medical device supply chain disruption

Medical device supply chain disruption during covid-19:

The one of the major hindrance faced by the nations worldwide during the trying times of the pandemic was the disruption of supply chain. The glimpse of which was seen in the disruption of the supply chain which affected the availability of the test kit, then the availability of protective equipment and finally now the availability of vaccine. The blog is all about how the protective shields which were of the utmost need of the hour was unavailable then.

How the supply chain became so vulnerable amidst these times?

 

China became a member of the world trade organization in 2001. The decision was reckoned to provide free trade . China evolved gradually to become the production hub and became the integral part of the global supply chain lifting the trade barrier.

When the first outbreak of Covid-19 namely Sars happened in 2002, the economic contribution of china was only 4% of the worldwide GDP. But now it became 16% of the worldwide GDP which is almost four fold increase. With its cheap labor, undeniable quality and on time delivery China became one of the leaders in production of automotive parts , electronics, aircraft, clothes and essential medical gears.  The outbreak of the pandemic unleashed a domino effect whose effect rippled throughout the globe and disrupted its supply chains in dusk of 2019.

If we think about the chain structure between two nations for instance US and China, it might be appearing as industry specific or company specific. But when we look at the entire US economy for example, they get most of the inputs from China. ( Note the similar case with many economies including India).Most of the global raw materials are supplied from China. This doesn’t mean direct supplier. It can be the supplier’s supplier. The cheap labor cost of the inputs supplied from china served as an eminent reason for the suppliers to source from china rather than looking upon the closer neighbors. With the Sars outbreak the china became the second largest economy trailing behind US.

Why china became the indispensable partner in this? Well … the undeniable quality, on time delivery, reliable quality.

Unlike China most of the economies are not export driven. So most of the products get exported from china to the other countries where the consumers use it for manufacturing various products or for consumption.

The protective equipment are mostly manufactured from the countries like China, Taiwan, Malaysia, Mexico, South Korea, and Thailand.

Lets take the example of a medical gown whose raw material comes from China. The raw materials are then sent to specific points which have got the contract to fulfil the need like China, Cambodia, and Vietnam etc.  The finished product then sent through cargos to US where the Gown company owner is located. From the Cargo the Gowns undergo the customs check and then to the manufacturer that owns the actual Gown company who then gives away to the distribution centers.

The process for getting the fully finished gown takes 90 days.

During the covid outbreak the manufactures couldn’t get the raw materials for several weeks

Resulting in the stagnant production and shipping. On march 2020, Covid-19 began to slowly eat away its population. Adding to the factors that contributed to the dearth of protective equipment came the strict regulations of FDA in US which strictly prohibited constant and fast switching of suppliers without proper quality check.

Most of the companies now trying to reallocate their supply chain from china. But this involves huge costs. Its predicted that there would be a lot of causalities in the economy like agriculture industry, oil industry, followed by their consolidation among them. The re-assessment of supply chain is the need of the hour.