Top 4 Trends Shaping the Future of Medical Supply Chains
True to form, the COVID-19 pandemic left a trail of destruction, in almost every economic sphere, globally. The medical supplies industry was also severely affected, as nations locked down, crippling trade and shining a spotlight on the fragility of global supply chains.
Logistics for medical supplies in particular, include so much more than the movement of pharmaceuticals and other products between countries. The foundations of trade were affected by the migration of laborers working in industrial units, the ban on transportation activities and timely courier facilities, all of which hampered the smooth functioning of supply chains, causing shortages in essentials like hand sanitizers, disinfectants, testing kits, personal protective equipment (PPE), pharmaceutical, medical devices and consumables, surgical equipment as well as raw materials.
It has left the industry rattled, as they saw the necessity for reforms and long-lasting structural shifts in the way manufacturing, procurement and trade will be conducted in the future. In the hopeful preparation for a rebound, there are notable changes being made, like:
1. Pivoting Production Lines
The most effective way to meet the increasing demand of medical supplies, was to make use of the manufacturing units that were already in place. Existing production lines were adapted to produce spare parts for medical devices like ventilators, pulse oximeters or consumables, like gloves, masks, and face shields.
For example the Defense Production Act, which was conceptualized during the Korean War, in the 1950s, was invoked, which allowed the US the government to empower companies in the private sector to pool its resources to help fight a national emergency like COVID-19. While, in Puerto Rico, The Bacardi Corporation distillery, which produces around 80% of the company’s rums, has partnered with Olein Refinery to provide alcohol as a raw material to help with production of hand sanitizer. This diversification allowed companies to supply what was currently in demand, cushioning the effects of the inevitable shortage of essential commodities.
2. Developing Domestic Resilience
The realization that import based economies fared relatively worse in terms of supply shortages, spearheaded a revolution across nations, to evaluate sourcing and access to raw materials . Supply chain mapping led to innovative ways to deal with local environmental hurdles for production, considering skilled and unskilled labor costs. This push towards independence, led to increasing resilience, when backed with accelerating adoption of agents of automation and small batch production. The surge in demand for protective materials like PPE, sanitizers and disinfectants are further fueled by the fear of future outbreaks and the dangers that those could bring, which enforces the need for nations to strategically build up their defensive stockpiles.
3. Leading with Legislation
Governments of both developing and first world countries took stock of their supply chains and in the bid to incentivize domestic production, offered subsidies and tax initiatives, restricting exports of values commodities like masks or PPEs, and medicines, while at the same time renewing trade agreements with friendly nations.
While little could be done about the delay of international transport, some border authorities like Dubai Customs, have employed strategies to ensure that medical supplies reach the end consumer as soon as possible. The Dubai Customs, have enabled swift clearance of pharmaceutical products and other supplies for the healthcare industry and have accomplished 4.4 million customs transactions through the Authorized Economic Operator (AEO), constituting 61% of the total number of transactions (7.2 million) in H1, 2020. Similarly, in March, Dubai International Airport reported a 49.4% (12,500-tonne) year-on-year (y-o-y) increase in pharmaceutical cargo handled. While facilitating external trade , it also balanced the supply and demand of the local market for essential commodities.
4. Treading forward with Technology:
Along with automation of manufacturing processes, production companies have also stepped up their game with digitization of paper work, reducing the need for expensive and risky human intervention. The pandemic has also seen a shift in consumer behavior with regards to e-commerce, and studies show that customers are purchasing products online, that they would normally buy in store, more frequently now, due to the fear of infection. Interestingly enough, there are many B2B services that have been launching new platforms in healthcare, delivering essential medical care supplies, facilitating e-pharmacies and providing health monitoring devices like portable oximeters, glucometers or fitness bands. The Remote Patient Monitoring (RPM) tools market is set to become a fast growing part of the healthcare ecosystem, predicting to surge to nearly $16 billion by 2023, per Research and Markets.
Therefore, retailers dealing with these goods have been able to leverage their online presence to cater to their customers as well as engage with consumers. According to Arabian Business, the UAE has one of the fastest growing e-commerce markets, with untapped potential for growth. It is also clear that as face to face interactions give way to screen time online, automation and digitalization cannot be treated as frills anymore. Technology is now a utility, not a luxury, an imperative tool for business survival.
One of the most exciting advances in the technology sphere is the application of 3D printing, to accurately and easily step up production of supplies like masks, oxygen valves, surgical instruments, prosthetics and various other parts for medical equipment. It reduce the costs of production of an array of medical device components, while its flexibility allows prototypes to be developed faster, through customized designs using a wider choice of materials, than through traditional production methods.
Nations have witnessed a broad change in fiscal policies, that have been rolled out fairly rapidly, with the intention to monitor, evaluate and fine tune processes to achieve a desired result: a robust, adaptable, agile global supply chain, that can survive through nomadic sourcing and consistent innovations. In a climate so fluid, the industry that manages to mold itself to the changing tide, will be the one that survives and thrives.
- “The Impact of Covid-19 on Global Supply Chains.” Oxford Business Group, 27 Apr. 2020, oxfordbusinessgroup.com/news/impact-covid-19-global-supply-chains.
Jesse Lin, “Here’s How Global Supply Chains Will Change after COVID-19.” World Economic Forum, 6 May 2020, www.weforum.org/agenda/2020/05/this-is-what-global-supply-chains-will-look-like-after-covid-19/.