, as failing to do so may cause com­mercial damage. Some of the changes we are now experiencing may become per­manent, and the pandemic has alerted businesses, governments, and regulators alike to risks in the medtech supply chain, which were previously under-recognized or even invisible. Setting up best practice sys­tems and processes to ensure the supply chain is critically assessed regularly is not only an important practice to face the cur­rent challenges, but will stand a business in good stead for any future unexpected changes in the supply chain. Manufactur­ers that begin their appraisal sooner rather than later are more likely to be well pre­pared, capable of weathering future storms, and able to grasp competitive ad­vantage.

REFERENCES

1. Managed Healthcare Executive, Study Reveals Path to Recovery in the Global Medical Device Supply Chain, 11. November 2020.
2. Williams SC, “Plastics Shortage Hits Plastic Parts Supply Chain”. ISM Blog, Apr 2021.
3. Williams SC, “Plastics Shortage Hits Plastic Parts Supply Chain”. ISM Blog, Apr 2021.

John Swift is Head of Supply Chain at Owen Mumford Ltd. He is an experienced operations program manager with a successful track record working throughout the supply chain, covering procurement, supplier management, invention, development and manufacture, as well as promotion, sales, and distribution. He is experienced in applying and adapting skills across both large corporations – such as Abbott, Abbvie, and Tyco – and SMEs, and has worked in multiple industries, including medical device, aerospace and defence, rail, chemical, automotive, and printing.