September 2, 2021 – Amid the reports of the Delta variant causing shutdowns of factories in largely unvaccinated parts of Asia, disrupting supply chains and contributing to rising consumer prices, industry stakeholders are monitoring the latest developments and how they may affect the healthcare supply chain.
The Journal of Healthcare Contracting reached out to Premier Inc.’s Disaster Preparedness Team about questions related to possible disruptions to the U.S. healthcare supply chain.
JHC: Do you believe recent variant outbreaks in countries like Vietnam could affect the production of medical supplies?
Premier: Vietnam doesn’t manufacture a significant quantity of medical products and supplies; however we saw previous outbreaks and associated lockdowns in countries like Malaysia and China impact the global supply chain.
In November 2020, for instance, the world’s largest nitrile exam glove supplier had to halt production at 28 Malaysian plants as it sought to control a COVID-19 outbreak. Just last month, the entire country of Malaysia was in lockdown amid a new wave of COVID-19.
As the Delta variant circulates and case surges persist, it will remain difficult for many manufacturers around the globe to find the workers necessary to maintain consistent production levels.
JHC: Do you know of any instances where disruption has already occurred due to the variants?
Premier: Most Indo-China nations have implemented lockdowns and/or restrictions, and multiple countries and ports have been affected. The good news is that many countries classify medical supplies as a critical manufacturing function and have been allowed to continue operations – albeit scaled back in some instances – during shutdowns.
However, as we’ve seen throughout the pandemic, the disruptions extend beyond manufacturing. Alongside halted or reduced production operations, economies around the world have also been plagued by global transportation issues, including port congestion, vessel shortages and equipment availability, as well as raw materials shortages.
Earlier this summer, the Port of Yantian, the world’s fourth-largest container port in the south China city of Shenzen, was partially closed due to a COVID-19 outbreak. This recent port shutdown and backlog escalated Chinese export delays of and caused major regional congestion as carriers sought alternatives.
Collectively, these transportation disruptions add to container availability issues, and potentially, less overall shipping capacity in the coming months even as demand continues to surge. With upwards of 80 percent of personal protective equipment (PPE) and raw materials for drugs made overseas, the healthcare supply chain can expect delays, longer lead times and the potential for price volatility.
JHC: How can the U.S. healthcare supply chain create safeguards against this issue?
Premier: While the healthcare supply chain is better prepared now than for the spring and summer surges of 2020, it remains constrained.
Alongside PPE conservation measures, ongoing stockpiling efforts and a greater visibility into inventory status, hospitals today are largely better equipped. Domestic manufacturing capabilities have also increased over recent months, including Premier and member investments in isolation gowns, face masks and nitrile exam gloves.
But alongside ongoing demand spikes coupled with global manufacturing, labor and logistics issues, almost any product can slipping into shortage. We’re seeing this currently play out with oxygen supply for hospitals throughout the Southeast.
Moving forward and in or out of a pandemic, we need to ensure that we have a much more resilient supply chain to protect us from any type of future disruption. We must:
- Modernize and technology-enable the supply chain, leveraging AI and predictive technology capabilities, for automation of manual tasks as well as full visibility and transparency baked into the system. This includes visibility on manufacturing locations, shipping ports and commodity content.
- Diversify production – including incentivizing more domestic manufacturing – to create redundancy plans and reduce overreliance on any single country or region.
- Build more agility by opening new demand channels and supplemental sourcing options, including trusted e-Commerce platforms.