The COVID-19 pandemic tested the resilience of supply chains. The medical device industry was no exception. The pandemic has disrupted everything from supply and demand to shipping and workplace capacity. Medical device companies have experienced delays within their facilities, and the disruption has affected their ability to serve their customers as well as their relationships with suppliers.
The pandemic also exposed that many in the industry have poor visibility into the entire supply chain and don’t have sufficient alternative suppliers in place if and when suppliers have to shut down.
On top of this, these companies still had to adhere to specific regulations around processes, labeling, packaging, and data governance—presenting its own challenges.
What does the landscape look like today for the medical device supply chain? And what can you do to overcome these challenges?
At the start of 2021, medical device manufacturers face:
Increasingly strict compliance requirements
Medical devices are subject to tight FDA regulations and good manufacturing practices (GMPs) that govern everything, including purchasing, receiving, designing, producing, purchasing, storing, testing, shipping, and labeling. These processes must be compliant from start to finish. And ultimately, each item must have a unique device identifier (UDI). This can be tricky for supply chains that are distributed, in which certain components aren’t an “end product” when they move from one facility to another.
Growing demand for customization
Medical devices are often expensive, niche products. Today, they’re trending even more toward customization. In many cases, variations must be produced and stocked to meet demand. It’s difficult to forecast demand without sophisticated analysis and forecasting tools. And there’s a high carrying cost to maintaining inventory of these products.
Maintenance as part of the chain
Maintenance and related logistics are part of the supply-chain process. Some companies have field techs to service products; others have products shipped to them for repairs and maintenance. The maintenance and logistics involved come with a high cost and must be done in a timely, FDA-compliant manner.
A lag in modern capabilities
According to a 2020 McKinsey article on medical device supply chains, the pandemic showed they are too reliant on historical demand data, and they lack pertinent intelligence about their most immediate supply base. These gaps made their supply chains incredibly vulnerable and challenged their planning capabilities—and point to the industry’s significant supply-chain technology deficit.
Much of the industry still relies on manual processes in part because upgrading to a digital system would mean meeting further regulations around security and compliance, the cost and effort of which can be a deterrent.
But manual processes are inefficient, and they’re becoming unsustainable. For one, there are recalls on a weekly basis. Speed matters. How quickly a company responds has a direct impact on patients’ lives. FDA also has its own requirements for how recalls, adverse events, and formal complaints are handled—and how quickly. Manually identifying relevant components is clunky, and it inhibits forward-backward traceability.
Opportunities for Better Supply-Chain Performance
To improve supply chain performance, medical device companies should modernize. Consider the following:
Invest in technology solutions that improve visibility
You need to be able to trace products and components forward and backward in the event of a recall or adverse event, and you stand to benefit greatly if you can identify supply disruption quickly. Pursue technology that helps you maintain the integrity of traceability. Solutions that permit more immediate communication with both suppliers and customers help you gain a real-time view of the health of your supply chain. With these capabilities in place, you’ll be able to respond and prioritize based on the most current sales and operations data and buffer the impact of disruptions.
Leverage data analytics, machine learning, and forecasting tools for planning
With these tools, you can make better decisions for production scheduling and purchasing and achieve greater resilience amid supply chain fluctuations. For instance, you can determine how many of each variation you might need to produce or stock. Review your forecast versus actual demand to measure accuracy.
Diversify your suppliers for greater resilience
Should disruption occur, your supply and operations will be more secure if you source locally and incorporate alternative suppliers. To accomplish this, it’s important to have a supplier qualification in place, and a technology solution that streamlines that process.
Use data analytics to optimize operations and performance
Data analytics can help you streamline internally, improving core functions of your business so you have a strong foundation to prepare for demand fluctuation and supply changes. For instance, using data, you can segment your supply chains, pairing products with like conditions for production, shipping expectations, and process for more streamlined flow. You can also perform operational assessments using analytics to identify where you might improve inefficient processes across your operations. Additionally, you can collect and analyze performance data to catch maintenance and repair issues and to plan for future maintenance.
The pandemic exposed gaps that companies should prioritize filling in 2021. Expectations are tightening, and it should no longer be a choice whether to modernize or stay behind.