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Fix Our Broken Medical Supply Chains

Published May 27, 2020

Written by: Pinar Keskinocak
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Pinar Keskinocak

Pinar Keskinocak, PhD, is the current President of the Institute for Operations Research and the Management Sciences (INFORMS) and professor at Georgia Institute of Technology, specializes in infectious disease modeling and evaluating intervention strategies. She has worked on projects with companies, governmental and non-governmental organizations, and healthcare providers, including the American Red Cross and the CDC.

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The entire world is watching aghast as our nation continues to struggle with its COVID-19 response, where our broken supply chain cannot supply medical workers with enough masks and face shields to keep them reasonably healthy. The pandemic has exposed inadequacies and vulnerabilities in supply chains that were supposed to provide the much-needed supplies in the healthcare system. But life-threatening shortages are reported daily. COVID-19 testing kits and nasal swabs, lab processing chemicals, hand sanitizer and ventilators are in desperately short supply. The list of what is missing is ridiculously long.

How did one of the world’s most advanced economies end up in this ditch, and how do we stay out of it in the future? There’s some good news: Supply chains are still there, and they have enough resilience and continuity to get us what we need if we improve them using methods we already know. This includes increased use of localized supply, supply chain mapping and visibility, i.e., assessing the supply chain risk and vulnerabilities across the entire supply chain, from first-tier suppliers and major components to the minor parts and raw materials, and product design for resilience.

Costs vs Control

Are you shocked by the shortage of N95 masks? No need to be; the country ran low when the H1N1 influenza pandemic first struck in 2009 when people and individuals and organizations rushed to buy them. And a fundamental problem in the supply chain for masks is that many are produced overseas – more than 50% in China, which helps keep costs low. But the lower cost comes with longer lead time and a loss of control over the source of the product.

For critical products, the US must be willing to pay more for domestic production to meet US demand, and companies must ensure they have sufficient capacity to ramp up to meet the nation’s demand. This can be achieved through financial incentives and long-term agreements to ensure purchases in “peacetime” in exchange for extra or flexible capacity during times of crisis.

Pharmaceutical supply chains are just as vulnerable, and the US has experienced both acute and chronic shortages of products in recent years. When Hurricane Maria hit Puerto Rico, it disrupted the leading producers of saline and IV bags in America, and shortages rippled across the whole country.  Also, the government does not even know what parts of products are produced where. Multiple manufacturers can source from the same supplier of a critical active pharmaceutical ingredient, and then disruptions can hinder that supplier.

Supply Chain Mapping

It is critical that we do a complete supply chain mapping of pharmaceutical and other medical products, from the final product all the way to the lower tier suppliers of components and raw materials. Such visibility would quickly expose weak links in a supply chain due to dependency on a single supplier or sourcing from an area prone to disruptions.

Pharmaceutical companies are concerned about sharing data because of proprietary information. This risk can be mitigated, and there is a far greater risk if the US cannot ensure a reliable supply of medicine. If necessary, we should take regulatory action to ensure supply chain mapping and visibility across products of many types are available in advance of a crisis.  

Critical products can be endangered when a single subcomponent is hindered. Examples abound, such as the nasal swab associated with the first Covid-19 testing kit used in the US.

Component Commonality

A classic solution is a flexible product and supply chain design. Companies often prefer component commonality, where several products depend on a common subcomponent that has sufficient supply. Examples include Coca-Cola products that use the same basic bottles and Toyota vehicles that use common parts across many models. Component commonality helps reduce waste and increase efficiency in supply chains. Still, it can lead to severe shortages if the component has a fragile supply chain that cannot easily be ramped up. We have seen this problem in the chemical reagents used in some coronavirus tests.

To avoid this in critical products, we need to build some flexibility into production and supply chain design so that alternative components from other supply sources can be substituted as required.

Supply Chain Visibility

Given the interdependence of product design, manufacturing, and supply chains, it is essential for them to engage continuously and not to be siloed, which can ensure the supply chain holds up, especially for critical products.  

Every company producing medical products should take on full responsibility to ensure the visibility of the supply chain with the ability to respond to changes in demand or supply. Each one should be willing to share information with a government agency that can ensure nationwide visibility and identify vulnerabilities. Understanding and mitigating supply chain risks for critical products can only be achieved if all parties work together and proactively.

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