How COVID-19 has changed the healthcare supply chain

May 25th, 2021 /
Andrew Fearnley
/ 5 Min Read

COVID-19 radically affected every global industry, but the healthcare supply chain was the first to bear the full impact of the pandemic. Medical supplies faced growing demands, with healthcare suppliers forced to increase production to an unprecedented level. 

Pressure to stockpile masks and other protective wear didn’t start after the pandemic, either. The World Health Organization suggested a 40% increase in personal protective equipment (PPE) eight days before it declared COVID-19 an official pandemic.

In the months that followed, the healthcare sector had to reconcile with the limitations of its current setup. Governments and healthcare institutions had to find ways to produce and stockpile supplies more effectively.

Data analysis has given us critical insights into the medical supply chain over the past year. Not only can these insights help streamline the current system, but they might leave future supply chains better equipped for crisis management. 

But where does the medical supply chain stand now? More importantly, how can it be made more resilient, adaptable, and responsive?

The current condition of the healthcare supply chain

Since March 2020, the two most extensive demands on the global medical supply chain were PPE and sanitizers. By the end of the month, sanitizer shortages were already dire. In response, major alcohol companies like Pernod Ricard SA leveraged their distilleries to manufacture sanitizers.

In 2021, a third product is rapidly pulling for resources: vaccines. 

Where PPE and sanitizers strained production, vaccine storage and transportation strained the distribution channels too. Jennifer Bisceglie, founder and CEO of Interos explains to SDC Exec:

“Technology to monitor the integrity of the cold chain to ensure temperature ranges were maintained in shipping (to help guarantee drug efficacy) was gaining investment and is now critical with the vaccine.”

With the CDC’s controversial removal of the mask mandate for fully vaccinated individuals, along with other guidelines, PPE demand is set to decline. As the global supply chain pivots towards vaccines, PPE manufacturers are now at risk of oversupplying a rapidly shrinking market. 

In the space of a year, the main threat to PPE manufacturers went from scarcity to wastage. Alongside the logistical difficulties that came with global vaccine rollouts, these two problems give us a good idea. 

Importance of supply chain management in healthcare

Of the three heaviest demands on the medical supply chain, sanitizers face the lowest risk of rapid market changes. Some studies project that the hand sanitizer market will see a 12% growth by 2026, with peak growth sustained until the end of 2022.

But what does this mean for supply chain management in healthcare? Well, it presents a complex dynamic between its three most needed products:

  • Falling demand for oversupplied PPE
  • Rising demand for vaccines
  • Consistent and high demand for sanitizing products

With three markets trending in different directions, the healthcare industry can’t afford to take a singular approach to effectively meeting demand. Supply chain management will need a multi-level strategy to address various problems at the same time. 

Specialists suggest a risk-limiting approach to management, with strategies that will:

  • Minimize rollout disruption
  • Incentivize good risk management 
  • Diversify raw material sources to reduce dependency on any one supplier
  • Accurately track production to minimize wastage
  • Stockpile effectively
  • Use better data analytics to predict market trends
  • Invest in software to streamline supply chain management

These suggestions are in response to the most critical factors slowing down the supply chain.

Factors slowing down the healthcare supply chain.

Fluctuating markets are just one factor slowing down the healthcare supply chain. Limited production capacity and an overreliance on imported raw materials still make crisis management difficult. 

Supply Chain Quarterly offers a comprehensive list of other disruptions, including:

  • Fewer workers due to illness or insufficient economic protection
  • Panic buying creating avoidable shortages
  • Lack of supply chain transparency at the national level
  • Poor coordination between the healthcare sector and federal, state, and local agencies

Facts of the healthcare supply chain

Many of the above disruptions were manageable in hindsight, but they all contributed to the current landscape. To avoid future complications, we need to deal with the realities of the existing supply chain. 

As things stand, the facts are:

Impact of COVID-19 on medical supply chain

In the early pandemic response, the biggest threats to the medical supply chain were scarcity and a limited capacity to produce essential goods. The introduction of COVID-19 vaccines in early 2021 compounded those issues through a problem that existed in the chain for years – temperature-controlled logistics.

Gisli Herjolfsson, co-founder and CEO of cold chain specialist Controlant, detailed the issue to SDC Exec:

“Within the cold chain, problems typically happen at multiple hand off points. Today, temperature excursions account for nearly 80% of supply chain problems, damaging products and diminishing consumer confidence in the brands they once trusted.”

In financial terms, the biopharma industry loses $35 billion annually to failed cold chain management. Pandemic-related trade restrictions compounded that loss, with many global suppliers struggling to export raw materials throughout 2020.

The pre-pandemic supply chain just wasn’t ready to deal with these issues all at once. So looking forward, what strategies are available to create better supply chains?

New supply chain management solutions

New Ideas for supply chain management
New supply ideas

Management software is vital to reducing response time to supply chain issues. Thankfully, the healthcare industry has several supply chain management platforms coming to the fore. Though they vary in scale and capacity, they share some crucial goals, such as:

  • Centralizing data management
  • Giving key stakeholders remote access to databases
  • Streamlining business-to-business (B2B) communication
  • Tracking inventory, orders, and shipments
  • Accurate reporting of financial and production data

Healthcare institutions are also being encouraged to source more domestic suppliers to avoid international trade disruptions. These new sources won’t necessarily be primary suppliers, but they could create redundancy along the supply chain.

While not as cost-effective as trimming down to only primary sources, redundancy has its benefits. It increases system resilience through backup suppliers, whose facilities can also increase emergency production capacity.

As healthcare industries continue to tackle COVID-19, the ability to rapidly meet demand while effectively stockpiling essential items will define any future crisis response. It could just be the foundation for a robust and responsive healthcare supply chain.

You May Also Like reading – How Are Practitioners Using EHRs to Treat COVID-19?

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