Drawing on experience of the COVID-19 pandemic, John Swift, head of supply chain, Owen Mumford, provides a framework for reassessing supply chains, based on his experiences over the past year, to ensure that all vulnerabilities are identified and addressed.
The global pandemic put healthcare systems, and consequently medical technology businesses, under very visible pressure. As a result, companies are even more likely to have identified stress points and vulnerabilities in supply chain infrastructure and operations, that would not have surfaced and been dealt with if it wasn’t for the pandemic. It is imperative to troubleshoot weaknesses detected in supplier networks now, to ensure businesses are protected from additional waves of the pandemic, or any other unexpected events, as failure in the medical device supply chain simply cannot be an option.
To minimise the impact of disruptions, business continuity policies should include plans for operational continuity, disaster prevention and business recovery. To do so, assessing supply chain risks must be an iterative process where risks are mitigated as much as possible within the agreed cost constraints of the business.
Five steps to conduct an efficient supply chain assessment
- First and foremost, risk must be reassessed within manufacturing plants, starting with the review of every key process, bearing in mind recent pandemic experiences and changes in risk parameters, to evaluate whether they are still fit for purpose or if new risk mitigation strategies are required. In addition, clear schedules and governance guidelines should be put into place, and it is important to review engineering spares policies, usage for all equipment and assets and to check whether service level agreements are in place where needed. Businesses might need to make additional investments to ensure an agile and flexible response to changes in customer demand.
- Next, it is advisable to take a fresh look at products in development. The production and distribution model needs to be mindful of initial launch requirements and subsequent scaling according to demand. This will vary according to product; businesses will therefore need to identify any potential risks to ongoing supply through the product growth and into established demand. A sound scale-up strategy in line with forecast demand will allow the business to make appropriate decisions related to tool investment, tool cavitation, assembly investment, or transitions from low-volume engineered fixtures to full automation.
- It is important to address key post-pandemic concerns, identified by a survey of supply chain professionals in the medtech industry as supply shortages (15%), lack of alternatives (12%) and delays in production issues (12%). The polymer industry has not yet recovered from the effects of the pandemic, and downstream markets that use polymers (such as the medical device market) are experiencing longer lead times from suppliers and extended door-to-door shipping times for multiple routes and shipping lanes. Delays can also be caused by a surge in demand for plastic products such as appliances, a global shortage of shipping containers, and interruptions in production schedules. Companies will need a broader and more rigorous tracking and management process to improve the quality of information about their supply chain, and to ensure this information is as up to date as possible. This is key to ensure a timely implementation of mitigation activities if potential disruptions occur so impact can be minimised or entirely avoided.
- Businesses should also prepare for additional vulnerabilities that are not yet known. To avoid missing weak areas in their review, it is important not to overlook criteria such as: market volatility, changes in suppliers’ circumstances such as acquisitions, mergers or product obsolescence, current and future trends in regulatory compliance, product lifecycle dynamics, supplier constraints and financial health, impact of climate change on raw materials, introduction of environmental or sustainability policies, changes in market prices, and reliance on single sourced key strategic items. Companies should also consider pre-screening and auditing supplier quality.
- Finally, available data can be used to draw up a supply chain map, i.e., a graphical or tabular representation providing a clear overview for consistent, effective risk scoring and risk assessment. This map can highlight: single source supply chain risk score, material demand chain, supplier names, sites and geographical locations, dual source alternatives, preferences for primary and secondary sourcing, strategic and generic procurement, supplier agreements, validation level information, recovery time objectives and even commercial engagement splits for dual sourced fully validated supply chains. Supply chain mapping will also support regulatory activities, such as tracking Economic Operator compliance under the EU Medical Device Regulation (MDR), which makes manufacturers, importers and authorised representatives jointly and severally liable for nonconformities.
Every medical device manufacturer will discover different patterns of how risks have morphed because of COVID-19. It is therefore imperative that companies carry out a deep re-appraisal of their supply chain, as it will prevent them from consistently encountering the danger of commercial damage. Some of the changes we experienced are likely to be permanent and the pandemic has brought previously overlooked risks in the medtech supply chain to the attention of businesses, governments, and regulators like. Those that begin their appraisal soon are likely to be well prepared and more capable of weathering the storms of the future.
You can find Owen Mumford’s full report on fresh post-pandemic approaches to supply chain risk management, including a framework for supplier assessment, here: https://bit.ly/3F3br1L