What Brexit and COVID-19 have revealed about supply chain efficiency

Following a report released by European medtech supplier Healthcare 21 Group (HC21), David Plotts sheds light on how healthcare businesses can maintain efficiency across supply chains during global disruptions brought by COVID-19 and Brexit.

COVID-19 has tested supply chains across all sectors to their limit. For the European medtech supply chain – responsible for employing around 730,000 people – the pandemic has revealed that key lessons need to be learnt in order to maintain a consistent supply of equipment during turbulent times whilst also managing expenditure.

One of the main issues to have arisen out of COVID-19 is keeping hospitals stocked with enough equipment to cope with the hundreds of thousands of cases being referred to their facility. This is particularly true for PPE and equipment needed to carry out critical operations not postponed by the pandemic.

However, whilst COVID-19 has brought it into public view, managing stock and supply is not a new challenge. In fact, around 30% of hospital budget spend is on supply chain activity alone.

It can also be expensive for hospitals and suppliers to hold onto excessive ‘consignment stock’, which is held by the hospital but remains the property of a supplier or other organisation. Each day this stock is idle is a cost to the property owner, meaning it is in the best interests for all to have an adequate supply of equipment, without having large storage areas full of unused devices.

Prior to COVID-19, a supplier would physically visit a hospital and record how much consignment stock that hospital held. This allowed for an accurate insight into what the hospital would likely need in the future. And by using barcode scanners and a purpose-built smartphone app, this process was often a swift one.

The restrictions caused by COVID-19, however, mean that suppliers have had to adapt this important process. In the absence of being able to physically check stock levels, we relied on our customers providing the information for us, which is then logged remotely. Whilst this may not necessarily be ideal, the process does open the door for clear communication between a hospital and supplier, and consequently, strengthens the trust between the two.

Furthermore, the use of mobile technology, linked to the customer’s unique database or ‘portal’ results in managing consignment stock a streamlined procedure as well as a swift one. This is more important considering strategic management can reduce inventory levels by between 25 and 40%.

For the orthopaedic sector, which carries out more than 110,000 hip replacements in the UK each year, the need for a robust and transparent supply network is especially important. In the UK, which has an ageing population, musculoskeletal conditions (MSK) accounts for more than a quarter of all surgical interventions. Consequently, there is a greater need for hospitals carrying out procedures such as hip and knee replacements to have a constant supply of equipment, but without incurring high costs in the process.

This has long been a difficult balancing act to monitor, however the introduction of the Total Orthopaedic Solutions Framework has enabled hospital trusts to have more information about the brands they choose and how much it will cost to have their products delivered. Again, software and databases have made it possible for decision makers to select the equipment that will deliver the best result for the patient and the hospital’s bottom line.

Recent years have seen other seismic disruptions to health care supply markets besides COVID-19. Before the pandemic spread to Europe, medical device manufacturers and suppliers had to contend with new legislation, the EU Medical Device Regulation (MDR) being brought in. Though currently postponed, MDR required every device in Europe would have its own unique device code, so its journey could be tracked all the way back to the facility where it was produced.

Naturally, this meant suppliers have had to be more stringent in their internal auditing procedures; tracking a product throughout its lifecycle now has to be more meticulous and thorough, so that if any errors occur, where they occurred is clear.

MDR implementation also comes at a time where the EU is awaiting to see what disruptions will be caused by Brexit. At a time when exact answers are difficult to know, the most effective way of preparing for Brexit is, quite simply, to be prepared for anything.

Preparations will vary depending on individual supplier markets and operations, but at the heart of all supply chains is the need for transparency, as has been revealed in the orthopaedic supply chain framework mentioned earlier. It also means suppliers have a greater responsibility to provide essential information on how soon they can provide specific equipment, and where they can source the equipment from.

To take this even further, transparency also means logistics staff such as warehouse managers are required to feed stock level data back to the rest of the supplier’s management team, which is then passed on to the end user where appropriate. Regulatory and tax issues over importer, distributor or legal representative status are also further muddying the Brexit waters.

Conversations like these will be integral to maintaining efficiency in what has already proven to be an uncertain time. As such, early investment in making IT and asset management systems as robust as possible reduces the risk of additional, preventable, disruption when the landscape becomes clearer in the future.