Dennis Menefee, Co-Founder, President & CEO of Partstat09.16.22
Covid-19, recent political and economic upheavals, and shifting customer needs have significantly impacted the healthcare industry and created an unprecedented demand for medical devices in a supply chain already faced with severe challenges. According to Gartner, supply chain disruptions have further increased the total healthcare supply chain cost, which already averaged 37.3% of the total cost of patient care in 2021.
Preservation of capital has therefore become more difficult, and in turn more important, for medical device manufacturers as challenges surface at unprecedented rates. In response to these changing dynamics, more than three quarters of manufacturers have reorganized their structure and business models in the past three years. These changes have placed greater emphasis on improved data analytics, external intelligence about the healthcare supply chain, and supplier visibility. Also, more and more medical device manufacturers are opting to purchase the components needed to build devices in bulk (also known as stockpiling), helping hedge against long factory lead times, delivery delays, and price inflation.
For many medical device manufacturers, stockpiling has become a necessary step toward supply chain resilience, ensuring that patients are able to access the care they need when they need it. In addition, redesigning can be very costly due to FDA regulations in regard to using replacement components.
A third alternative to EMS providers and self-storage is partnering with an inventory ownership provider where a third-party purchases medical equipment components on the manufacturer’s behalf and stores them in the proper conditions while offering fulfillment on demand to the EMS provider.
In this scenario, the right inventory management solution enables medical device manufacturers to maintain successful production levels throughout the life cycle of their products and bring them to market in the most efficient and cost-effective manner possible. These cost savings are of paramount importance to the medical supply chain in particular, as reimbursement and high cost of supplies were major concerns for the healthcare supply chain, even before the challenges of the pandemic. An inventory management solutions provider can also help to bolster weak links in the medical supply chain, offering to hold inventory for extended forecast periods.
As of July 2022, according to the FDA, automated external defibrillators (AEDs), chest drains/suction canisters and autotransfusion systems are the latest additions to the device shortage list. The list is divided into the following categories; dialysis-related products, personal protective equipment, testing supplies and equipment, and ventilation-related products.
It is essential that medical device manufacturers are prepared for supply chain disruptions in order to maintain continuity in production, and in turn ensure that patients have access to lifesaving medical equipment. The critical nature of these devices makes their shortages particularly alarming, but through careful planning and stockpiling inventory, manufacturers can prevent shortages and save lives.
Dennis Menefee has been the co-founder, President & CEO of Partstat, an inventory ownership solution provider, since 1991.
Preservation of capital has therefore become more difficult, and in turn more important, for medical device manufacturers as challenges surface at unprecedented rates. In response to these changing dynamics, more than three quarters of manufacturers have reorganized their structure and business models in the past three years. These changes have placed greater emphasis on improved data analytics, external intelligence about the healthcare supply chain, and supplier visibility. Also, more and more medical device manufacturers are opting to purchase the components needed to build devices in bulk (also known as stockpiling), helping hedge against long factory lead times, delivery delays, and price inflation.
Benefits of Stockpiling
Stockpiling to mitigate instances of supply chain disruption is a tactic leveraged across a range of industries, from electronics manufacturers to the U.S. government. This approach helps mitigate supply chain disruptions and combats the effects of inflation by locking in prices over extended periods of time.For many medical device manufacturers, stockpiling has become a necessary step toward supply chain resilience, ensuring that patients are able to access the care they need when they need it. In addition, redesigning can be very costly due to FDA regulations in regard to using replacement components.
Assessing Options to Leverage Stockpiling
Although stockpiling is a viable solution to many supply chain challenges, for some manufacturers it can also present a new set of problems, including securing the capital to purchase and store these delicate components. One option, leveraging Electronics Manufacturing Service (EMS) providers to store inventory, solves the storage end of the equation, but can also come with a high cost. For some manufacturers, building or maintaining space within their own facilities or warehouses to store inventory is another option, although also one with associated maintenance and personnel costs to consider.A third alternative to EMS providers and self-storage is partnering with an inventory ownership provider where a third-party purchases medical equipment components on the manufacturer’s behalf and stores them in the proper conditions while offering fulfillment on demand to the EMS provider.
In this scenario, the right inventory management solution enables medical device manufacturers to maintain successful production levels throughout the life cycle of their products and bring them to market in the most efficient and cost-effective manner possible. These cost savings are of paramount importance to the medical supply chain in particular, as reimbursement and high cost of supplies were major concerns for the healthcare supply chain, even before the challenges of the pandemic. An inventory management solutions provider can also help to bolster weak links in the medical supply chain, offering to hold inventory for extended forecast periods.
The Importance of Inventory Management for Medical Device Manufacturers
In a world where new Covid-19 variant outbreaks are the new normal, it creates a chain reaction that affects the health and lives of far more than just Covid patients. Patients with comorbidities such as diabetes, kidney disease, and heart disease may not have access to the treatments they need, while in addition, they are more susceptible to contracting a severe case of Covid-19.As of July 2022, according to the FDA, automated external defibrillators (AEDs), chest drains/suction canisters and autotransfusion systems are the latest additions to the device shortage list. The list is divided into the following categories; dialysis-related products, personal protective equipment, testing supplies and equipment, and ventilation-related products.
It is essential that medical device manufacturers are prepared for supply chain disruptions in order to maintain continuity in production, and in turn ensure that patients have access to lifesaving medical equipment. The critical nature of these devices makes their shortages particularly alarming, but through careful planning and stockpiling inventory, manufacturers can prevent shortages and save lives.
Dennis Menefee has been the co-founder, President & CEO of Partstat, an inventory ownership solution provider, since 1991.