4 Problems (and Solutions) for the Medical Device Supply Chain

If you had told me three years ago that supply chain economics and logistics would become a popular discussion topic, I would have raised an eyebrow or two. 

Having worked in Medical Device Distribution before coming to Greenlight Guru, I was used to thinking of supply chain as, quite literally, the final push to getting the device in the hands of the customer.

Today, however, the subject of supply and demand has gone from high-level, sometimes theoretical industry talk, to a very real issue impacting billions of people all over the world. 

The same can be said for medical device supply chains, which have been stretched thin as a result of the pandemic. It has unearthed a slew of shortcomings in the supply chain procedures we use, and given us opportunities to strategize for major improvements to be made for a better future state. 

This article will cover some of the biggest issues facing medical device supply chains and offer solutions to address these problems.

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What are the biggest issues facing the medical device supply chain?

When thinking about strengthening the medical device supply chain, it’s important to consider the wide variety of threats and obstacles currently facing our industry today. While it’s never easy to admit flaws, this kind of reflection is in sync with the medical device world’s commitment to continuous improvement.

Let’s perform some gap analysis, as it were, and examine four major problem areas of the medical device supply chain.

Supply chain shocks

As the COVID-19 pandemic raged on, we saw it put pressure on nearly every business sector we have, not the least of which was the medical device industry. Almost immediately, manufacturers started experiencing a high demand for equipment and supplies, major disruptions to raw materials and parts supply, and labor shortages. 

This kind of disruption is known as a supply shock, in which a sudden and unexpected event causes both demand and supply to fluctuate wildly. And while we may think of COVID-19 as a once-in-a-lifetime event, it is far from the only supply shock our industry needs to guard against.

Other examples of supply shock include:

• Macroeconomic and political conditions (including trade-policy or regulatory changes)

• Malicious actions (cybersecurity, intellectual-property theft)

• Counterparty issues (such as financially fragile suppliers)

Recent research from the McKinsey Global Institute (MGI) reports lengthy disruptions from a shock (two months or longer) are frequent, occurring every 3.7 years. The same research also found that within a ten-year period, shocks could cause some medtech companies to lose approximately 38 percent of one year’s earnings.

Regulatory compliance across multiple parties

It’s no secret that medical devices are subject to tight regulations and good manufacturing practices that govern everything, including purchasing, receiving, designing, producing, purchasing, storing, testing, shipping, and labeling. These processes, as well as many others, must be compliant from start to finish. 

Ultimately, each item sold 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.

Custom materials and parts

Over the past decade, the medical device industry has seen a significant shift in customer expectations. This change has occurred for many reasons, not the least of which is the burgeoning field of custom-built, personalized medical devices. I’ll never forget the doctor’s office who wanted “house divided” etched on their tools as the husband-wife physician duo didn’t necessarily agree over college basketball. 

Thanks to technologies like 3D printing, manufacturers are able to offer devices that are built to specs ordered by healthcare facilities. While these custom-made products offer many benefits to patients on a hyper-personalized level, they also can significantly slow down supply chains due to the nature of the customization process itself.

Additionally, the regulatory pathway for these custom devices has become increasingly complex, meaning manufacturers may be facing an uphill battle for any widespread distribution of these custom-made devices.

Failure to adopt modern tools

As forward-facing as the medical device industry is, many organizations still rely on manual systems that are inefficient and unsustainable. Unfortunately, legacy QMS tools continue to be utilized, largely in part because upgrading to an eQMS could lead to a new set of compliance requirements, the cost and effort of which can be a major deterrent.

Strategies for building a better medical device supply chain

It’s been said that COVID-19 only accelerated industry changes that were inevitably going to happen. In the same sense, the medical device supply chain has finally received the shot in the arm necessary to inspire real, sustainable change. 

Now that we’ve got a good understanding of the issues perpetuating the problems we’re seeing with the medical device supply chain, we can start to examine new strategies for improvement. Let’s take a look at some innovative strategies for building a better and more efficient medical device supply chain.

Leverage predictive analytics

Predictive analytics provides medical device manufacturers with a digital environment in which a system is fed huge datasets and actually “learns” an organization’s historical behavior to enable data-driven decisions to be made. Equipped with predictive analytics, companies can identify fluctuations in product demand to accommodate as needed.

Predictive analytics tools also help teams to anticipate patient needs and predict demand for the year ahead. The ability to anticipate increases and decreases in end users and, subsequently, product volume could play a huge role in staying ahead of the curve when it comes to product shortages. Supply chain teams can be made aware of backorders before orders are placed, giving them time to identify which replacement products are needed most urgently.

Invest in technology that enables full visibility and traceability

Another layer of protection against supply chain shortages is traceability, in which teams can track products and processes forward and backward in the event of a recall or adverse event, since we know you stand to benefit greatly if you can identify supply disruption quickly. 

Some examples of this technology include smart sensors, blockchain, advanced labeling techniques, and interoperable devices. These kinds of traceable technological solutions permit more immediate communication with suppliers and customers alike, affording your team a real-time view of a given supply chain. This only improves the ability to respond and prioritize resources based on current purchasing and operations data and minimize the impact of supply chain shocks and disruptions.

Create a diversified portfolio of suppliers

When medical device manufacturers turn to external vendors for components and parts, they put a great deal of trust and reliance in the hands of a third party. But what if a shortage occurs? What if a supplier is responsible for a quality event or is found to be noncompliant with quality procedures? By having a diverse set of suppliers, supply chain teams can reduce risk levels associated with a particular vendor experiencing supply-side issues.

There are many strategies for qualifying different suppliers, but one of the best is to consider partnering with niche organizations that are local to a manufacturer’s facilities. This strategy can improve the pace of the materials supply chain, as well as provide some relief against geographic-based supply shocks.  

Moreover, these kinds of homegrown, small companies may be able to incorporate more innovative services while they bid to stand out from the competition. There is a lot to be considered in terms of higher upfront costs which are inherent with multiple vendors. However, this is generally offset by the economic impact of engaging with multiple suppliers, as a more diverse supply chain generally drives down the cost as a form of competition. 

Use data to improve quality processes

In order to build a better supply chain for medical devices, it’s going to take some ground-up rethinking, particularly when it comes to the quality processes that drive our industry. Data analytics allow teams to streamline internal processes and improve essential functions of the business. 

For instance, you can use data to segment your supply chains and link certain products with ideal conditions for production, shipping, and delivery for a more streamlined flow. 

You can also perform operational assessments, such as gap analyses, with the use of data analytics to identify opportunities to improve inefficient processes across an enterprise’s operations. Additionally, you can collect and analyze performance data to prevent maintenance and repair issues and to plan for the future.

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Gain visibility into your medical device supply chain with end-to-end traceability from Greenlight Guru

Creating a better supply chain is about increasing visibility through traceability, and leveraging the technology that allows us to predict and potentially mitigate risks. But when teams are drowning in disconnected tools and data is getting stuck in silos, it's difficult to stay in touch with what's to come. 

Greenlight Guru helps your entire team achieve end-to-end traceability, thanks to a connected ecosystem that is collaborative, organized, and purpose-built for the medical device industry. Build out traceability, conduct supplier audits, and track your supply chain across the entire product lifecycle, all while breaking down silos and keeping your focus on driving your business.

Ready to learn more? Contact us today for your free, personalized demo of Greenlight Guru!

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