Post-Pandemic Supply Chain Insights for Medical Device Companies

5/18/2023 Frank Costello

Increased demand, disruptions to manufacturing, logistical challenges, and rising costs — the pandemic’s impact on supply chains around the globe revealed a number of vulnerabilities for medical device companies.

It also became clear that, across the industry, there is an undeniable need for responsive innovation, enterprise-wide agility, and consistent vendor-client communication. To dig a little deeper, here are four insights we believe will help medical device companies better position themselves to succeed in the post-pandemic world.

1. Resilience is more than a state of mind

Not all that long ago, offshoring the bulk of your operations was considered the smartest, most cost-effective decision you could make. This globalized supply chain model worked well when supply chains were running smoothly, but it proved vulnerable to bigger disruptions (e.g., natural disasters, political instability, and pandemics), which led to strained workforces, supply shortages, and transportation delays.

Here are a few steps businesses can take toward a more resilient supply chain in order to better ensure that patients have access to the products they need:

• Invest in proven track-and-trace technology for more effective monitoring
• Develop contingency plans for disruptions
• Evaluate nearshoring for potential opportunities and assurances 

And speaking of nearshoring, RRD’s 2023 Diagnostic Drivers Report found that two-thirds of life sciences companies are moving sourcing, manufacturing, and fulfillment physically closer to customers and end markets. A growing number of our clients have expressed a readiness to explore reshoring or nearshoring as a way to increase the supply chain resiliency.

2. Agility requires buy-in — from every angle

Like Rome, building a supply chain that is agile and responsive will not happen overnight. It also cannot happen in a vacuum. One of the biggest challenges in adjusting a supply chain is getting enterprise-wide buy-in. Without top-down alignment, turning on a dime to address the market volatility will be difficult.

First and foremost, achieving greater supply chain agility requires clearer and more concise  communication the moment a change to your supply chain occurs. How you communicate can positively (or negatively) impact stakeholder response and overall buy-in to what comes next. 

Training and support for those employees directly affected by the changes is also essential. How will their roles change — and when? Again, this goes back to the need for clear communication to help your organization quickly adjust its supply chain(s) to meet changing needs and remain competitive.

Consider these additional tips for generating stronger buy-in for potential supply chain changes:

• Leverage data and analytics to support your case for change. This will only make your case for change more compelling and necessary. 
• Focus on the benefits of the changes for employees. This will help to get them on board with the changes and make them more likely to support them.
• Be transparent about the changes and the process for implementing them. This will help to build trust and confidence among employees.
• Communicate regularly with employees about the changes and their progress. This will help to keep them informed and engaged in the process.

3. Supplier mismanagement can surface unexpectedly

Yes, having a go-to roster of suppliers for critical components can help to mitigate the risk of potential supply chain disruptions. However, poor management of said suppliers can also create unwanted complexity, a lack of supply chain control, and open the door for the following costly (and sometimes undetected) issues:

• Quality control issues can have a negative impact on patient safety
• Logistical challenges can lead to delays in patient care
• Financial risks can occur if a supplier goes out of business
• Compliance issues, for example, if one supplier is not following a mandated procedure,  it can put your company at risk of regulatory fines or penalties

Rely on early, consistent, and constant communication to strengthen how you manage and coordinate your business relationships. This may seem obvious, but it is also a critical component in how information is shared, contingency plans are developed, and disruptions are addressed.

Transparency is also table stakes when it comes to managing multiple suppliers. It’s important to expect the highest levels of it from your suppliers, particularly in a space so regulated. Investing in the right tech stack, as previously noted, will help you increase control and visibility of all the moving parts and partners within your supply chain.

4. Plan pragmatically for the unexpected 

In a recent blog post, a colleague of mine covered the keys to establishing a communication plan for a medical device recall — read it here. The key takeaways from that piece are worth repeating here. Having a sound plan in place can help to:

• Protect patient safety
• Comply with regulatory requirements
• Minimize impact on business
• Maintain customer trust
• Ensure legal protection

At RRD, the pandemic’s impact reinforced an invaluable lesson: contingency planning for a supply chain disruption requires a high degree of pragmatism to increase your odds of executing against it. And while plans will vary from one organization and product to the next, they will all most likely share the following key elements:

1. Start by identifying the critical components of your supply chain — the parts and materials that are essential for your business to operate.
2. Assess the risks to each component of your supply chain.
3. Develop mitigation strategies, which could include diversifying your supplier base, outsourcing supply chain management to an experienced partner, investing in risk management tools, etc.
4. Test and update your plan to ensure it’s effective, flexible to changing circumstances, and up-to-date with the latest risks.

Commit to a better supply chain 

To say the COVID-19 pandemic has had a profound impact on the world would be a grave understatement. As it relates to medical device organizations, the pandemic revealed a number of vulnerabilities in the supply chain that in turn highlighted the need for greater resilience and agility, supplier management, and better contingency planning.

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