Managing Critical Healthcare Supply Chains in Turbulent Times

Solving problems and managing challenges are part of daily operation in most businesses. I suspect there is not too much disagreement when I say the last two years have presented us all with a multitude of new and intense challenges. This is evidenced by the increasing frequency and severity of natural disasters, the supply chain-stifling COVID-19 pandemic, and, most recently, the geopolitical upheaval of armed conflict in Eastern Europe.

Our interconnected global economy has been disrupted, and remains vulnerable. In recent years, we have seen that hurricanes, tsunamis, contagious disease, and war have the ability to disrupt production and delay deliveries, leaving valuable materials and products scarce and subject to unanticipated price increases.

Since patient safety remains the healthcare industry’s top priority, when disruption affects the supply chain ecosystem, it creates a cascading set of challenges. Even a modest change to materials or manufacturing processes to address a disruption requires re-qualifications and regulatory approvals. Further compounding the chaos of disasters and diseases has been the obsolescence of certain raw materials and subsequent line discontinuations—more factors that have forced change and are driving time-consuming regulatory oversight. And all this says nothing about the significant cost impacts of the sudden, protracted inflationary raw materials market, the likes of which we have not seen in quite some time.

Given just one true constant—change—healthcare companies need to carefully consider how supply chain risks can affect business continuity. Let’s explore, through historical context and real-world anecdotes, the value that organizational heft brings to mitigating supply chain challenges.

The advantages of robust vendor and outsourcing partnerships include multi-factory pre-qualifications; outsourcing secondary and tertiary production to focus on core competencies; and the direct and tangential benefits of engaging entities offering vertical integration when time constraints or cost of ownership make internal production untenable.

Bumps in the Flat-Earth Road

In 2005, New York Times economic writer Thomas Friedman published “The World is Flat.” Friedman explained globalization through concepts such as outsourcing, offshoring, and supply chaining, already well-established business operations strategies. He gave Walmart as a prime example of flat-world-ism done right and today we have an even more robust, ever-accessible example: Amazon.

Of course, his dissertation predates what we all know occurred shortly after this writing: the worldwide financial crisis, Great Recession, and subsequent economic nationalism. Another economically troublesome trend also has worsened since Friedman’s writing: climate change. More extreme weather has meant more—and more severe—supply chain disruptions.

And then…the coup de grace: COVID-19. Though the pandemic’s death and employment tolls have rightfully taken center stage, miles and miles of container ships stalled off the coast of major ports around the world have showcased how a health crisis quickly becomes a supply chain one.

As the COVID crisis wanes, another is born: Russia’s invasion of Ukraine risks ushering in a period of geopolitical instability. From an economic standpoint, the fallout could include inflation fueled primarily by spiraling energy prices. Here, healthcare companies will undoubtedly be adversely impacted, as nearly all medical-grade plastics typically require petroleum. A looming scarcity of some commodities—Plastics News recently reported a projected resins shortage due to the crisis in Ukraine—and disrupted East-West shipping routes only exacerbate these issues.

The world, it seems, isn’t so flat after all. As such, medical products companies need a well-rounded strategy to minimize disruptions caused by supply chain pitfalls.

While our company is a globally-integrated developer and supplier of advanced medical-grade polymer solutions for a wide variety of applications, in recent years, we’ve also become supply chain mavens of sorts—an innovation born of our customers’ necessities.

Let’s discuss three examples of increasingly common supply chain challenges and potential tactics toward alleviating them.

1. Long Tubes, Short Timeframe
The first example involves an urgent increase in medical tubing production. Its goal was to keep healthcare facility personnel safer at the height of the COVID-19 pandemic.

To lessen the number of in-room visits healthcare providers needed to treat COVID-19 patients, many institutions adapted as best they could on the fly. One such technique was to move certain machinery outside the patient’s room. This machinery included IV pumps, whose frequent changing had become the cause of too many close contacts between patients and personnel.

To make this move possible, the tubes connecting pump to patient needed to be longer—much longer, as in three to four times the length. In addition to unprecedented demand, this swift sea change in procedure meant the design of certain IV pump tubing needed to be reconfigured. This would necessitate qualifications across various geographic locations ASAP.

Our medical device partner contacted us and outlined the problem, and together, we formed a multifunctional, multi-national team. We formulated an appropriate PVC compound and extruded multiple batches of tubing for the rigorous qualification process.

Mission accomplished—in just 10 working days. The ability to both produce the compound and extrude the tubing without involving a third party was critical.

2. More Than One and Done
In the second example, a natural disaster had impacted multiple suppliers along a supply chain, causing a manufacturing domino effect for numerous device companies. This set off a race to secure volumes of materials, resins, compounds, and finished parts.

Unsurprisingly, the result was something akin to panic buying: device purchasers were gobbling up product wherever it could be found, depleting stockpiles, and driving up prices via simple supply and demand.

To remedy this and increase supply, we were able to run qualification samples on three continents to supply local manufacturers in North America, Europe, and Asia—including, not coincidentally, several new customers. As demand continued to rise, we installed and qualified higher-volume machinery and ran multiple shifts at these facilities.

Crucially, this did not require tradeoffs, such as delayed lead times for current customers and projects. A key factor was strategically-located sister sites capable of providing redundancy on a wide scale and expedited delivery in their respective regions. The takeaway is clear: standalone facilities face elevated risk of production disruption and delay.

3. When Growth Becomes a Cost of Ownership
The final anecdote involves a customer who needed to increase production quickly to meet growing demand for one of its medical devices. Its production facility was at capacity, and building an extension was not an option because of time and real estate constraints. In addition, it was becoming increasingly difficult and expensive for the company to recruit skilled product developers due to competition in the local labor markets. A significant portion of its footprint and personnel were being utilized in the extrusion department, which was running a high-volume but low mix of tubes for its interventional catheter lines. While most extrusions were already outsourced, these specific lines remained on-site due to a “make or buy” evaluation conducted several years earlier.

Despite their solid setup, they ultimately determined that cost of ownership had become too high compared to outsourcing. Here, a key factor was vertical integration. Faced with a situation where producing one of its devices’ several components was taking up too much floorspace and manpower, the solution involved engaging a partner for whom the tubing wasn’t part of the product, but rather the entire product.

In this scenario, however, the company needed not just execution but expedience. It needed to outsource on the double to free up space for its core competencies amid an overall demand surge. This required a partner who could quickly qualify equipment and parts, and build a buffer inventory to bridge any transitional downtime gaps. In this particular case, equipment was even purchased from the company, providing ROI on infrastructure as well as seamless tech transfer.

What We’ve Learned, and Future Considerations

First and foremost, failing to address turbulent environments can impact patient safety and outcomes. It can also cost extraordinary amounts of money, time, and reputation damage—and more healthcare companies are catching on. A growing number of forward-thinking companies are conducting the type of advanced scenario planning that bakes robust risk and uncertainty analyses into their materials and supply chain strategies, right from the very inception of new projects.

Moving forward, the best approach is to ensure new projects robustly encompass both patient safety and supply chain risk mitigation. While there may be a bit more initial cost and qualification efforts, we have learned this approach protects patients and, ultimately, will also be the most economically efficient.

Finally, choose partners with a robust solutions platform to solve both product and supply chain challenges on a global scale. Seek companies that have people with extensive technical, supply chain, and project management acumen; comprehensive imbedded materials science expertise; and precision manufacturing processes aligned in a worldwide network. 

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Chris Qualters is CEO of TekniPlex Healthcare, which utilizes advanced materials science expertise and technologies to develop and deliver critical solutions for medical and diagnostic devices, drug delivery systems, and healthcare packaging applications. Qualters has three decades of engineering and manufacturing experience, with an emphasis on the medical and healthcare sectors. TekniPlex Healthcare’s portfolio helps meet demands for high-leverage medicines and mission-critical healthcare products that benefit care providers and patients. Visit the company at www.tekni-plex.com.