Mike Piccarreta, partner with Kearney, speaks about the ability of the healthcare system’s supply chain to react to national emergencies, and the vulnerabilities that have been exposed as a result of the coronavirus pandemic.
With the outbreak of COVID-19, public attention has become focused on the availability of critical medical supplies such as masks, gloves and ventilators. And while the healthcare supply chain is more resilient than those of many other industries, it has faced severe challenges in meeting demand for product during the current crisis. The situation has only been made worse by the temporary shutdown of manufacturing plants in Asia, on which U.S. healthcare providers depend heavily.
Traditional sourcing patterns are being disrupted. A number of new producers have entered the market, while automotive and other types of manufacturers have retooled to make much-needed ventilators and sanitizers.
Healthcare executives need to conduct “proper postmortems” of what went wrong in their supply chains, Piccarreta says. In the future, the will need to focus more heavily on resiliency and reliability of product flow. To do that, they’ll have to identify the critical materials that impact finished-goods production, as well as which suppliers have performed to expectations and which ones have fallen short.
The healthcare supply chain has tended to involve more single-sourcing than other sectors, amplifying risk in the event of crises such as the coronavirus pandemic. “If those sources get tapped out, it’s very hard to switch quickly if a supplier is not qualified,” says Piccarreta. “A lot of this has to be preplanned and orchestrated.”
Manufacturers must also do a better job of engaging customers, working to coordinate inventory placement, allocations, and communications around demand signals. Customers today are making more deliberate decisions about the critical items they need, and suppliers must respond in kind.
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