COVID-19 and the healthcare supply chain: impacts and lessons learned

17 Feb 2021

The COVID-19 pandemic shone a bright light on the cracks and weaknesses in the health care supply chains. There are several strategies that the industry can implement to mitigate supply chain disruptions during major emergencies without incurring exorbitant costs.

The COVID-19 pandemic is an extraordinary event that has impacted every nation, business, and supply chain on our planet. The pandemic left the health care system in crisis: hospitals on the verge of collapse with their capacity overflowed, critical item supply chains interrupted, and federal and state agencies struggling to take palliative and preventative measures. While governments and private sector organizations did have disaster plans and stockpiles in place, the pandemic exposed several major supply chain vulnerabilities, including shortages of personal protective equipment (PPE) and testing kits.

Of course, supply chain disruptions can be the result of many events, including natural disasters, acts of war or terrorism, supplier bankruptcy, labor disputes, cyberattacks, and data breaches. What’s different about the COVID-19 pandemic is the level of uncertainty and the length of the disruption as well as its simultaneous impact on various geographic areas. In addition, unlike most other disruptions, COVID-19 has been affecting not only the supply but also the demand for products and services.

In response to the pandemic, organizations across many different industry segments have attempted to stabilize their supply chains by conducting risk assessments and implementing business continuity plans. Many have diversified their product portfolio to respond to changing demands, making new products based on their existing resources. For example, some apparel manufacturers began producing PPE, and some distillers started making hand sanitizer.1 Others have made their supply chains more responsive by utilizing 3D printing technology to make products closer to demand. Finally, several have emphasized the need to bring production facilities back onshore or engage in nearshoring.

To strengthen and stabilize the health care supply chain for the future, it’s important to first identify the challenges that resulted in the major supply chain interruptions seen during the pandemic. Next, health care organizations and pharmaceutical companies need to assess which strategies can help them mitigate supply chain disruptions during major emergencies without incurring exorbitant costs. For example, while holding extensive amounts of safety stocks for a wide variety of health care items and/or reshoring production of a wide array of items would improve resiliency, they would be extremely costly strategies, and therefore not practical. Finally, solutions cannot just come from the private sector. Emergency preparedness is a public health imperative, and federal, state, and local governments need to assess what policy prescriptions they should enact in the wake of this experience as well.

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Source: Supply Chain Quarterly