Managing critical supply chains in turbulent times
Chris Qualters, CEO, TekniPlex Healthcare, explains how unpredictability favours partners with a robust reach, foresight, and creative solutions.
There are many aspects to running a business, and most require sound acumen in problem solving and handling unexpected challenges. Over the last two-plus years, we all have experienced several unprecedented, intense examples of both, from the frequency and severity of natural disasters and the supply chain-stifling COVID-19 pandemic, to escalating inflationary pressures and the geopolitical upheaval of armed conflict in Eastern Europe. In my 32-year career, never have we been faced with this many challenges in such a condensed timeframe.
Our interconnected global economy has been disrupted and remains vulnerable. We’ve been faced with production interruptions, uncertain supply chain deliveries and rising costs. As a result, we are challenged with managing through a scarcity of valuable materials and product availability, much of which is also subject to unanticipated price increases.
Patient safety remains the healthcare industry’s top priority, so when disruption affects the supply chain, a cascading set of issues ensue, as even modest reactive changes to materials or manufacturing processes require re-qualifications and regulatory approvals. Given one true constant—change—healthcare companies must carefully consider how supply chain risks can affect business continuity and recognise the value organisational heft in supplier partnerships brings to mitigating challenges.
The advantages of robust partnerships include multi-factory pre-qualifications; outsourcing secondary and tertiary production to focus on core competencies; and the benefits of engaging entities offering vertical integration when time constraints or cost of ownership make internal production untenable.
Bumps in the road
So many factors are impacting production in factories around the world. One troublesome trend that has worsened in recent years is climate change. More extreme weather has meant more—and more severe—supply chain disruptions.
And then… COVID-19. The ensuing worldwide lockdowns, labour shortages, and supply-demand imbalances created by the pandemic showcased how a health crisis quickly becomes a supply chain one.
As the COVID crisis wanes, another is born: Russia’s invasion of Ukraine has ushered in a period of geopolitical instability and contributed to inflation fuelled by spiralling energy prices. Here, healthcare companies are undoubtedly being impacted, as nearly all medical-grade plastics typically require petroleum. A looming scarcity of some commodities and disrupted East-West shipping routes continue to exacerbate these issues.
Healthcare products companies need a well-rounded strategy to minimise supply chain pitfalls. While our company is a globally-integrated developer and supplier of advanced medical-grade polymer solutions for a wide variety of applications, in recent years we’ve also become supply chain mavens of sorts—an innovation born of our customers’ necessities.
Let’s explore examples of increasingly common supply chain challenges and potential tactics toward alleviating them.
1. Long tubes, short timeframe
The first example highlights the need to keep healthcare facility personnel safer during the COVID-19 pandemic. Getting a solution implemented fast was, to put it mildly, critical.
To lessen the number of touchpoints needed to treat COVID-19 patients, many institutions opted to move certain machinery outside patient rooms. This included IV pumps and tubing, which required frequent changing.
The solution was that tubes connecting pump to patient needed to be longer—as in three to four times the length. In addition to unprecedented demand, this swift sea change in procedure meant the design of certain IV pump tubing needed to be reconfigured. This would necessitate qualifications across various geographic locations, ASAP.
Our medical device partner contacted us, and together we quickly formed a multifunctional, multi-national team. Mission accomplished – in just ten working days. Our ability to produce both the compound and extrude the tubing was critical to meeting the customer’s needs.
2. More than one and done
A natural disaster impacted multiple suppliers along a supply chain, causing a domino effect for numerous medical device companies. This triggered a race to secure volumes of materials, resins, compounds, and finished parts. Device purchasers started gobbling up product wherever it was, depleting stockpiles and, via supply and demand, driving up prices.
To remedy this and increase supply, we produced qualification samples on three continents to supply manufacturers in North America, Europe, and Asia—including, not coincidentally, several new customers. As demand continued to rise, we installed and qualified higher-volume machinery and ran multiple shifts.
Crucially, this did not require trade-offs, such as delayed lead times for current customers. A key factor was strategically located sister sites providing widescale redundancy and expedited regional delivery. The takeaway: standalone facilities face elevated risk of production disruption and delay.
3. When growth becomes a cost of ownership
A customer needed to increase production quickly to meet growing demand. Its production facility was at capacity, and building an extension wasn’t an option because of time and real estate constraints. Skilled labour also was scarce. A significant portion of its footprint and personnel were being utilised in the extrusion department, which produced a high-volume but low mix of tubes for interventional catheter lines. While most extrusions were already outsourced, these lines remained on-site due to an earlier “make or buy” evaluation.
Ultimately, they determined cost of ownership had become too high compared to outsourcing. A key factor was vertical integration. With just one of its devices’ several components requiring too much floorspace and people power, the solution involved engaging a partner for whom tubing wasn’t part of the product, but rather the entire product.
In this scenario, the company needed to outsource quickly to a competent partner to free up space for its core competencies. This required a partner who could quickly qualify the production process, all product SKU’s and build buffer inventory to bridge transitional gaps.
What we’ve learned, and future considerations
First and foremost, failing to address turbulent environments can impact patient care. It also can cost extraordinary amounts of money, time, and reputation damage. Fortunately, a growing number of forward-thinking companies are evolving to advanced scenario planning that bakes robust risk and uncertainty analyses into materials and supply chain strategies.
Moving forward, the best approach is to ensure new projects robustly address supply chain risk mitigation. While there may be a bit more initial cost and qualification efforts, we’ve learned this approach protects patients and, ultimately, is also the most economically efficient.
Finally, choose partners with a comprehensive solutions platform to solve both product and supply chain challenges globally. Seek companies that have extensive technical, supply chain and project management acumen; imbedded materials science expertise; and precision manufacturing processes aligned in a worldwide network.