At hospitals, successfully managing the supply chain for medical devices is essential. From ventilators to diagnostic equipment, elective surgeries to prenatal care, devices play a vital role in patient health. Finding solutions for medical device supply chain challenges helps healthcare facilities remain functional and profitable.
Supply chain issues also impact medical device manufacturers, component makers, and suppliers. In an unpredictable world, the better you understand common obstacles, the better positioned you are.
What Medical Device Supply Chain Challenges Should Your Company Prepare For?
In the past, shipping delays were a relatively minor inconvenience. Today, they can cause lasting damage to your reputation, operations, profits, and client relationships.
1. Global Disruptions to Supply and Demand
Supply disruptions these days affect entire regions, and many threats are global in scope. When third-party platforms experience problems, the outages can impact airlines, shipping companies, payment systems, and manufacturers around the world.
Modern companies also face instability. Product demand can rise or fall sharply based on market factors, especially when selling or sourcing overseas.
2. Cyberattacks
Ransomware attacks have affected more than 60% of companies worldwide. These cyberattacks can paralyze business operations, and they’re hard to predict. Not only can they cause delayed shipments, but some vendors never recover after a data breach.
3. Geopolitical Tensions
Concentration in manufacturing means many companies source many of their raw materials or components from a single country. If that nation becomes involved in a war or trade dispute, the disruption can block or severely limit its export capabilities.
4. Uncertainty Around Trade Barriers
Tariffs have made supply chains more complex for medical device manufacturers, suppliers, and wholesalers. Unpredictability in raw material costs makes it hard to stay competitive. When tariffs are higher for some countries than others, your business may have to scramble for alternate suppliers.
5. Concentrated Production
Is your company prepared if your main supplier goes out of business unexpectedly? Over the years, some manufacturers have become overly reliant on large-scale suppliers with huge catalogs for every need.
But sourcing most of your raw materials from just one or two companies can be a disaster waiting to happen — especially when most of the items must be shipped from overseas. In addition to paying higher prices and having longer lead times, you may be more vulnerable to supply chain disruptions.
6. Chip Shortages
If your products rely on semiconductors, the risk of chip shortages should be one of the medical device supply chain challenges that you prioritize. A growing number of medical devices use semiconductors, from insulin pumps to diagnostic systems.
The problem is that one industry’s demand (e.g., data centers) can send supply plummeting for others. Worse, even though half of all medical devices need electronic parts, the opposite isn’t true. Medical device manufacturers are just a drop in the bucket (~1%) compared to industries like automotive and aerospace.
7. Custom or Device-Specific Components
Problems like vendor concentration and trade barriers become even harder when your products rely on customized components. Prototyping is a time-consuming investment, and not all suppliers have the infrastructure to create made-to-order parts.
8. Regulatory Challenges
Depending on the nature of your products, you and your suppliers may need to comply with several regulatory frameworks, including HIPAA, GDPR, and the FDA’s medical device packaging requirements. EPA regulations on ethylene oxide sterilization can also affect your operations.
How Can You Prevent, Mitigate, or Solve Medical Device Supply Chain Issues?
To be effective, any solutions for medical device supply chain problems must fit your company’s operations, products, and clients.
Maintain a Detailed Vendor Inventory
You can’t control what you don’t see. The first step in fixing supply chain problems is identifying them. Create and maintain a thorough record of all current vendors.
Perform a Supply Chain Risk Assessment
Identify the biggest bottlenecks and risks in your supply chain. Focus on vendors with the largest impact on your ability to continue operating or serving your customers.
Establish Contingency Plans for Crisis Events
Even though no organization wants to believe that a supply chain disruption similar to the COVID-19 pandemic will happen again, there are no guarantees for the future. Instead of being caught off guard, prepare contingency and continuity plans for different scenarios.
Diversify Your Suppliers
Even if you have a long-time relationship with specific vendors, emergency preparedness means branching out. Ensure you always have a backup supplier for key products, one with quality you trust.
Reshore Your Supply Chain
One of the simplest ways to minimize medical device supply chain issues is to keep things closer to home. Don’t dismiss parts or supplies made in the USA.
A common misconception is that American-made means “expensive,” but that’s not the case for many precision materials. CNC equipment has lowered local prices for thermoformed goods, metal parts, and other components.
Build Supply Chain Solutions Into Vendor Relationships
Vendor transparency goes a long way in avoiding supply chain problems. For example:
- Does the vendor make everything in-house or use third-party suppliers?
- What happens if their primary supplier can’t fulfill an order on time? Do they have alternatives?
- Does one account manager handle everything for your company?
Improve Stakeholder Communications
Sometimes, supply chain issues arise because of internal miscommunication. When different product teams manage their raw materials individually, mixed wires can cause shortages. Medium and large-scale businesses need to centralize data for inventory management, procurement, and logistics.
Take Advantage of Technology
Analytics can streamline risk management, inventory management, and vendor management. Vendors who periodically deliver late now are a red flag for future disruptions.
Other key performance indicators for medical device supply chains include:
- Perfect order rate
- Defects per unit
- Perfect supplier delivery rate
- Downtime to operating time ratio
- Customer order cycle time
Lead time matters, but quality matters more. Suppliers should have a defect rate (DPU) under 5%.
Find High-Quality Solutions for Medical Device Supply Chain Challenges
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