The global healthcare system we experience today is the consequence of an extremely efficient, yet fragile, supply chain. This efficiency, therefore, comes at the expense of resilience, meaning it is vulnerable to “black swan” events like Covid-19.
Healthcare facilities work with one another in a group purchasing organization. They contract with two or three large distributors, which either purchase from wholesalers or contract directly with manufacturers.
As the Covid-19 pandemic ravaged the world, we can all remember the shortages the healthcare system suffered. As the caseload kept increasing, the need for PPEs soared, filling the news with images of healthcare workers improvising hospital gowns and face shields. The same thing happened with some critical medical supplies. By April 2020, prices for N95 masks were up 6,136%, while those of isolation gowns had spiked by 2,000%. U.S. health care leaders had to resort to protocols for rationing testing and ventilators as the shortages continued.
This supply chain failure led to a paradigm shift from a centralized supply chain in the US into thousands of domestic manufacturers stepping up and producing PPEs as well as other critical medical supplies. An example of this included Austin-based Tito’s, which transitioned from producing vodka to hand sanitizer. Cumbersome vendor-approval processes and inflexible funding rules did not help.
In a world where large-scale disruptions such as climate change and natural disasters, shifting global economic or geopolitical conditions as well as cyberattacks are likely to become more common, the Covid-19 pandemic has opened our eyes to the dangers of a supply chain that focuses exclusively on efficiency.
https://hbr.org/2021/02/one-way-to-build-more-resilient-medical-supply-chains-in-the-u-s
